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gf371dx3287

Preparatory Committee of the International Conference on Trade and Employment London 1946 Journal. Journal No. 3 Thursday 17 October 1946

United Nations Economic and Social Council, October 17, 1946

United Nations. Economic and Social Council

17/10/1946

journal

1-5

https://exhibits.stanford.edu/gatt/catalog/gf371dx3287

gf371dx3287_90240014.xml

GATT_157

United Nations ECONOMIC AND SOCIAL COUNCIL Nations Unies CONSEIL ECONOMIQUE ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TADE AND EMPLOYMENT LONDON 1 946 JOURNAL NO.3 THURSDAY 17 OCTOBER 1946 Time 11.00 a.m. 3.00 p.m. I. PROGRAMME OF MEETINGS Thursday 17 October 1946 A. Plenary Meetings Second Plenary Session Third Plenary Session B. Committee meetings Nil. Room Hoare Memorial Hall Hoare Memorial Hall II. AGENDA Thursday 17 October 1946 Plenary Meetings (Second and Third Sessions) General statements by Delegations on the scope of the work of the Preparatory Committee. 4288 III. SUMMARY RECORD. OF MEETINGS Executive Committee of the Plenarny Session A. First Meeting, held on Tuesday, 15 October 1946, at 4.30 p.m. Following the first plenary meeting, of which a full record will be available to delegates, the Committee went into Executive Session, on the motion of the United Kingdom Delegate, to discuss Parts I, II, IV, V, VI, VII, VIII, IX and X of the Rules of Procedure, and certain other matters connected with the scope and conduct of the Committee's business. The Rules of Prcoedure were adopted subject to cert in amendments, the most important of which related to the question of the publicity of proceedings. The Rules were amended to provide that the meetings of the Working Committees of the Preparatory Committee should ordinarily be held in private, unless any committee decided that a particular meeting should be held in public. The UNITED STATES Delegation submitted three additional draft rules relating to the position of observers of inter-governmental and non-governmental agencies and of observers from non-member governnmnts. After preliminary discussion these were referred to the Second Executive Session. B. Second Meeting, held on Wednesday, 16 October 1946, at 11.30 a.m. The Committee considered the Lmerican proposals, and after extended discussion, in which various delegations put forward amendments and counter-proposals, rules were adopted which provide that representatives of the specialized agencies attending the Committee as observers should be admitted to all meetings of the Committee and its sub-Committee, that representatives of the non-governmental agencies attending the Committee should participate in all public meetings and, by invitation, in private meetings, and that observers from non-member governments which are, however, members of the United Nations should have the right to attend all meetings as observers. The S Secretariat then introduced documenE/PCVJ/TW'J.1 1,and invited the mosmit'ets approval. The discussion of this documen -saS adjourned to theThhnird eExcutive Session. C.. Third Meeting, held on Wnduesday, 16 October 1946, at 3.00 p.m. The view was expressedhairt tha c genda submitted by the Secretariat, which would be the basis of the work of the Cmmxittees, was not entirely satisfactory. Although based upon ehu Ecomonic and Social Council 4283 -11- resolution of 18 February 1946. it followed very closely the Amercan proposals which, the view was expressed, were deficient in certain respects. In particular, several delegations felt that more specific attention should be given to Industrial Development of under-developed countries, and that this subject should therefore be included in the agenda and in the work either of a separate Working Committee or within the agenda of one of the Comnmittees proposed. As a result of the discussion, it was agreed that topic A in the Secretariat proposal should be amended to read: "International agreement relating to the achievement and maintenance of high and steadily rising: levels of effective demand, employment, and economic activity"; secondly, that a new topic should be introduced, viz: "International agreement relating to Industrial Development"; thirdly, that topic (e) should be amended to read: "Establishment of an International Trade Organization as a specialized agency of the United Nations having appropriate responsibilities in the above fields". It was agreed that the new topic on Industrial Development should be included in the work of the appropriate Committee, and that where several Committees were concerned with this topic, they should consult together in its treatment. With these amendments, document E/PC/T/W.11 was approved. On the motion of the Chairman, the Committee referred to the Working Committee for study, a working paper submitted by the United States Delegation containing proposals for a charter for an International Trade Organization, and a paper submitted by the Indian delegation containing certain comments on the United States proposals for Expansion of World Trade and Employment, published in November 1945. The BRAZILIAN Delegation stated that they proposed to submit a document containing proposals by the Brazilian Government. IV. DOCUMENTS DISTRIBUTED On Wednesday 16 October 1946 Symbol No. Title E/PC/T/l/Corr.1 Corrigendum to Agenda 4288 -12- V. MISCELLANEOUS Lost One brown overcoat (gentleman's) with side pockets containing one pair of brown leather gloves and, a coloured scarf. Found A certain amount of Polish Zloty found in the Hoare A black case containing a pair of spectacles. Lost Property Off ice: Room 114 (Order of the Day Office) a CMMUNlICTYINS. TO H'EED)IORlS emcorial Hall. iaterial for insertion in the JORNAZL should be addressed to the Editors, Room 413 and 414 (eulephoec extnrsions 29 ad 255).

