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WT/DS162/R/Add.1 Page 42

3.13

The United States argues that the history of the 1916 Act actually dates back to 1912.  In that year, President Woodrow Wilson was elected on a party platform that promised major reductions in tariffs; reductions to a level adequate to generate sufficient revenue for the functions of government, but not so high as to provide unnecessary protection to domestic industry.  His party, the Democratic party, also promised more vigorous antitrust enforcement.138  During President Wilson's first term in office, the Tariff Act of 1913, known as the Underwood Tariff Act, was enacted along with the Clayton Act (15 U.S.C. §§ 12 et seq.) and the Federal Trade Commission Act (15 U.S.C. §§ 41 et seq.).

3.14

The United States notes that, in 1915, the Secretary of Commerce, a member of President Wilson's Cabinet, concluded that additional competition legislation was needed.139  He stated that while "[u]nfair competition" was forbidden by law in domestic trade, "[…] [t]he door, however, is still open to 'unfair competition' from abroad which may seriously affect American industries for the worse.  It is not normal competition of which I speak, but abnormal. […] If it shall pass beyond fair competition and exert or seek to exert a monopolistic power over any part of our commerce, we ought to prevent it."  The Secretary concluded that he would "prefer […] to deal with it by a method other than tariffs, classing it rather as an offense similar to the unfair domestic competition we now forbid."  Specifically, he

"recommend[ed] that legislation supplemental to the Clayton Antitrust Act be enacted which shall make it unlawful to sell or purchase Articles of foreign origin or manufacture where the prices to be paid are materially below the current rates for such Articles in the country of production or from which shipment is made, in case such prices substantially lessen competition on the part of the American producers or tend to create a monopoly in American markets in favour of the foreign producer."140

3.15

The United States recalls that, in 1916, Congress enacted legislation implementing the suggestion of the Secretary of Commerce141 that the Clayton Act should be extended to import trade.  On 1 July 1916, Representative Claude Kitchin introduced H.R. 16763, an extensive piece of legislation designed to raise additional revenue through expansion of the income tax and inauguration of a federal estate tax.  It also contained, in a section entitled "Unfair Competition", the provision which became 15 U.S.C. § 72.  During debate of the bill in the House of Representatives,  Representative Kitchin described this provision in terms that made it clear that the section was intended as a supplement to existing antitrust laws, and not as a form of protection for individual industries:

"Then there is an unfair competition provision in this bill which ought to be good Republicanism and good Democracy.  The Republican Party, in all of its 50 years of tariff writing, never had the wisdom and the judgment and the patriotism to incorporate in any of its legislation an unfair competition proposition.  We believe that the same unfair competition law which now applies to the domestic trader should apply to the foreign import trader."142

138 The United States refers to Zenith III, Op. Cit., p. 1218.

139 The United States refers to the Annual Report of the Secretary of Commerce 1915 4041 (1915).

140 Ibid.

141 The United contends that Congress was aware of the Secretary's recommendation.  The United States refers to 53 Cong. Rec. 13,079 (1916)(Sen. Penrose); 53 Cong. Rec. App. 1475 (1916)(extension of remarks of Rep. Denison).

142 53 Cong. Rec. App. 1938 (1916)

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