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Economy - Trade Meat Imports (2)
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Economy - Trade Meat Imports (2)
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Philip W. Buchen Files
Philip Buchen's General Subject Files
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The original documents are located in Box 11, folder "Economy - Trade Meat Imports (2)"
of the Philip Buchen Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 11 of the Philip Buchen Files at the Gerald R. Ford Presidential Library
FOREIGN-TRADE ZONES BOARD
UNITED STATES DEPARTMENT OF COMMERCE
WASHINGTON, D.C.
:
In Re:
Foreign-Trade Zone No. 7,
:
Mayaguez, Puerto Rico;
:
Investigation pursuant to
:
15 CFR $400.807 & $400.1302
:
Docket No. 6-76
to determine whether certain
:
meat processing operations
:
are detrimental to the
:
public interest.
:
:
TO: EARL L. BUTZ
Secretary,
and your agents having relevant information
United States Department of Agriculture,
Washington, D. C.
REQUEST FOR TESTIMONY AND DOCUMENTS
YOU ARE HEREBY REQUESTED by the undersigned representative
of a party to this proceeding to appear in Room 4833 of the
main building, United States Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D. C., at
10 A.M. on August 24, 1976, and there to give testimony concerning
the following matters:
BERALD FORD LIBRARY
-2-
A.
All events and materials contributing to your
determination to send the letter of July 13, 1976
addressed to Elliot L. Richardson, a copy of
which is attached hereto and which is hereinafter
referred to as "the July 13 letter"; which events
and materials shall include, but not be limited
to:
1.
All consideration by you, your superiors, or
your subordinates of:
(a) complaints and desires of representa-
tives of the beef production and
processing industries in the United
States;
(b) the application for a grant of authority
to establish special trade zones at New
Orleans and Metairie, Louisiana;
(c) the impact of the action requested in
the July 13 letter on the Commonwealth
of Puerto Rico and its citizens;
(d) the impact of that action on Common-
wealth Processing Corporation;
(e) the impact of that action on El Ganadero,
Inc. and its employees;
(f) the impact of that action on the
stability of contracts entered into
FORO i LIBRARY GERALD
between the Puerto Rico Industrial
-3-
Development Company ("PRIDCO") and
businesses operating within Foreign-
Trade Zone No. 7 at Mayaguez, Puerto
Rico;
(g) the impact of that action on economic
development within Foreign-Trade Zone
No. 7;
(h) the impact of that action on the price
of meat in United States markets;
(i) the impact of that action on prices
paid for meat by American consumers in
the United States;
(j) the effect on the domestic meat produc-
tion and processing industries during
the period 1970 - date of the entry
into the United States customs territory
of meat processed within Foreign-Trade
Zone No. 7;
(k) the future effect on the domestic meat
production and processing industries / of
actions which would limit or exclude
the entry into the United States
customs territory of meat processed
within Foreign-Trade Zone No. 7.
2. All contacts with representatives of:
(a) the domestic meat production and
FORD i LIBRARY GERALD
processing industries in the United
States;
-4-
(b) the Commonwealth of Puerto Rico;
(c) Commonwealth Processing Corporation;
(e) Bunker Hill Packing Corporation of
Bedford, Virginia;
(f) El Ganadero, Inc. ;
(g) PRIDCO;
(h) consumer interests in the United States;
(i) the Foreign-Trade Zones Board or its
staff;
(j) the United States Department of Treasury
and the United States Customs Service;
(k) the United States Department of State;
(1) the Port or City of New Orleans.
3.
All statistics concerning:
(a) the economics of the domestic meat pro-
duction and processing industries since
1930;
(b) imports of processed and unprocessed
meat into the customs territory of
United States from foreign countries
during the period 1970 - date;
(c) exports of processed and unprocessed
met from the customs territory of the
United States to foreign countries
during the period 1970 - date;
(d) imports into the customs territory of
QERALD FORD LIBRARY
the United States of live and slaughtered
-5-
beef cattle from the countries of
Canada and Mexico, during the period
1970 - date;
(e) operations within Foreign-Trade Zone
No. 7 during the period 1961 - date;
(f) operations of Commonwealth Processing
Corporation during the period 1970 -
date;
(g) operations of El Ganadero, Inc. during
the period 1975 - date;
(h) import of foreign meat to Foreign-Trade
Zone No. 7 during the period 1970 -
date;
(i) shipment of meat processed within
Foreign-Trade Zone No. 7 into the
customs territory of the United States
during the period 1970 - date;
(j) the effect on the United States domestic
meat production and processing industries
during the period 1970 - date of the
entry into the United States customs
territory of meat processed within
Foreign-Trade Zone No. 7;
(k) effect on the domestic meat production
and processing industries in the future
of the limitation or exclusion of meat
BERALD FORD LIBRARY
processing within Foreign-Trade Zone
No. 7;
(1) the importation into the customs
territory of the United States of beef
of all descriptions, both live and
slaughtered, from the countries of
Canada and Mexico, during the period
1970 - date;
(m) the exportation from the customs
territory of the United States of beef
falling within any classification of
TSUS, Schedule 1, Part 2, during the
period 1970 - date;
(n) all possible causes of the recession
referred to in the July 13 letter.
4.
All statistics, opinions and considerations
on which were based the statements in the
July 13 letter, as contained in 112-7 of
that document.
5.
All statistics, materials, opinions and
considerations which relate to any belief
held by you, your superiors, or the United
States Department of Agriculture that the
Foreign-Trade Zones Board must act on the
matters stated in the July 13 letter on or
before August 30, 1976.
6.
Any consultation concerning the political
results of sending the July 13 letter and
GERALD LIBRARY FORD
attempting to limit or to exclude the meat
-7-
processing operations currently conducted or
planned in Foreign-Trade Zone No. 7.
7.
All materials, conferences, statistics and
information relating to your publication of a
proposed regulation concerning the importation
of meat into the United States, in the Federal
Register of August 17, 1976.
B.
All statistics, materials, opinions and considera-
tions which you or the United States Department
of Agriculture consulted, rejected, or relied
upon in defining the "public interest" referred
to in the July 13 letter and the submission of
the United States Department of Agriculture to
the Foreign-Trade Zones Board dated August 6,
1976.
C.