GATT Library

yw345mj0074

Preparatory Committee of the International Conference on Trade and Employment London 1946 Journal. Journal No. 4 Friday 18 October 1946

United Nations Economic and Social Council, October 18, 1946

United Nations. Economic and Social Council

18/10/1946

journal

1-5

https://exhibits.stanford.edu/gatt/catalog/yw345mj0074

yw345mj0074_90240016.xml

GATT_157

United Nations ECONOMIC AND SOCIAL COUNCIL -13- Nations Unies CONSEIL ECONOMIQUE ET SOCIAL PREPARATORY COMMlTTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT LONDON 1946 . JO0 U RN1 A L N.; 4. FRDALY 18 OCTOBER 1946. I. PROAMEi OFMEE!TINGS Friday 18 October 1946 Tmne 10.30 a.m. 12.00 noon ConiitteeII Comoittee II 3.45 p.m. Committee IV 5.00 p.m. Cmimittee III 5.00 p.m. Cmrmittee V lecnaryMeectnzgs Fourth Plenary Session Meeting ofHIeads of ealegations B. Comnittee- Meetings mEployemn an.d Economic Ictivity : General Cmmeorcanl Policy (Restrictions, Regulations and Discriminations) Cmmzoditecs (Inecr-govermeontal Cmamodity rrargemwents) : Carecls (ecstrictive Business Practices) dmini'sta tion Aidiminstrativ &- Ogani=aztion Room Hoare MemorialHhal1 General Committee Romr Room 143 Committee Room I -350 Cmmi.teoe Room II - 243 Conmittee Room IV-";G" Cmm-ittee Room IV - "G" Cmomittee Room V - "Convocation Hall" 2.30 p.m. 3.45. p.m. -14- II. AGENDA Friday 18 October 1946 Plenary Meetings Fourth Plenary Session Continuation of general. statements by Delegations on the scope of the work of the Preparatory Committee; Committee Meetings 1. Election of Chairman and Vice-Chairmen 2. Preliminary consideration of agenda and programme of work. 3. Explanation by Secretariat of arrangements for records of Committee meetings. 4. Date of next meeting. III. RECORD OF MEETINGS Second Plenary Session of the Preparatory Committee Held on Thursday, 17 October 1946 at 11 a.m. Chairman: Mr. M. SUETENS (Belgium) General Statements by Delegations MR. .WILCOX (United States of America) said: "When a dog bites a man, according to a saying that is common in my country, the event goes unrecorded. in the press. But when a man bites a dog, the story is good. for a headline on page one. So it is with the popular appraise. of the progress that has been made, since the war, toward the reconstruction of world order. The difficulties that have been encountered and the persisting threat of failure are uppermost in every mind. The solid successes .that have been achieved are taken for granted, as if they were a matter of routine. This attitude is understandable; conflict is exciting; agreement is dull. But .t is sadly lacking perspective; the big news, the important nows, is not that nations have encountered difficulties, but- that they have surmounted them; not tha t their efforts are threatened with failure, but that they have. been attended by so large a measure of success. "The world has gone a long, way, in the last few years, towards binding itself together in a network of agencies for international co-oporation.- The organization of the United Nations has been established; the General Assembly, the Security Council, and the Economic and Social Council, ith their several commissions .and, sub-commissions, are now going concerns. The United Nations Relief and Rehabilitation Administration, the Food and Agriculture Organization, the International Monetary Fund, the Internnational Bank for Reconstruction and Development, the Civil Aviation Organization, the United Nations Educational, Scientific and Cultural Organization, and the World Health Organization have joined the Interrnational Labour Organization as specialized inter- national agencies. The nations are developing the programme and -15- organizing the institutions through which they can work together, side by side, to reconstruct a shattered world. For so much in the way of concrete accomplishment, in so short a time, there is no precedent in history. "Much has been done; much remains to be done. The General Assembly, meeting this month in New York, will act upon the recommend- ation of the Economic and Social Council for the establishment of an international organization for refugees. The United Maritime Consultative Council, meeting in Washington, will consider the creation of a world-wide inter-governmental organization for maritime affairs. A reconstituted international telecommunications organization is now under discussion in Moscow, and a conference to plan for such a body may be held in the spring of 1947. And finally our own committee has been charged with the responsibility of writing a constitution for an organization in the field of international trade. "Of the many tasks of economic reconstruction that remain, ours is by all odds the most important, Unless we bring this work to completion, the hopes of those builders who preceded us can never be fulfilled. If the peoples who now depend upon relief are soon to become self-supporting, if those, who now must borrow are eventually to repay, if currencies are permanently to be stabilized, if workers on farms and in factories are to enjoy the highest possible levels of real income, if standards of nutrition and health are to be raised, if cultural inter-change is to bear fruit in daily life, the world must be freed, in large measure, of the barriers that now obstruct the flow or goods and services. If political and economic order is to be rebuilt. we must provide, in our world trade charter, the solid foundation upon which the super-structure of international co-operation is to stand, "From the project of establishing an international trade organization I take it, there is no dissent. But with regard to details, there will be many views. It would be well, therefore, at the outset, to find the fundamental principles on which all nations can agree. Of such principles, I should like to suggest five; and, with your permission,. shall state them, dogmatically, and comment briefly upon each. "The first principle is that existing barriers to international trade should be substantially reduced, so that the volume of such trade may be large -- larger, certainly, than. it was between the two world wars. Readier access to foreign markets is needed if nations are to barn the foreign exchange that will enable them to pay for the imports that they require. Increased trade, with greater specialization and more active competition, should enhance the productivity of labour, cut the costs of production, enlarge the output of industry, and add to the richness and diversity of daily lining. More goods should flow from less effort and levels of consumption should be heightened all around the world. A renewed sense of well-being should contribute, in turn, to domestic stability and to international peace. Abundant trade is not an end in itself; it is a means to ends that should be held in common by all mankind. "The second principle is that international trade should be multilateral rather than bilateral. Particular transactions of course; are always bilateral; one seller deals with one buyer. But under multilateralism the pattern of trade in general is many-sided. Sellers are not compelled to confine their sales to buyers who will -16- deliver them equivalent values in other goods. Buyers are not required to find sellers who will accept payment in goods that the buyers have produced. Traders sell where they please,exchanging goods for money, and buy where they please, exchanging money for goods. Bilateralism, by contrast, is akin to barter. Under this system, you may sell for money, but you cannot use your money to buy where you please. Your customer insists that you must buy from him if he is to buy from you. Imports are directly tied to exports and each country must balance its accounts, not only with the world as a whole, but separately with every other country with which, it deals. "The case against bilateralism is a familiar