The Escape Clause and Peril Points Under the Trade-Agreements Program
The most important legislative limitations on the power of the President to negotiate tariff reductions under the Trade Agreements Act have been the escape-clause and peril-point provisions. These provisions, however, are statutory formulations of the principle of no serious injury to domestic industries which has underlaid the trade-agreements program since its beginning. This chapter deals with (1) the formalization of escape-clause and peril-point procedures; (2) the administration of the escape-clause and peril-point provisions; and (3) an assessment of these provisions. An account of the outcome or current status of all escape- clause investigations is contained in an appendix.
The principle that trade-agreements concessions should not and would not be made for the purpose or with the anticipation of doing "serious injury" to a domestic industry has been present since the original enactment of the trade-agreements law in 1934. This concept was implicit in the manner in which the legislation contemplated that tariff negotiations would be conducted, i.e., on a selective, product-by-product basis. It was elaborated on in the Congressional hearings during which Administration spokesmen promised to avoid damage to domestic industries.
From 1934 to 1942 the methods of avoiding damage took the form of (a) interdepartmental administrative procedures designed to assure the careful weighing of facts and probabilities with respect to proposed tariff concessions; (b) the use of qualified concessions, i.e., tariff reductions on foreign merchandise limited to types, qualities, quantities, grades, or seasonal periods of importation, which offered less competition with domestic production than unqualified concessions would have; (c) the use of special escape clauses aimed at specific risks, such as foreign currency devaluations, which encouraged imports by lowering their prices in terms of dollars; and (d) willingness to renegotiate concessions that occasionally turned out to be more painful than had been expected.