All statistics, materials, opinions and considera-
tions which you or the United States Department
of Agriculture consulted, rejected or relied upon
in preparing the July 13 letter, concerning the
following matters:
1.
The power or authority of the United States
Department of Agriculture to avert adverse
affects on the United States domestic meat
production and processing industries which
were described in the July 13 letter.
2.
The power or authority of the United States
Department of Agriculture to determine
GERALD FORD LIBRARY
-8-
"public interest" as that term is set forth
in §15 (c) of the Federal Trade Zones Act, 19
U.S.C. 81o (c).
3.
The power or authority of the United States
Department of Agriculture to take any action
concerning:
(a) entry into the United States customs
territory of meat processed in foreign
trade zones;
(b) meat processing operations in foreign
trade zones;
(c) the entry of meat into foreign trade
zones from foreign countries;
(d) implementation of the Meat Import Act.
D.
All statistics, materials, opinions and considera-
tions concerning the monitoring, inspection or
approval of meat processing operations in foreign
trade zones, and in Foreign-Trade Zone No. 7
particularly.
E.
All other information relating in any manner to
the assertion by the United States Department of
Agriculture that meat processing operations in
Foreign-Trade Zone No. 7 should be "limited" or
"excluded" under the Foreign-Trade Zones Act.
BERALD FORD LIBRARY
AND YOU ARE FURTHER REQUESTED to bring with you the following
documents:
-9-
A. All documents, materials or other tangible objects
relating in any manner to the testimony described
above.
B.
Copies of all letters, memoranda or correspondence
from representatives of the United States cattle
industry and United States Representatives to you,
your superiors or your supordinates concerning the
subjects described above.
AND YOU ARE FURTHER REQUESTED to advise the undersigned on
or before 12 o'clock P.M., August 20, 1976 (a) whether you will
comply with this request, and (b) if not, whether you will
designate any other responsible representative of your agency
to undertake such compliance.
Huart Stuart F. Pierson 7.Punion
Verner, Liipfert, Bernhard,
McPherson and Alexander
Suite 1100
1660 L Street, N.W.
Washington, D.C. 20036
(202) 452-7444
Counsel for the Puerto Rico
Industrial Development Company
This request was delivered by Deborah L. Wale , by
hand, at 3:40pm on august 18, 1976.
FORD : LIBRARI 03RALD
CC: Foreign -Trade Zones Board
MEMORANDUM
OF CALL
TO:
260/
YOU WERE CALLED BY-
YOU WERE VISITED BY-
OF
361 (Organization) EOB
PHONE NO.
PLEASE CALL
CODE/EXT.
WILL CALL AGAIN
IS WAITING TO SEE YOU
RETURNED YOUR CALL
WISHES AN APPOINTMENT
MESSAGE
Boh Hormats
X 3393
FORDO LIBRARY
Re Mayaguez paper
RECEIVED BY
defed to Scowcraft
DATE
TIME
STANDARD FORM 63
GPO 332-889
63-108
REVISED AUGUST 1967
GSA FPMR (41 CFR) 101-11.6
MEMORANDUM
OF CALL
TO:
YOU WERE CALLED BY-
YOU WERE VISITED BY-
OF Meat
(Organization) proclamation
has feen
PLEASE CALL
CODE/EXT. PHONE NO. signed
WILL CALL AGAIN
IS WAITING TO SEE YOU
RETURNED YOUR CALL
WISHES AN APPOINTMENT
MESSAGE
FORD i LIBRARY QERALD
RECEIVED BY
DATE
TIME
STANDARD FORM 63
GPO :1969-c48-16-60341-1 832-389
63-108
REVISED AUGUST 1967
GSA FPMR (41 CFR) 101-11.6
THE WHITE HOUSE
WASHINGTON
INFORMATION
September 1, 1976
MEMORANDUM FOR THE PRESIDENT
FROM:
PHILIP W. BUCHEN
SUBJECT: Australian Meat Processed in the Puerto Rican
Foreign Trade Zone on the Island of Mayaguez
BACKGROUND
Australia entered into an agreement with the United
States to limit its meat exports to the United States
for the calendar year 1976. The agreement was so
worded that meat coming from Australia which was
processed within the foreign trade zone of Puerto
Rico could not be counted against the limits imposed
by the Australian agreement even though the processed
meat went into U. S. markets.
To overcome the consequences of the indirect imports in-
to the U. S., the Administration requested the Foreign
Trade Zones Board within the Department of Commerce to
initiate a hearing which at its conclusion could have
resulted in a prohibition or limitation on use of the
Foreign Trade Zone Board for the purpose of processing
meat. However, pending the notice of hearing, the
affected parties went into Federal Court in Roanoke,
Virginia to secure a temporary restraining order
against having the Board proceed.
Subsequently, the Department of Agriculture proposed
regulations under the Meat Import Act which would
have the effect of requiring all indirect imports of
Australian meat to be counted against both the
statutory maximum quotas under the Meat Import Act
and the voluntary quotas under trade agreements such
as that with Australia.
LIBRARY GERALD ? FORD
2
With the publication of these proposed regulations,
the concerned parties amended their complaint in the
Roanoke case to seek injunctive relief also against
the proposed Agriculture order. At a hearing of the
Court on August 23, the Judge deferred making any
further ruling until September 14 and urged the
private parties and the government to try in the
meantime to work out a settlement.
CURRENT DEVELOPMENTS
In the face of the delay imposed by the Court, the
Department of Agriculture and the Department of
State began negotiations anew with Australia to
secure an amendment to its trade agreement. This
amendment would have the effect of requiring that
meat exported in the future by Australia into the
Puerto Rican Trade Zone and then into the U.S. be
counted against its present export limits under the
trade agreement. Australia has indicated its
willingness to accept such an amendment, but it is
still arguing that the contents of 1 shipment already
made to Mayaguez that arrived August 16 and two
others scheduled to arrive respectively on
September 15 and October 15 should not be counted.
Agriculture believes that an agreement is possible
that will not exempt the third of such shipments,
and representatives of the U.S. Cattlemen Industry
have been so advised. These representatives did
consult with Speaker Albert today to seek his
assistance, and this visit resulted in the Speaker's
call to you. Secretary Butz is meeting with the
Cattlemen representatives tomorrow afternoon
(September 2, 1976), and he hopes to get their con-
currence in an agreement which would require counting
all meat imported through Mayaguez starting with the
shipment due to arrive October 15.