one. By reducing the number and the size of the transactions that can be effected, it holds down the volume of world trade. By restricting the scope of available markets and sources of supply, it limits the possible economies of international specialization. By freezing trade into rigid patterns, it hinders accommodation to changing conditions. Multilateralism follows market opportunities in a search for purely economic advantage; bilateralism invites the intrusion of political considerations. It will be agreed, I trust, that nations livin, in the middle of the twentieth century should not be thrown back to the primitivism of barter, with all of the inconvenience, all of the costs, and all of the risks which such a system entails. "The third principle is that international trade should be non- discriminatory. This principle would require that every nation give equal treatment to the commerce of all friendly states. It should be evident that discrimination obstructs the flow of trade, that it distorts normal relationships and prevents the most desirable division of labour, that it tends to perpetuate itself by canalizing trade and establishing vested interests and, finally, that it shifts the emphasis in commercial relations from economics to politics. Discrimination begets bilateralism as bilateralism begets discrimination. If we are to rid ourselves of either one of them, we must rid ourselves of both. "The fourth principle is that prosperity and stability, both in industry and agriculture, are so intimately related to international trade that stablization policies and trade policies must be consistent, each with the other. It should be recognized that the survival of progressive trade policies will depend upon the ability of nations to achieve and maintain high and stable levels of employment and upon their willingness to protect the producers of staple commodities against the sudden impact of violent change. It should be recognized, too, that the advantages of abundant trade cannot be realized if nations seek to solve their own employment problems by exporting unemployment to their neighbours, or if they attempt, over long periods, to hold the production and prices of staple commodities at levels that cannot be sustained by world demand. Programmes that are directed toward the objectives of prosperity and stability, on the one hand, and abundant trade, on the other, will not often be in conflict. But when they are, they must be compromised. -17- "The fifth and final principle is that the rules that govern inter- national commerce should be so drafted that they will apply with equal fairness and with equal force to the external trade of all nations, regardless of whether their internal economies are organized upon the basis of individualism, collectivsm, or some combination of the two. The United States, among other countries, will continue to entrust the management of her industry and the conduct of her trade to private enterprise, relying primarily for guidance upon freely determined market price. Some countries have taken over the entire operation of their economies, guiding production according to the requirements of a central plan. Others have committed substantial segments of their industry and trade to public ownership under varying patterns of control. There can be no question concerning the right of every nation to adopt and to maintain, without external interference, the form of economic organization that it prefers. But it should be agreed that this diversity of economic systems need not and cannot be permitted to split the world into exclusive trading blocs. Every nation stands to gain from the widest possible movement of goods and services. Every nation should recognize an obligation to buy and sell abroad, wherever mutual advantage is to be obtained. The rules that apply to diverse trading systems must differ in detail. But they should not differ in principle. That international trade should be abundant, that it should be multilateral, that is should be non-discriminatory, that stabilization policies and trade policies should be consistent -- these are propositions on which all nations, whatever their forms of economic organization, can agree. "These are the principles that the United States has sought to embody in the Proposals for Expansion of World Trade and Employment that it published in December of last year, and to elaborate in the Suggested Charter for an International Trade Organization that it circulated to other members of this Committee during the past summer and published on September twentieth. The latter draft, in accordance with the resolution of the Economic and Social Council, has been submitted to the Council's secretariat for transmission to this Committee. We hope that it will be accepted as a working document, that it will afford a useful basis for discussion, and that it will facilitate the process of arriving at agree- ment on a final draft. "The importance which my Government attaches to this enterprise is evidenced by the years of labour it has put into the writing of the Proposals and the Suggested Charter. As they stand, these documents give expression, in principle, to the policy of the United States. But they are not to be taken, in detail, as presenting a formulation which we regard as fixed or final. We have sought, through consultation with other governments and through modification of our earlier drafts, to take into account the interests and the needs of all nations, be they large or small, highly industrialized or relatively undeveloped, capitalist, socialist, or communist. But we do pretend that we have said the last word, dotted the final ."i", or crossed the final "t". If we have not succeeded in meeting legitimate requirements, we shall be ready to consider further modifications. It would not be in our own interest to insist upon provisions that may be detrimentel to the interests of other states. As far as we are concerned however, our cards are on the table. The Suggested Charter expresses, in general-outline, what we want. "The present draft is not a product of pure altruism. We conceive the principles which it embodies to be in the interest of the United States. We want large exports. An important part of our agricultural activity has long been directed toward sales abroad, And now our heavy, mass-production industries are also geared to a level of output which exceeds the normal, peacc-time demands of our domestic market. We want large imports. The war has made great inroads on our natural resources; we have become and may increasingly become dependent upon foreign supplies of. basic materials. The quantity and the variety of our demand for consumers goods are capable of indefinite expansion. Abundant trade is essential to our industrial strength, to out economic health, to the well- being of our people. - "But surely it is true that this interest is one that is shared, in greater or lesser degree, by every other nation in th e world. Indeed, if the importance of untrammelled trade to the United States is great, its importance to many other nations must be compelling. Countries that are small, populous, and highly industrialized must have access to foreign markets if they are to earn the exchange with thich to pay for foodstuffs and raw materials. Countries that specialeze in the reduction of a smaller number of staple commodities must have access to such markets if they are tomintain the basis of their economic life. Countries that have been devastated by the enemy must be enabled to sell abroad if they are to obtain interials for their reconstruction. Countries that are relatively undeveloped must be enabled to make such sales if they are to acquire equipment for their industrialization. Countries that have borrowed for either of these purposes must be permitted to earn exchange if they are to service their debts. If