Special Message to the Congress Requesting Extension of the Reciprocal Trade Act.

To the Congress of the United States:

I recommend that the Congress extend the Reciprocal Trade Agreements Act in its present form for 3 years, until June 12, 1951. This act authorizes the President, under well-defined procedures and limitations, to conclude agreements with other countries for the reciprocal reduction of tariffs and other obstacles to international trade.

For 14 years the Reciprocal Trade Agreements Act has been an essential element of United States foreign policy. It was first enacted in 1934 and has been extended by the Congress four times, on each occasion after thorough study of its operation and results. It is well known to the American people and has drawn their constant and increasing support, regardless of party affiliation.

The basic reason for this constant popular support and repeated congressional approval is that the act has provided a sound method for increasing world trade through progressive lowering of trade barriers, to the benefit of living standards both here and abroad.

The importance of the act is greater day than it has ever been. Together with other nations, we are engaged in a mighty endeavor to build a prosperous and peaceful world. The financial assistance we have already contributed, and the further aid we shall give to nations in Europe and elsewhere, constitute a tremendous investment toward world economic recovery. The Reciprocal Trade Agreements Act, by stimulating an increasing flow of trade between nations, will contribute strongly to the achievement of this objective. Its extension is essential if we are to complete the work we have begun.

The trade-agreements program contributes not only to the restoration of a prosperous world economy; it also contributes directly to the welfare and prosperity of the people of the United States. Our people need to import many commodities from abroad; we need equally to export many of our products. Both needs are served by agreements which reduce or eliminate obstacles to commerce between the United States and other countries.

These agreements recognize the fundamental fact that trade is a two-way business and that our foreign commerce depends upon a balanced relationship between imports and exports. Foreign countries must be able to sell to us if they are to have the dollars to pay for our exports and to repay our loans. Adequate markets for our agricultural and industrial producers depend upon the lowering of trade barriers by other countries. Imports of goods needed in this country improve the standard of living of our people as consumers at the same time that they make possible the maintenance of markets for our people as producers.

Currently, we are exporting far more than we are importing. But this is a temporary condition made necessary by considerations of overriding importance. The trade-agreements program is a sound method for achieving a more balanced relationship in the future within the broader framework of the expanding world trade so necessary to economic reconstruction.

In addition, by contributing to the lowering of trade barriers the United States can support the expansion of private trading as distinct from Government trading. The existence of trade restrictions is too often accompanied by Government participation in trading operations--extending even to trading by Government agencies. The preservation of our private enterprise system at home is closely bound up with the reduction of trade restrictions and the encouragement of private international trade.

The Reciprocal Trade Agreements Act is a proven instrument for achieving these objectives. Prior to 1945 the United States had concluded agreements with 29 countries, affecting about one-half of our foreign commerce. These agreements helped greatly to reduce trade barriers and to stimulate the foreign commerce of the United States and the other countries concerned.

Since 1945 we have continued our efforts to reduce the strains imposed upon the world economy by narrow concepts of economic nationalism. Last summer at Geneva the United States and 22 other countries concluded the most important and comprehensive trade agreement in history. By this agreement these 23 nations agreed to reduce their tariffs, or to maintain low tariffs or none at all, on a wide variety of products. The products affected accounted in 1938 for over half the world's international trade. In addition, the Geneva agreement included commitments to curb the use of other trade restrictions, such as import quotas and preferential treatment of imports from one country as against those from another.

This agreement is a landmark in international economic relations. Never before have so many nations combined in such an intensive effort to reduce barriers to trade. While it will be some time before the benefits of the agreement can be fully felt, it is clear that it will make a substantial contribution to the expansion of world trade and to the recovery of the world economy.

We expect that many other countries will wish to join the Geneva agreement. The continuance of the Reciprocal Trade Agreements Act is necessary to enable the United States to play its part in extending this reduction of trade barriers to these other countries. Furthermore, we shall need the authority of the act to make appropriate revisions in the Geneva agreement as they are made necessary by changing world conditions.

The trade-agreements authority will also be needed to enable us, in concert with other nations, to carry out the International Trade Organization charter, now being completed at Habana. The United States has actively sponsored the creation of this Organization to encourage the conduct of trade between nations on fair and liberal principles and to provide a forum where nations can consult on points of economic difference and on cooperative measures to solve common economic problems. The proposed charter, which will be presented to the Congress at a later date, includes as one of its cardinal points the undertaking that all member countries will stand ready to negotiate for the reduction of tariffs and other trade barriers on a reciprocal and mutually advantageous basis. The extension of the Reciprocal Trade Agreements Act will enable us to carry out this undertaking.

For all these reasons I am convinced that we should continue the Reciprocal Trade Agreements Act. The positive benefits to world trade, to United States export industries and agriculture, and to our domestic consumers are beyond question. Furthermore, we need have no fear of serious harm to any domestic producer. An expanding foreign trade promotes the most efficient use of our productive resources and contributes to the growing prosperity of the whole Nation.

In addition, the interests of domestic producers are carefully protected in the negotiation of each trade agreement. I assured the Congress, when the Reciprocal Trade Agreements Act was last extended in 1945, that domestic producers would be safeguarded in the process of expanding trade. That commitment has been kept. It will continue to be kept. The practice will be continued of holding extensive public hearings to obtain the view of all interested persons before negotiations are even begun. The practice will be continued whereby each agreement before its conclusion will be carefully studied by the Departments of State, Treasury, Agriculture, Commerce and Labor, the National Military, Establishment, and the United States Tariff Commission. Finally, each agreement will continue to include a clause which will permit withdrawal or modification of concessions if, as a result of unforeseen developments and of the concessions, imports increase to such an extent as to cause or threaten serious injury to domestic producers.

The Reciprocal Trade Agreements Act is a tested and practical means, which has wide bipartisan support, for achieving the benefits of expanding world commerce for the United States and for other countries. It is a continuing evidence of the determination of the United States to contribute its full share to the reconstruction of a sound and growing world economy as the basis for enduring peace. As such, I strongly recommend that the act be extended for an additional 3 years.

HARRY S. TRUMAN