I will keep you advised of further developments.
FORD : LIBRARY BERALD
THE WHITE HOUSE
WASHINGTON
September 2, 1976
ADMINISTRATIVELY CONFIDENTIAL
MEMORANDUM FOR:
PHIL BUCHEN
FROM:
JIM CONNOR E 6
SUBJECT:
Australian Meat Processed in the
Puerto Rican Foreign Trade Zone
on the Island of Mayaguez
The President reviewed your memorandum of September 1 on the
above subject and made the following notation:
"October 15th shipment must be counted.
Suggest someone brief Speaker Albert"
Please follow-up with appropriate action.
cc: Dick Cheney
Brent Scowcroft
GERALD FORD VIBRABA
THE WHITE HOUSE
WASHINGTON
September 15, 1976
ADMINISTRATIVELY CONFIDENTIAL
MEMORANDUM FOR:
BILL SEIDMAN
FROM:
JIM CONNOR JEE
The President recently asked the following question:
"Where do we stand on meat imports
and the Puerto Rican case?"
We understand that you are working on this matter. Please
prepare an appropriate response for the President.
cc: Dick Cheney
Phil Buchen
FORD : LIBRARY BERALD
THE WHITE HOUSE
WASHINGTON
September 16, 1976
ADMINISTRATIVELY CONFIDENTIAL
MEMORANDUM FOR:
PHIL BUCHEN
FR OM:
JIM CONNORGEE
or
SUBJECT:
Australian Meat Processed in
the Puerto Rican Foreign Trade
Zone on the Island of Mayaguez
The Pre sident reviewed your memorandum of September 17
on the above subject and made the following notations:
"Very discouraging.
Legislation - can't it be done?
If no action why don't we lower the import quota
and the trigger point?"
Please follow-up with appropriate action,
cc: Dick Cheney
Bill Seidman
FORD is LIBRARY GLARLD
ADMINISTRATIVELY CONFIDENTIAL
THE WHITE HOUSE
WASHINGTON
September 17, 1976
MEMORANDUM FOR. THE PRESIDENT
FROM:
PHILIP W. BUCHEN
T.
SUBJECT: Australian Meat Processed in the Puerto Rican
Foreign Trade Zone, on the Island of Mayaguez
BACKGROUND
On September 1, I sent you the memorandum which appears
at TAB A.
CURRENT SITUATION
James D. Keast, General Counsel, Department of
Agriculture, has supplied me with an updated
report on the situation which appears at TAB B.
The substance of this report is that all our efforts
to deal with the situation through action by the
Foreign Trade Zone Board, through regulations by the
Department of Agriculture and through negotiations
with Australia have been frustrated. These efforts
are all tied up in court litigation, and it will be
impossible to get the court action resolved in time
to correct the situation for the few months remaining
in this calendar year. However, the Department of
Agriculture will make a final effort to get correc-
tive legislation which will avoid a recurrence of
this situation in the future.
Attachments
CC: Richard Cheney
William Seidman
FORDO & LIBRARY OFRALD
THE WHITE HOUSE
WASHINGTON
INFORMATION
September 1, 1976
MEMORANDUM FOR THE PRESIDENT
FROM:
PHILIP W. BUCHEN
SUBJECT: Australian Meat Processed in the Puerto Rican
Foreign Trade Zone on the Island of Mayaguez
BACKGROUND
Australia entered into an agreement with the United
States to limit its meat exports to the United States
for the calendar year 1976. The agreement was so
worded that meat coming from Australia which was
processed within the foreign trade zone of Puerto
Rico could not be counted against the limits imposed
by the Australian agreement even though the processed
meat went into U. S. markets.
To overcome the consequences of the indirect imports in-
to the U. S., the Administration requested the Foreign
Trade Zones Board within the Department of Commerce to
initiate a hearing which at its conclusion could have
resulted in a prohibition or limitation on use of the
Foreign Trade Zone Board for the purpose of processing
meat. However, pending the notice of hearing, the
affected parties went into Federal Court in Roanoke,
Virginia to secure a temporary restraining order
against having the Board proceed.
Subsequently, the Department of Agriculture proposed
regulations under the Meat Import Act which would
have the effect of requiring all indirect imports of
Australian meat to be counted against both the
statutory maximum quotas under the Meat Import Act
FORD
and the voluntary quotas under trade agreements such
as that with Australia.
LIBRARY
2
With the publication of these proposed regulations,
the concerned parties amended their complaint in the
Roanoke case to seek injunctive relief also against
the proposed Agriculture order. At a hearing of the
Court on August 23, the Judge deferred making any
further ruling until September 14 and urged the
private parties and the government to try in the
meantime to work out a settlement.
CURRENT DEVELOPMENTS
In the face of the delay imposed by the Court, the
Department of Agriculture and the Department of
State began negotiations anew with Australia to
secure an amendment to its trade agreement. This
amendment would have the effect of requiring that
meat exported in the future by Australia into the
Puerto Rican Trade Zone and then into the U.S. be
counted against its present export limits under the
trade agreement. Australia has indicated its
willingness to accept such an amendment, but it is
still arguing that the contents of 1 shipment already
made to Mayaguez that arrived August 16 and two
others scheduled to arrive respectively on
September 15 and October 15 should not be counted.
Agriculture believes that an agreement is possible
that will not exempt the third of such shipments,
and representatives of the U.S. Cattlemen Industry
have been so advised. These representatives did
consult with Speaker Albert today to seek his
assistance, and this visit resulted in the Speaker's
call to you. Secretary Butz is meeting with the
Cattlemen representatives tomorrow afternoon
(September 2, 1976), and he hopes to get their con-
currence in an agreement which would require counting
all meat imported through Mayaguez starting with the
shipment due to arrive October 15.
I will keep you advised of further developments.