the trade of the world were to be governed by rules the opposite of those contained in the Suggested Charter, the United States would deeply regret it, but it could adapt itself to the re- sulting situation; its economy would survive the strain. But other nations, in this respect, are less fortunately endowed than are we. For us, the, strangulation of trade would necessitate a difficult re-adjustment For other , it would spell catastrophe. "It will doubtless be remarked, it the course of these proceedings, that the United States has not always practiced the gospel that it now presumes to preach. This I admit. But the fact that we have sinned in the past should not be taken to justify all of us in sinning in the future, to our mutual harn. Certainly, it should not be inferred that the economic strength of the United states can be attributed to the restrictions that we have imPosed on our external trade. We have within our borders an area of 3,000,000 square miles, diverse resources, and a. market of 140,000,000 customers. And the founders of our republic wisely provided that this vast market should not be split by customs barriers. As for our foreign trade, I submit that our present proposals should demonstrate that we can learn from history. "It will probably be said, tool that the provisions of the Suggested Charter, particularly those that deal with commercial policies and restrictions business practices, are negative rather than affirmative. It is true that the work of reducing barriers to trade and eliminating discriminatory practices is negative, in the same sense in which the work: of a surgeon who removes a diseased appendix is negative. But for proposing, an operation that is rquyired to e-stoeu the bodyecconmlic to full health,wve offer no yaologies. The other chaptersocf the Charter hoeoer-, particularly tolse that dealw,ithem.l§omcent policy,cCmmo.dity ararnem,ents,. and the fraew-orkof' an international trade ograniaztion, .re scarcely to be described as negatiec. And the Charter as awvhole is desinecd tomiake affimnative provision for the expansion of world trde "The draft recognizes that provision must be made to enable un- developed-countries to achieve a greater diversification of their economics. And, in this connection, I wish to make clear that the United States affirmatively seeks the early industrialization of the less developed sections of the world. He know, from experience, that more highly industrialized nations generate greater purchasing power, afford better markets, and attain higher levels of living. We have sought to promote industrialization by exporting plant, equipment, and know-how; by opening markets to countries that are in the early stages of their industrial development; by extending loans through the Export-Import Bank; by participating in the establishment of the International Bank. We recognise that public assistance may be required, in some cases, to enable new industries to get on their feet. But we believe that such aid should be confined to enterprises that will eventually be able to stand alone and that it should be provided directly, by public contribu- tions, rather than indirectly by restraints on trade. The interests of undeveloped countries in sound industralization cannot be served, effect- ively, by imposing arbitrary restrictions on the flow of goods and services. We believe, finally, that the Economic and Social Council and some of the specialized agencies of the United Nations, including the proposed international Trade Organization, may make affirmative contributions to the process of industrial development, and we stand ready to consider all serious proposals that are directed toward this end. "Every nation, of course:, will feel that its own situation is in some respect peculiar; that some special provision is required to meet its needs. Exceptional cases will call for exceptional rules. And such rules must be .written into the Charter where the need for them is real. But they must be particularized, limited in extent and time, and set forth in terms of fixed criteria. Mutuality of benefit and of obligation must be preserved. No special interest, however worthy, can justify a sweeping exemption from general principles. Exceptions must be made, but they cannot be made in terms so broad as to emasculate the Charter as a whole. We have been called together to create an organization that will liberate world trade. If our efforts are to succeed, it will be by virtue of the fact that each of us has come prepared to make his contribution to the common enterprise. "In conclusion, let me repeat that my country seeks a Charter and an Organization that will apply with equal fairness to the trade of every nation in the world. If it should be shown that any one of the detailed provisions of the present draft is really detrimental to the essential interests of another status, we shall recommend that it be withdrawn or modified. I remarked, at the outset, that conflict is exciting and agree- ment dull. It is the hope of my legation that the proceedings of this Committee will be dull. We shall do everything in our power to make] them so." R. MA-IO MOREIRA DA. SILTA. (Brazil) saidl "The oranization of international trade, based on the expansion of commercial exchanges between nations, is the object which brings together at a Preparatory Meeting in this ancient city of London a group of representatives of countries interested in the establishment of world peace. "Brazil has sent to this meeting a Delegation entrusted with the duty of expressing the sentiments of the Brazilian Government and the public opinion of Brazil: and the first duty of the Delegation is to express the hope that the results of these labours for the establishment of new means of promoting the welfare of the nations, welfare based on justice, will be successful. Brazil desires to devote all her efforts to the achievement of that aim in this period of readjustment for peace, as she did in the war period, when she contributed her resources of raw materials and, the ardent youth of her population to the common cause. Having thus contributed material resources and manpower to the war, Brazil emerges with considerable derangements of her national economy, and is all the more readily disposed to work for the organization of peace. "Brazil has no other interests differing from those of any of the countries here assembled, all of which are directed in the last resort to a more equitable distribution of the benefits provided by Nature and reduced to his service by Man. "The object which this meeting has in view is to study means of expanding, trade between the nations and promoting their economic development. The read to that goal is by way of the revision of tariffs and other obstacles to world trade, as also by the climination of all kinds of discriminatory treatment as between countries. Brazil has no reason to feel uneasy in the matter of this proposal, because she has no high tariffs and is not one of those nations whose state budget is based on this form of taxation. But the knowledge which we have of the requirements of countries, whose economic structures based not so much on industry as on the production of raw materials an foodstuffs, convinces us of the inadequacy of any solution limited to increase in the distribution of the goods produced. What is primarily needed is international co-operation on the most ample scale, based on complete knowledgceof the situation of each country in the World. The indefinite increase of the production of commodities is not the sole object of international commerce. Its object is rather to increase the well-being of the people by the correction of economic inequalities. It is the task of international commerce to help diminish the differences in the standards of living of the peoples, who are not equally blessed by Nature or by historic