CC: Jack Marsh
Bill Seidman
BERALB FORD LIBRARY
DEPARTMENT OF AGRICULTURE
OFFICE OF THE GENERAL COUNSEL
WASHINGTON, D.C. 20250
September 16, 1976
TO: Philip Buchen
Counsel to the President
FROM: James D. Keast
General Counsel, USDA
Per your telephone request, this is an update on the matter involving
processing of meat through Mayaguez, Puerto Rico. By way of review,
the Secretary of Agriculture on July 13, 1976, wrote Secretary Elliot
Richardson and asked that the Foreign Trade Zone Board (FTZB) be
convened to consider excluding meat being processed in the Foreign
Trade Zone (FTZ) at Mayaguez, Puerto Rico. Commonwealth Processing
Corp., a licensee in the FTZ, filed suit in the Federal District
Court, Roanoke, Virginia, asking the Court for a temporary restraining
order (TRO) enjoining the FTZB hearing. The Court issued the TRO.
The FTZ permittee, Puerto Rico Industrial Development Co., and
E1 Ganadero, Inc., another licensee, moved to intervene and enjoin the
implementation of the Secretary of Agriculture's August 17 proposed
regulations, under which meat being processed in the FTZ would be
counted against the voluntary restraint agreements -- an action
primarily directed at Australia. The Court granted the motion to
intervene and extended the TRO on the FTZB hearing. In addition,
the Court ordered the taking of depositions to include Secretary Earl
L. Butz, Assistant Secretary Richard E. Bell, a designee of Secretary
William E. Simon, and a designee of Secretary Henry A. Kissinger
(State Department having been joined as a defendant).
With agreement of the plaintiffs, the depositions, Court hearings and
the FTZB hearings have been continued. Attempts have been made to
renegotiate the voluntary restraint agreement with Australia to include
provisions relative to the FTZB problem which would be satisfactory
to USDA. Senator Carl Curtis, among several legislators, has intro-
duced legislation which would count meat processed in FTZs against
voluntary restraint agreements and under the Meat Import Act.
Satisfactory renegotiation of the voluntary restraint agreement with
Australia has not come about. On September 15, at a meeting between
representatives of the State Department, Justice and Agriculture, we
reviewed various options, keeping in mind scheduled depositions of
Cabinet and sub-Cabinet Officers commencing Monday, September 20. The
options considered were:
GERALD FORD LIBRARY
Page No. 2
Philip Buchen
(1) Accept the Australian proposal.
(2) Rely on legislation.
(3) Imposing quotas under the Meat Import Act, as of
October 1, assuming the trigger level would be reached.
Consultation with Senator Curtis' office indicated a high probability
of satisfactory legislation. We had incomplete information on whether
the estimates of meat being imported for the balance of the calendar
year would reach the trigger level under the Meat Import Act, though
it appeared quite close.
The lawsuit in Roanoke had all prospects of being drawn out through
the end of the year, during which time the licensees in the FTZ
would continue to process meat outside of the restraint agreement.
Even if the FTZB was permitted to hold a hearing, the result would
likely be to permit processing of meat under contract and would not
satisfy our desired objectives. All these factors resulted in our
conclusion that continued litigation would not provide the desired
results. Therefore, on September 15, we took the following action:
(1) Assistant Secretary Bell wrote Secretary Richardson
withdrawing the request for the FTZB hearing.
(2) USDA filed a notice for publication in the Federal
Register, withdrawing its August 17 proposed regulations.
(3) Filed a motion with the Court to dismiss the lawsuit
on the basis it is now moot.
It was decided to:
(1) Rely on legislation to prevent the processing of meat
through Mayaguez.
(2) Continue to monitor and review estimates of imports
and be prepared to impose quotas under the Meat Import
Act, if the estimates indicate such action is required.
Secretary Butz and Assistant Secretary Bell participated in these
decisions and concur.
Dear Mr. Chairman:
I write to comment on a proposal to amend P.L. 88-482
to deal with meat processed in foreign trade zones and sub-
sequently entered into the customs territory of the United
States.
At the direction of the President, the Department of
State has negotiated voluntary restraint agreements with the
governments of eleven major meat exporting countries. These
agreements have the effect of limiting the quantity of meat
in tariff categories 106.10 and 106.20 which enters the
customs territory of the United States for consumption.
During 1976 a significant quantity of meat which would
otherwise have been subject to the voluntary restraint
agreements has been processed in a foreign trade zone and
thereby transformed prior to entry into the customs territory
of the United States into a tariff classification not covered
by the agreements. This practice, permissible under the
Foreign Trade Zones Act, has resulted in an evasion of the
voluntary restraint program that the Department of State
considers contrary to the public interest as expressed in
the Meat Import Act, P.L. 88-482.
Accordingly, we and other agencies have sought means to
resolve the apparent conflict between the provisions of the
Meat Import Act and the Foreign Trade Zones Act. The efforts
of the Administration to this end have been frustrated by
the prospect of prolonged litigation. Largely as a result
of confusion stemming from the legal status of administrative
approaches to problems raised by meat processing in foreign
trade zones, it has also not been possible to resolve the
problem by negotiations to the voluntary restraint agree-
ments.
The Honorable
Russell B. Long, Chairman
Committee on Finance,
United States Senate.
GERALD FORD LIBRARY
-2-
Recognizing that the available administrative and
diplomatic means for treating this problem have been exhausted,
the Department of State would have no objection to appropriate
legislation to deal with it. It would be necessary that
such legislation be drafted in a manner that would not place
the United States in violation of existing restraint agree-
ments negotiated and concluded in good faith by the govern-
ments of eleven foreign countries.
We believe that proper language could be found to deal
effectively with the problem under review in a manner
consistent with the international obligations of the United
States. The Department of State is prepared to work urgently
with the committee's staff to draft appropriate legislation.
Sincerely,
Julius L. Katz
Assistant Secretary, Designate
for Economic and Business Affairs
Drafted: EB/OFP/FPD:PDTaylor:js
9/20/76 Ext. 23036
Cleared: EB/AWatson
L/EB:GRosen
FORD it LIBRARY
Meeting
Monday 9/20/76
9/20/76
11:30 a.m.
10:50 Jane advises that you plan to attend
the meeting on the meat situation.
It will be held at 11:30 a,m. today
(Monday 9/20) in Bill Seidman's office.
FORD is LIBRARI QENALD
THE WHITE HOUSE
WASHINGTON
October 6, 1976
MEMORANDUM FOR PHILIP BUCHEN
JAMES CANNON
MAX FRIEDERSDORF
JOHN O. MARSH
FROM:
ROGER B. PORTER RBP
SUBJECT:
Meat Imports
Attached is an options paper for the President regarding
meat imports.