development. "Countries, in which the production of raw materials and agricultural products is predominant, are subject to violent fluctuations where there is too rapid a reduction of their exports. Brazil agrees that increase in the volume of international trade is eminently desirable. Such increase is possible in one of two ways - either by reduction, and possibly abolition, of customs barriers or by increasing the purchasing, power of the peoples. The object of these two things is the same: but the one is negative and the other positive. It is our conviction that the positive policy will do more to increase world trade than the negative policy, because the positive policy is a dynamic policy and can call into being new forces of consumption. It is on the basis of this conviction that Brazil advocates measures with a view to the industrialization of the less developed countries. "The Brazilien Delegation proposes to submit a number of - suggistlons which faiu;filly reflect the aspirations of tBe 3razilian people. - She does not doubt that those suggestions will meet with understanding and approval at thio Ccnference, since it is only agreement based on realities which admits of execution and commands respect. "The- Brazilian Delegation greets the representatives of the peoples, and the efforts which they are abcut to make to lay economic foundations for the peace of the world: and at this inaugural meeginG of the PreparatorymConmittee of theInternational Conference on Trade and Rnplonte-n she respectfully saeutus the City of London, which has endured nobly the rudest. shocks of war, buit wll unquestionably emerge greatar ond more vcaersbleathen ever for the blessing of her people and for the advance of humanity aswa Who"le. -21- DR. COOMBS (.Australia) said: "Australia., like the United States, approaches the subject-matter of this Conference with certain basic principles in mind, and they, too, number five. Since they are somewhat different from those stated by MR. -WILCOX, it may be of interest to the Conference if I enumerated them. "Our first principle is that each member government should do all in its power to ensure to every man living within its borders the opportunity of employment from which he can earn an income with which to buy the goods and services produced by others in his own and other countries. Unless this is done, it will be futile to clear the channels of trade since without jobs and incomes the wants of most men must go unsatisfied, and there will be no demand for goods to flow through the channels of trade. "The second principle is that member governments should undertake that they -ill make it possible for their people to use their incomes to buy goods from other countries or to invest in the development of those countries up to the limit of their currently available inter- tional resources. Only if this is done will high employment and .-.comes have their full effect on international trade. "The third principle is that member governments will do all in their power by developing their economic resources to open out for their people new and more varied opportunities for employment and the hope of steadily increasing rewards for their labour. Upon this principle depends the hope of an expanding volume of world trade and of higher living standards for all people. "The fourth principle is that member governments should jointly and severally take action to protect the primary producers of their own and other countries from the violent fluctuations in prices and incomes to which they have been exposed in the past. While this threat of insecurity overhangs the primary producer, he cannot hope to achieve proper levels of efficiency or reasonable standards of living. "The fifth and final principle is that the rules which are to govern international commerce and the structure of the international organization to be established to deal with it should be such as to assist member governments to fulfil these obligations. Only if this is done can those rules be accepted as just and that organization build for itself an effective place in the world as an instrument of planned and.intelligent change rather than a defender of established interests. "I would not suggest that the principles I have outlined are necessarily in conflict with those enunciated by MR. WILCOX; indeed on many points we are in full agreement. It is, however,' clear that there is between them at least some difference of emphasis. For the Australian Delegation I can say that we are looking forward to. the task of reconciling them. While I can assure MR. WILCOX that the process will not be dull, I do not despair of success. "However, unlike the United States, we cannot comfort ourselves with the belief that we can face failure to build a rational world order without serious harm to our economic welfare. We are too conscious of our exposure to the economic blizzards of the world for us to have anything but the strongest sense of urgency about the task which lies ahead of us. -22- "This does not mean that we will not hold firmly to what we believe to be right. There is told among the natives of the part of the World from which I come a legend which expresses well our attitude - and I believe :that of many of th representatives of the smaller nations. Once, the legend runs, a young native set out to sea in a frail canoe. The journey was long, and while he was yet at sea, night fell. During the night the sky became overcast, the, wind swelled to a gale and the seas came mountains high. It seemed certain that the tiny craft and its raster would be overwhelmed. Finally the native prayed to the Gods of his. people for aid. "But his prayer was the prayer of a man - for he prayed not that the wind would fall or the seas subside, but that his Gods would clear away the clouds that he might see the stars by which to plot his course. "so we, too, do not cone here in the hope that all will be made smooth. But let the great nations remember that the vagaries of their economic; systems can make mockery of all our plans and endeavours, and let then measure their offering on the altar of co-operation according to their strength and their responsibility. We may then hope that by our combined obligations we will dispel the clouds of insecurity, so that we all shall see the stars and find our way, however wild and unyielding the Nature from which we wring our living, into a world where the limits of our achievements will be set by our oven skill, our own wisdom, and our own courage." MR. LEBON (Belgium-Luxembourg) said: "It was in September 1945, in the course of financial negotiations with the Government of the United States, that the Belgian Government expressed its agreement as to the desirability of convening a Conference on Trade and Unemployment. Some months later the Joint Proposals were the subject of careful consideration by the Belgian Government Offices concerned, together with the draft Proposals previously submitted by the United States Government. "In general the Belgian and Luxembourg Governments are agreed as to the objectives to be attained. Recovery and economic stability are inconceiveable without a resumption and expansion of trade between the different countries: and this requires a relaxation of customs regulations and an alleviation of the many restrictions now in force. If any progress is to be achieved and maintained in this direction, the different states must of necessity agree to co-operate, and to maintain their co-operation. "It is in this spirit that the Belgian and Luxembourg Governments approve the greater part of the proposals expressed in the United States draft. Their economic policy is in agreement with the general police of the draft. The Belgo-Luxembourg Customs Union is the first economic unit since the liberation of its, territory to restore freedom for a large number of commodities