I would appreciate having your comments and recommendations
by close of business today, Wednesday, October 6. (Phone: 456-6420)
Thank you very much.
4537
Called Parter on 10/7/76
and recommended Opten /
Attachment
appeal would be structured
if answer to Cresident's
favorably austrabans in advance
P.
LIBRARY GERALD R. FORD
DRAFT
October 6, 1976
MEAT IMPORT OPTIONS
I. PROBLEM
Under the Meat Import Law quotas are triggered this year if the
estimate of the level of imports exceeds 1,233 million pounds. The
U.S. has sought to avoid imposition of quotas as this would place
the USG in violation of international agreements and its GATT obliga-
tions. To ensure that imports do not reach the trigger level, the
USG has negotiated voluntary export restraint agreements (VRAs) with
11 supplying countries. Canada has been excepted from the VRA program
because of the traditional open border on US/Canadian beef trade.
The Secretary's fourth quarterly estimate which was due October 1
has not been announced yet due to uncertain information and the out-
come of efforts to plug the loophole in this year's program caused
by meat processing operations in the Foreign Trade Zones and U.S.
trust territories. The Department of Agriculture which has the
responsibility for making the estimate of meat imports under the Law
feels strongly that a credible estimate below the trigger level (i.e.
1,233 million pounds) can no longer be made because of increased
imports from Canada unless the State Department can obtain assurances
from foreign supplier countries so that U.S. imports from them will
not be such that the 1976 trigger level will be reached. The
Department of State differs with the interpretation of factors
affecting imports from Canada, Mexico and certain Caribbean countries
and, therefore, believes an estimate below the trigger level is
plausible. The following Policy options are available for consideration.
FORD : LIBRARY
2
Option I: Diplomatic Option and Administration Initiatives:
This option involves diplomatic approaches to Australia and
other supplying countries to obtain assurances (written amendment)
that total imports will not exceed the trigger level and that no more
meat will be shipped in circumvention of the VRA program of 1976. 11/
Pros -
(1) Avoids imposition of quotas.
(2) Avoids action inconsistent with GATT obligations.
(3) Avoids the possibility of retaliation, especially by Canada.
Cons -
(1) Further delays Secretary of Agriculture's fourth quarterly
estimate on meat imports.
(2) May not be acceptable to livestock industry.
(3) It may be difficult to obtain cooperation of supplying
countries.
(4) Would require VRAs to be amended, particularly with Australia.
Option II: Impose quotas; issue regulations to prevent circumvention.
a) At 1,233 million pounds.
Pros -
(1) Would have maximum support of domestic livestock industry.
(2) Does not require negotiations with any foreign government.
(3) Would meet requirements of the Meat Import Law.
Cons -
(1) Would violate VRAs, particularly the VRA with Mexico.
1/ Details of this Option are contained in Attachment A.
FORD : 938870 LIBRARY
3
(2) Regulations to deal with Foreign Trade Zones might
be delayed or overturned in court.
(3) Would place U.S. in violation of the GATT obligations and
could result in possible requirements for compensation or
retaliation by foreign governments.
(4) Would prejudice our trade liberalization objectives in the
MTN.
b) Above 1,233 million pounds.
Pros -
(1) Would minimize damage to exporting country interests;
specifically would permit countries to ship their restraint
quantities.
(2) Does not require cooperation of any foreign government.
Cons -
(1) Would be vigorously opposed by the cattlemen.
(2) All cons in Option II above, except Con 1.
LIBRARY GERALD R. FORD
1
ATTACHMENT A
Option I: Diplomatic and Domestic Initiatives Option
The President would:
(1) Personally contact Prime Minister Fraser
(a) to explain the political difficulties engendered
by the processing of imported Australian meat
at Mayaguez and
(b) to ask the Government of Australia to refrain
from further shipments to Mayaguez this year,
and to limit direct shipments to the U.S. so
that exports will be 11 million pounds below
the agreed restraint level. (I.e., Australia
would accept a reduction in exports from 632.2
to 621.2 million pounds to allow for the 11 million
pounds of Australian meat which arrived recently
at Mayaguez.)
(2) Direct the State Department to make diplomatic
demarches with the other countries participating in the meat
import program to ensure that none of them begin using the
free trade zone loophole.
(3) Direct that negotiations begin on November 15 for the
1977 meat import program, and instruct that assurances be sought
from all exporting countries that the FTZ loophole will not
be used.
(4) Announce that he will introduce in the next session
of the Congress an amendment to the Meat Import Act (along
the lines of the Curtis Amendment, which passed the Senate 9.
GERALD FORD LIBRART
- 2 -
few days ago but failed in the House) to permanently close
the FTZ loophole.
(5) Direct the Special Trade Representative to actively
and aggressively continue efforts to reduce barriers to U.S.
beef exports (a) in the multilateral trade negotiations, and
(b) in bilateral contacts with major importing nations.
(6) Direct the Department of Agriculture to expand its
beef export market development programs, in cooperation with
the U.S. Meat Export Federation.
(7) Direct the Secretary of Agriculture to place special
emphasis during the next several months on the use of beef in
school lunch and other food distribution programs.
(8) Direct the Secretary of Defense to carefully explore
possibilities for larger U.S. beef purchases for military needs
at home and abroad.
(9) Direct the Secretary of Agriculture to re-evaluate
the financing capabilities of the Farmers Home Administration
to make sure that it can respond to the needs of cattlemen who
are unable to obtain commercial financing.
(10) Direct Presidential Consumer Affairs Advisor Virginia
Knauer to mobilize efforts of the Administration to inform the
American public of the availability of beef at attractive prices
now and well into the future.
(11) Establish a Beef Industry Task Force chaired by the
Secretary of Agriculture, and including as members L. William
Seidman, Assistant to the President for Economic Affairs;
FORD R: GERALE LIBRARY
- 3 -
John Marsh, Counselor to the President; Julius Katz, Assistant
Secretary of State for Economic and Business Affairs; Clayton
Yeutter, Deputy STR; Virginia Knauer, Consumer Affairs Advisor,
that will meet immediately with leaders of the cattle industry
to explain these initiatives and ask for any further suggestions
as to how the Administration might help in responding to their
severe economic problems.