both in the case of imports and in the case of exports. It may be said that at-the present moment one third of the in-coming trade and one third of the out-going trade of the Union are free from any restrictions. This naturally is an experiment; and the circumstances, will decide. whether this state of affairs can be maintained. A serious effort has already been made by our two countries to the significance of which it is worth while to draw attention.. The Customs Agreement, which the Belgo Luxembourg Customs Union concluded on 5 September 1944, with the Netherlands, is also in harmony with the spirit of the Anglo-American Joint Proposals. "These considerations are sufficient indication of the spirit in which the Belgo-Luxembourg Delegation approaches the present Conference. It is full convinced of the interest which attaches, not only for the -23- Belgo-Luxembourg Customs Union but for the whole world to the success of the Conference. We regard a standardization of economic relations on the basis indicated in the American draft as essential. But standardization alone will not suffice to establish economic peace. More is needed. It will not be enough to ensure that the principles of freedom and the absence of discrimination prevail: it will not be enough to lower customs duties and to alleviate, or even abolish, all restrictions. It will also be necessary to secure, whether by the agency of this Conference or by that of other bodies, a minimum of co-ordination between the economic policies of the different countries. Lack of co-ordination between the different policies of production, export and import, might well plunge the world into a new chaos. We see how international organizations are being set up, such as the FAO., the EECE., the ECO and the ECITO., the purpose of which is to bring about co-ordination in certain important economic connections. It is with a view to achieving complete success in the realization of these aims that the Belgo- Luxembourg Delegation is prepared to consider in detail the American draft." MR. McKIWNON (Canada) said: "The Government of Canada welcomes the opportunity it hopes will be afforded by this meeting of making its contribution to the attainment of what appear to be the general objectives of all the governments represented hero today. "My colleagues and myself have come to this meeting of the Preparatory Committee as officials, not to undertake commitments but to assist in exploring the means for the achievement of our common objectives relative to trade and employment. Our country has a vital concern in connection with every aspect of those objectives, as witness the words used by the Prime Minister of Canada in tabling in Parliament the United States Proposals in these matters - at that time the inly proposals which had been made: 'The government of the United States has proposed that aIl countries should concert their efforts in the sphere of their international economic relations, with a view to expanding the volume of world trade and maintaining high and stable levels of national employment. The specific suggestions for achieving these ends, set forth in the document which is now being tabled for the consideration of members of parliament, deserve our most careful study, for no country has a greater interest than Canada in the realization of these objectives. "It may be contended by some of the countries here represented. that expanding trade is the source of ever-increasing employment - and by employment I mean the entire field of productive effort, that of the primary producer as well as that of the skilled artisan; by others, that a high level of employment is a pre-requisite to and a guarantor of greater and greater trade. That these two work to- gether to the common good has been and is the belief of my government, whichin its White Paper on Employment and Income has stated as follows: 'In pressing for international arrangements which would permit and encourage the expansion of world trade the govern- ment is impressed not only with the importance of trade from the point of view of the Canadian economy but is also con- vinced that a high degree of freedom of trade is thoroughly compatible with and necessary to a balanced programme for permitting a high level of employment and income.' "The task entrusted to this Committee is to examine the subject matter placed before it, not with a view to formulating rigid decisions, which is a task for governments, but rather to assess as experts the aim and content of the various proposals placed before us and to discover, if we can, the broadest area of mutual agreement therein. Until we have done that in reasonable detail we are not in a position to pass a competent opinion as to their respective merits. Indeed, until we have done that we have not discharged the obligation laid upon us by the Economic and Social Council of which we are a Committee. "In this spirit, Mr, Chairman, the view of the Canadian Delegation is that we should without undue delay address ourselves to the very heavy duties that await us in the various Working Committees." H.E. SENOR DON MANUEL BIANCHI (Chile) said: "The Chilean Delegation wishes to express, through myself as their intermediary, their great satisfaction at the holding of this Conference, the object of which is to strengthen and unlarge the econonic and commercial relations between the United Nations. "I wish to recall to mind to-day that as long ago as 1855, at the drafting of our Civil Code, Chile upheld the principle of equal treat- ment in civil law for her own nationals and for those of other countries. From that time on she has welcomed and encouraged co-operation with all nations and has manifested at every opportunity her desire to collabor- ate in all plans for the moral and material benefit of humanity. "It is, therefore, with great pleasure that thei Chilean Delegation attends the present Conference; it is confident that the decisions reached will go far towards solving the many obstacles which at the moment higher the expansion of world trade. "Our presence here is of particular importance to us and, we ven- ture to think, to the United Nations Organization, since Chile is one of the countries whose economic stability depends fundamentally on its foreign commerce. "Chile, by reason of her method of production and the problems she faces in her international trade, forms part - not only because her geographical position, but also because of the circumstances already mentioned - of an economic group which includes, to a greater or lesser- degree, all the Latin-American nations and other countries of similar economic development. The factor which most influences the conditions of these countries is their exports. These exports provide the means of payment for, and determine' tho volume of, imports; they place these Republics in a position to meet their foreign financial commitments and to service State and private loans; they furnish a considerable. part of Government and private revenue; and, finally, they constitute the most important factor .in the monetary stability of those nations. "The exports of these countries, which consist principally of raw materials and semi-manufactured products, are thus the dynamic actor in their economy; their value greatly influences the internal conditions of the nations concerned and is mainly responsible for a state of national prosperity or depression. "From the foregoing it will be clear that the principle factor in the maintenance and development of the economies of this group of countries, lies in the assurance that prices for raw materials will not suffer the f luctuations that took place between the years 1930 and. 1940, and that prices are maintained at reasonable level, with the double object of, firstly, stabilizing their balance of payments amd, secondly, facilitating a stable capitalization. "We