(12) Direct the Secretary of Agriculture to brief the
media on the initiatives that are taken. Briefings would be
held in Washington, D.C. and other appropriate locations.
FORD : LIBRARY QERALD
BACKGROUND PAPER
TABLE OF CONTENTS
Page
1. U.S. Livestock Situation
2
2. Difficulties with 1976 Program
3
3. Fourth Quarterly Estimate
4
FORD i UERALD LIBRARY
Background
The Department of Agriculture has responsibility under the Meat
Import Law to make quarterly estimates of the quantity of meat (fresh,
chilled or frozen beef, veal, mutton and goat meat) which will be im-
ported into the United States in any given calendar year.
The Law requires the President to restrict imports of meat to an
adjusted base level if the Secretary of Agriculture estimates that annual
imports of such meat equal or exceed 110 percent of the adjusted base in
any of his four quarterly estimates.
To date in calendar year 1976 the first three estimates made under
the Act have not exceeded 1,233.0 million pounds, 110 percent of the 1976
adjusted base. The Secretary's previous estimates were based upon volun-
tary restraint agreements negotiated by the Department of State with
principal supplying countries limiting their imports to 1,155 million
pounds. Imports from countries not participating in the voluntary restraint
program--Canada, the United Kingdom, Ireland, and Belize--were estimated at
69 million pounds, bringing the total estimated imports for the year to
1,223 million pounds--10 million below the 1976 trigger quantity.
The Secretary's fourth quarterly estimate which was due October 1 has
not been announced yet due to uncertain information and the outcome of
efforts to plug the loophole in this year's program caused by meat process-
ing operations in the Foreign Trade Zones and U.S. trust territories.
2
Meat Import Options
1. U.S. Livestock Situation
At the end of 1974, several circumstances encouraged a return to a
restraint program after 2-1/2 years of suspended quotas. Declining beef
prices moderated consumer discontent while causing serious economic dis-
tress in the cattle industry. Given higher feed prices caused by short
1974 crops, there was concern that COW herd liquidation would lead to
an insufficient base for increasing beef supplies when demand conditions
warranted. At the same time, the existence of import barriers amounting
to almost total bans in the other major consuming areas, the EC and Japan,
left the U.S. market particularly vulnerable to a surge in imports from
meat exporting countries. This concern was heightened by record cattle
inventories in major supplying countries, particularly Australia and New
Zealand. These circumstances continued throughout 1975.
In 1975 record slaughter levels in the U.S. were enough to reduce the
cattle herd at the beginning of 1976 by 4 million head, the first year to
year decline since 1967. Beef COW inventories were down almost 2 million
head, the first decline in 20 years. Herd liquidation is continuing in
1976. After a brief period of profits in 1975 cattle feeders have been
operating in the red since January. Most cow-calf operators probably
have not been able to cover all costs of raising cattle since 1973.
Returns to cow-calf producers are particularly important because imported
beef substitutes most directly for domestic COW beef.
Through the first 7 months of this year U.S. beef and veal production
was running about 11 percent above the same period a year earlier. Con-
tinued herd liquidation is expected during the remainder of the
year. LIBRARE
3
Limitations on the importation of meat are considered necessary to
assist in the economic recovery of the livestock industry.
2. Difficulties with 1976 Program
Earlier this year the Department of State completed a program of
voluntary agreements with principal supplying countries to limit imports
to 1,155 million pounds. However, this program has come under criticism
with regard to the processing of beef in Foreign-Trade Zones. Boned
frozen meat shipped from countries signatory to the restraint agreements
is being processed in the Foreign-Trade Zone at Mayaguez, Puerto Rico,
and in U.S. trust territories to change its form so that at the time of
its entry into the customs territory of the United States it is no longer
the fresh, chilled, or frozen beef in TSUS item 106.10 despite the fact
that it has only been shredded, chopped, or otherwise superficially
processed. Through September 18, approximately 37 million pounds of
such beef has entered the Foreign Trade Zone for processing (31 million
from Australia and 6 million from New Zealand). Imports of meat this year
through the Foreign-Trade Zone at Mayaguez are expected to reach 55 mil-
lion pounds.
We have made several efforts to resolve the problem of Mayaguez meat
but without satisfactory results. A proposed Foreign-Trade Zone Board
investigation and a proposed USDA regulation were both challenged in
court and ultimately withdrawn by the government when it appeared that
as a result of litigation, neither could produce an expeditious solution.
The Australians agreed to amend their restraint agreement to cover
pective shipments to Mayaguez, but would not agree to cover all meat
Dr. FORD in LIBRARY
4
transit to the zone. Finally, an attempt to have Congress amend the
Meat Import Law was defeated at the close of the last session.
3. The Fourth Quarterly Estimate
The chief areas of doubt concerning the estimate of total U.S.
imports are imports from Canada (which are not subject to a restraint
agreement) and the degree of shortfall in imports from Mexico.
Because of uncertainty about imports from these countries, the estimate
in the Department of State's opinion could be as low as 1,227 million
pounds (6 million pounds below the quota trigger). Agriculture, how-
ever, which has the responsibility for making the estimate, is estimating
that imports will reach 1,250 million pounds (17 million pounds over the
quota trigger) if no further diplomatic action is taken to limit imports.
FORD is LIBRARY GERALD
esper in chen
MEMORANDUM
5648
NATIONAL SECURITY COUNCIL
INFORMATION
October 8, 1976
MEMORANDUM FOR: BRENT SCOWCROFT
FROM:
ROBERT HORMATS
SUBJECT:
Meat Import Quotas
Attached (Tab A) is a new option for dealing with the meat import
situation which Chuck Robinson has proposed. The new option
has the obvious advantage of not requiring that the President im-
pose import quotas at the present time.
I have given Porter a copy of the attachment and he will be sending
a more extensive package out to the Presidential party.
We understand Secretary Kissinger may be calling you to urge
acceptance of this option.
Treasury supports this option as a last effort to avoid quotas. Fred
Dent believes that a personal call from the President to Fraser might
still succeed in turning the Australians around. Further, he questions
whether the other meat exporting countries would go along with a 2%
reduction in their voluntary restraint level; and he points out that if
they do not, the USG will be 18 days late in announcing the meat import
figures (which were supposed to be announced on October 1), moving
this announcement too close to the election.
Agriculture believes that the other exporting countries will not go
along with a reduction in their voluntary restraint levels and points
out that it would likely be sued if it held off 10 more days in announcing
the meat import figures.
FORD i LIBRARY GERALD
MEAT IMPORT QUOTAS: DIPLOMATIC OPTIONS
The Australians have informed us that they would be willing to
reduce their meat exports to the United States only if this reduction
were applied to other exporting countries. We initially rejected
proposing this sort of across-the-board reduction as it would take
time to negotiate and probably would be resisted by those countries
which have not yet shipped up to their restraint levels. These
countries would contend that our meat import problem was the
result of Australian actions and open-marketing arrangements
between the United States and Canada. Nonetheless, we believe
this option should now be given serious consideration if our only
alternative is a system of mandatory quotas.
In announcing this diplomatic initiative, the President could state
that, if within 10 days we are not successful in concluding agree-
ments with the exporting countries for a 2% reduction in their
1976 restraint levels, he will impose import quotas. He could
also take the opportunity to announce that we have succeeded in
closing the Mayaguez loophole; the Australian Government has not
permitted the shipment of any meat to Mayaguez since September 10
and will permit no further shipments to Mayaguez during the 1976
calendar year. No other country is shipping meat through Mayaguez
at this time. The President could also announce that we will under-
take immediate consultations about the meat problem with the
Canadian Government in accord with previous understandings.
October 8, 1976
FORD is LIBRARY GERALD
meat
Friday 10/15/76
import
5:15
Mark Feldman called to say he has checked and
foynd that, to the best of his knowledge,
no paper actually has been prepared for the
NSC.
Mr. Deal is aware of the problem
and has been consulted on it.
Mr. Feldman is going to check on it.
LIBRARY GERALD :
THE WHITE HOUSE
WASHINGTON
November 19, 1976
MEMORANDUM FOR: WILLIAM SEIDMAN
FROM:
PHIL BUCHEN P.
SUBJECT:
Meat Import Options
for 1977
The Counsel's Office supports
the general consensus of the
EPB Executive Committee in favor
of Option 2.
FORD : LIBRARY DERALD
THE WHITE HOUSE
WASHINGTON
November 19, 1976
MEMO FOR: PHIL BUCHEN
FROM:
BK
BOBBIE KILBERG
SUBJECT:
Meat Import Options for 1977
Suggested response:
Counsel's Office supports the general
consensus of the EPB Executive Committee
in favor of Option 2.
GERALD sana LIBRARY
THE WHITE HOUSE
WASHINGTON
November 18, 1976
MEMORANDUM FOR PHILIP BUCHEN
JOHN O. MARSH
JAMES M. CANNON
MAX FRIEDERSDORF
FROM:
L. WILLIAM SEIDMAN sws
SUBJECT:
Meat Import Options for 1977
The Economic Policy Board Executive Committee has recently con-
sidered the issue of the Meat Import Program for 1977. A mem-
orandum on this issue is attached.
At the most recent EPB Executive Committee meeting on this is-
sue there was a general consensus, on the basis of an earlier
draft of this paper, that we should seek to negotiate voluntary
restraints at or near the 1977 trigger level of 1,282 million
pounds (Option 2). However, agency positions are not recorded
on the attached memorandum because we are awaiting their formal
recommendations after reviewing this draft of the paper.
There is general agreement that it is desireable to have a
meat import program in place at the beginning of 1977 and
thus we are attempting to expedite consideration of this issue.
I would appreciate very much your comments and recommendations
on this memorandum no later than c.o.b. Friday, November 19,
1976.
Attachment
GERALD FORD VIBRAR,
THE WHITE HOUSE
WASHINGTON
MEMORANDUM FOR THE PRESIDENT
FROM:
L. WILLIAM SEIDMAN
SUBJECT:
Meat Import Options for 1977
The Meat Import Act of 1964 requires the President to
restrict imports to an adjusted base quantity if the
Secretary of Agriculture estimates that, in the absence
of restraints, imports of fresh, chilled, or frozen beef,
veal, mutton, and goat meat will equal or exceed the
trigger level (110 percent of the adjusted base quantity).
The adjusted base quantity, calculated annually, would
keep imports at the same percentage of production as during
the 1959-63 base period. For 1977, the USDA has estimated
that imports in the absence of restraints would total be-
tween 1,580 and 1,630 million pounds, about 300-350 million
pounds above the 1977 trigger level of 1,281.9 million
pounds (Tab A). The law does, however, provide that the
President may suspend quotas or increase the quantity of
meat imports under certain conditions such as overriding
economic or national security interests. This memorandum
seeks your decision with respect to the meat import program
for 1977.
Application of the Law in Recent Years
In past years, various policy alternatives have been used
to avoid the imposition of quotas:
-- In 1969, the first half of 1970, 1975, and the first
three quarters of 1976, voluntary agreements were
reached with major supplying countries to restrain
imports below the trigger level, so that it was not
necessary for the President to impose quotas.
-- In the second half of 1970, all of 1971, and the
first half of 1972, the President suspended quotas,
under powers granted to him in the Meat Import Act
with voluntary restraints above the trigger level FORD
GERALD
LIBRARY
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-- In the second half of 1972 and all of 1973 and
1974, the President suspended quotas with no
restraints on imports.
For the first time in the 12-year history of the Meat Import
Act formal quotas were imposed by Presidential Proclamation
on October 9, 1976, after the Department of Agriculture esti-
mated that 1976 meat imports would exceed the trigger level
by 17 million pounds despite the voluntary restraint program.
Excess imports resulted from larger than estimated imports from
Canada. We have traditionally not restricted trade in beef
with Canada and, therefore, we did not have a voluntary
restraint agreement with Canada.
Impact of Imports on Beef Consumers and Producers
Retail beef prices in 1976 averaged approximately $1.39 per
pound. USDA has recently estimated that retail beef prices
in 1977 will average approximately $1.50 per pound assuming
that imports do not exceed the trigger level of 1,282 million
pounds. At the trigger level, beef available for U.S. consump-
tion in 1977 is estimated at 121 pounds per person. If imports
are unrestricted, the per capita beef supply would increase
about 2.1 to 2.4 pounds reducing retail beef prices an esti-
mated 1.5 to 3 percent. This would result in consumer savings
in the range of $520-$1,040 million. Producers would lose an
almost equal amount in total receipts from cattle sales.