are, therefore, ddsirous of' contributin, to all measures designed to bring about easier international trade; and we believe that this aspiration should be studied from a realistic point of view, taking, into account the circiumstances and features of the trade of those nations whose economies are still undeveloped and, therefore, whose balances of payments are generally adverse. In our opinion, an effective solution of these problems cannot be achieved unless the elimination of international trade restrictions is accompanied by-an increase of production and the- industrialisatiori of the countries concerned. "To this effect, I should like to reiterate what I said yesterday at the meeting of the executive Committee of this Conference, when I made reference to the text of Article 4 of the resolution adopted by the Economic and Social Council of the United Nations at its session in London on 18 February last. "The resolution of the Council, which summoned an International Conference on Trade and Employment provides that the Preparatory Committee should take into account the special conditions prevailing in the countries whose manufacturing industry is still in its initial states of development, and ,the questions that arise in connection with commodities which are subject to special problems of adjustment in international markets. "Chile hopes that in harmony with the spirit of this resolution, an appropriate solution of the above problem will be studied in such a way as to permit those countries of undeveloped economy to attain full development, through various methods of international co-operation. In this way, a level of consumption would be assured which would allow an effective increase in internationaL trade "With regard to, full employment, we believe that it should be closley linked with betterment of the standard of living of the working classes. We think that the American Proposal, with respect to which the United States Delegation has given us such an interesting, explanation, is a very good basis for discussion, but the Chilean Delegation will have some observations to present when this proposal is studied in detail. "During the first part of the First Assembly hold in London, Chile was elected a member of the economic and Social Council of the United Nations for a period of three years. This election was made not only on account of our contribution to various basic industries and the characteristics of Chileon production, but also because Chile has alwa ys lent positive and sincere support to all international plans which are directed to the betterment of economic and social conditions of the world. "I can assure you that our collaboration is and will be of the utmost loyalty, not only in this Preparatory Conference but also in any other future activity of the orgnizations to which the United Nations may entrust the study of these vital problems for humanity." -26- MR. -UGENT.I LER.(Czechoslovaka) said: "It is vexy well known that Czechoslovakia , which has few raw materials, is by reason of her economic structure and her geographical position in Europe to a large extent dependent on foreign trade. after her liberation in 1918, Czechoslovakia already held an honourable position in this respect, and she will try with all the strength at her disposal to regain that position as soon as possible. It goes without saying that .Czechoslovakia does not regard foreign trade as a thing by itself but as a means to raise the general standard of living, assure full employment and social security, all of which means an avoidance of economic fluctuations and crisis. "Czehcosluvakia ,was the first country occupied in Europe and the last which was liberated. Under German and Hungarian occupation she suffered economic losses for which there is no example in our history. These losses had a profound influence on the whole economic and finan- cial structure of life in Czechoslavakia, and a certain period for recuperation and for a return to more normal conditions will be needed. It is difficult to forsee now the length of this period, because the economic recovery of Czechoslovakia depends not only on help which she might get from outside but also on the economic development in neigh- bouring countries. On this occasion I should like to acknowledge gratefully all help which up till new has been given to Czechoslovakia; and especially I should like to mention the splended work of UNRRA which helped us to overcome the first and worst difficulties. "It is natural consequence of the geographical position of Czechoslovakia that her foreign trade was and shall be again mainly with countries whichare Czechoslovakia's neighbours or in her proximity, For this reason, the economic stability of our market depends very much on developments .in those countries. A substantial extension of trade relations with the USSR and countries of Central and South Eastern Europe is natural. That does not mean that Czechoslovakia intends to neglect her trade relations with the United States, the British Commonwealth, France and all other democratic countries. Therefore Czechoslovakia welcomed the invitation to an International Conference on Trade and Employment and agrees with the general tenor of the "Proposals" presented for the consideration of the representatives of the countries who are members of this Committee. "We are fully conscious of the fact that our labours here are only in preparation for a future Conference, where many more countries will be represented and whose deliverations may decide the final fate of our work. That is wh we y'_ hopethaet the outcom of' twis rmak ;.y provide a basis foe thQ future eoeftrcnce and be acceptable to all. I think that we can achieve thie evcn ifhwe Lave to bearmin :ind the natural difficulties whwcllvi:L have toeve comro<_e and which are a consequence oe thc fact twet vr deoal nt wiwh t-o or three, but with a series of eminoinc structurws, e shall be able to achieve greemoe;,ent which is necessarytin whe intereotspef -cace :nd the economic and social prosperity of the whwle Borld. Because we want this prosperity for, the whole world we wish good luck from the bottom of our hearts to all those countries whichehava taken the reaw tovards industrialization. We have fulle undrstagdin oe thewfr fcects, especially siwee vu grapple with the same issue in Sloaaki., the Eastern part of our country. "I nas as~ure you that Czechoslovakia will do her best for the success of tmeetingingg." -27- The CHAIRMAN requested the delegations to give the Secretariat the names of the delegates who will represent them on the various committees. He also asked that any proposals for officers of the committees be sent to the Sacretariat. The meting rose at 12.25 p.m. Corrigendum of Summary Record of the Second Meeting of thExecutive Committee of the Plenary Session Held on Wedbesday. 16 October 1946 At 11.30 a.m. The first sentence should read: "The Committee considered the American proposals, and after extended discussion, in which various delegations put forward amend- ments and counter-proposals, rules were adopted which provide that representatives of the specialized agencies participating in the meetings of the Committee as observers should be admitted to all meetings of the Committee and its sub-Committees, that representatives of the non-governmental agencies attending the Committee should attend all public meetings and, by invitation, private meetings, and that observers from non-member governments which are, however, members of the United Nations should have the right to attend all meetings as observers." .~~~~~V -ursday 17 Oc,3 ;r3JTED On Thursday 17 October 1946 Sy;bol No. F/O/T/2. Oorr 2 Title Corrigendum 2 to Rules of Procedure Iaterial for insertitn in the JOUin'L should be addressed to the Editor, Room 413 and 414 (' o-c-}nt) uxtcriions 29 and 255). COKMUIC'TIOTS TO THE E..YOS