The outlook for the second half of the year will be strongly
affected by producer returns in the first half of the year,
pasture conditions, and the U.S. feedgrain situation for 1977.
These conditions suggest that any 1977 import program may
require revision as the year progresses.
Policy Considerations
A quota system in 1977 raises several trade and foreign policy
questions. First, to be consistent with the non-discrimina-
tion provisions of GATT and the Meat Import Act, country
quotas must be based on trade during a representative his-
torical period. Under this criterion the quota for Canada
would be proportionally smaller than this year's quota for
"other" countries, which includes Canadian imports. Such a
reduced quota would invite retaliation by Canada against
exports of meat and perhaps livestock from the U.S. Second,
indication of our intent to employ quotas again in 1977 would
GERALD
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even if the nondiscrimination test were met, almost assure
GATT proceedings against our present quotas and could
stimulate retaliation by other countries against U.S. exports
that might not occur if our present quotas were seen as a
temporary measure. The GATT retaliation could cover up to
$1 billion in U.S. exports or could be directed to reduce
U.S. exports by an estimated $150-$200 million. Australia
and New Zealand would likely retaliate against imports of
U.S. industrial products. Finally, the continuation of meat
quotas in 1977 could (1) be interpreted as a clear departure
from our negotiating posture which has favored greater trade
liberalization, and (2) reduce the prospect for substantial
liberalization of trade in agriculture commodities. We have
in the past opposed such quotas and have obtained a specific
GATT waiver for our Section 22 quotas.
Negotiation of another voluntary restraint program in 1977
is likely to be very difficult in view of the problems
experienced in the program this year. While recognizing
these difficulties, the Department of State believes that
voluntary restraint agreements might be negotiated success-
fully with foreign governments, especially if it could again
be demonstrated that participants would enjoy greater access
to the U.S. market under voluntary restraint agreements than
they would under formal quotas.
Foreign Trade Zone Problem
The 1976 voluntary restraint program came under criticism
with regard to the processing of beef in the Foreign-Trade
Zone at Mayaguez, Puerto Rico. Quantities of meat imports
under any of the restraint options for 1977 will be reduced
in overall magnitude by a quantity equal to the amount of
such products which will enter through Foreign-Trade Zones
in 1977. Therefore, these imports are not an issue in the
choice of restraint options.
Options
The EPB Executive Committee has reviewed this issue. Four
policy options are outlined for your consideration.
Option 1: Impose import quotas at or near the 1977
trigger level of 1,282 million pounds.
FORD
Options 1 and 2 would both permit U.S. meat imports to
crease by 49 million pounds over 1976 imports.
GERALD
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Advantages:
Quotas would have maximum support of the domestic
livestock industry.
Quotas would protect the domestic livestock industry
consistent with the Meat Import Act.
Disadvantages:
Quotas would place the U.S. in violation of its
GATT obligations and could result in requirements
for compensation or retaliation by major supplying
countries.
Quotas run counter to our trade liberalization
objectives in the MTN.
Imports at or near the trigger level would result
in lower supplies of meat and higher consumer prices
than under a less restrictive policy.
Option 2: Negotiate voluntary restraints at or near the
1977 trigger level of 1,282 million pounds.
If you decide to seek voluntary restraints, supplying countries
will be asked to send representatives to Washington about
December 1 with the understanding that voluntary restraint
negotiations must be completed by about December 15.
Advantages:
Voluntary restraints at or near the 1977 trigger
level would provide protection for the domestic
livestock industry consistent with the Meat Import
Act.
A voluntary restraint program avoids the problems
in the MTN and the GATT which would result from
quotas.
The domestic livestock industry would not oppose
this approach.
FORO i BERALD LIBRARY
-5-
Disadvantages:
Voluntary restraints may be difficult to negotiate
for 1977 because of problems with the 1976 program.
Imports at or near the trigger level would result
in lower supplies of meat and higher consumer prices
than a less restrictive policy.
Option 3: Negotiate voluntary restraints above the 1977
trigger level of 1,282 million pounds.
Advantages:
Negotiations will be easier than under Option 2.
This option will result in lower beef prices for
consumers than a more restrictive policy.
A voluntary restraint program avoids the problems
in the MTN and the GATT which would result from
quotas.
Disadvantages:
U.S. livestock producers would strongly oppose
imports above the trigger level which would reduce
cattle prices more than a more restrictive policy.
Imports above the trigger level would be inconsistent
with the intent of the Meat Import Act.
Option 4: Suspend quotas with no restraints on imports.
Advantages:
An open market because of larger supplies from
greater imports provides the lowest consumer
prices.
An open market is consistent with our trade
liberalization objectives in the MTN.
Disadvantages:
An open market is counter to the intent of the Meat FORD
Import Act in that it does not protect the U.S.
livestock industry under the conditions in which
the Act calls for protection.
GERALD
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An open market would result in the lowest producer
returns.
An open market is strongly opposed by the U.S.
livestock producers.
Decision
Option 1:
Impose import quotas at or near the 1977
trigger level of 1,282 million pounds.
Supported by:
Option 2:
Negotiate voluntary restraints at or near
the 1977 trigger level of 1,282 million
pounds.
Supported by:
Option 3:
Negotiate voluntary restraints above the
1977 trigger level of 1,282 million pounds.
Supported by:
Option 4:
Suspend quotas with no restraints on imports.
Supported by:
FORD : LIBRARY OFRALD
TAB A
IMPORTS OF MEATS SUBJECT TO P.L. 88-482
(Million pounds, product weight)
Estimated
Actual
Quota
Imports of Absence
Country of Origin
Imports
Allocations
Restraints
1975
1976
1977
Australia
679.4
632.2
850-880
New Zealand
275.4
259.8
360
Mexico
29.8
52.0
40-60
Canada
21.2
81.9
85
Ireland
6.8
4.1
0
United Kingdom
0.8
0.0
0
Caribbean Area
195.6
203.0
245
Total
1,208.9
1,233.0
1,580-1,630
Date: November 4, 1976