GATT Library

pm997vb6611

Preparatory Committee of the International Conference on Trade and Employment London 1946 Journal. Journal No. 5 Saturday 19 October 1946

United Nations Economic and Social Council, October 19, 1946

United Nations. Economic and Social Council

19/10/1946

journal

1-5

https://exhibits.stanford.edu/gatt/catalog/pm997vb6611

pm997vb6611_90240018.xml

GATT_157

-28- United Nations ECONOMIC AND SOCIAL COUNCIL Nations Unies CONSEIL ECONOMIQUE ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT LONDON 1946 J O U R N A L NO.5 SATURDAY 19 OCTOBER 1946 I, PROGRAMME OF MEETINGS Saturday 19 October 1946 A. Plenary Meetings Nil. B. Committee Meetings Committee IV : Commodities (Inter-governmental Commodity Arrangements) II. AGENDA Saturday 19 October 1046 Room Committee Room IV-"G" Committee Meetings Committee IV 1. Further consideration of Provisional Agenda 2. Consideration of request of International Chamber of Commerce to attend the meetings of the Committee. 4362 Time 10.30 a.m. -29- III. RECORD OF MEETINGS A. Plenary Meetings Third Plenary Session of the Preparatory Committee Held on Thursday,17 October 1946 at 3,00 p.m. Chairman: Mr. M. SUETENS (Belgium) General Statements by Delegations MR. WUNSZ ZING (China) said: "We are assembled here today charged with the supremely important task of drawing up an international code of commercial relations between the nations, with twin objects in view: the attainment of an expanding world economy and the realization of a stable level of full employment. To this end, we are also charged with the task of preparing a Charter for an international trade organization which will add another import- ant link in the whole set up of international mechanism designed, to promote and co-ordinate all phases of economic activities, thereby enabling us to fulfil the solemn pledges we have madu during the.war. "As we look beyond this conference room, we see everywhere serious economic dislocation and maladjustment due to the var - in some countries cities still in ruins; industry and agriculture still crippled; transport still in chaos; and in many, others financial and monetary conditions far from being satisfactory; normal demands shifted; trends of trade altered; and economic structure permanently changed. In spite of the heroic efforts of individual countries to rebuild anew their ruined economy, or .to reconvert their war production to peace-time goods, every country is still beset with difficulties and bottlenecks which no one country can surmount individually without concerted action on an international basis. This is a challenge to the statesmen of today, who are called upon to construct a new world economic system. "We all remember that similar attempts to restore world economic life were made, though belatedly and spasmodically, after the First World War. The recovery was slow and unstable. It soon relapsed, after a short spell of boom, with disastrous consequences with which we are all familiar. In the early '30's, When the world was swept by waves of depression, every country, either voluntary or involun- tarily, had to adopt a policy of "sauve qui peut". In desperation, everyone tried vainly to erect breakwaters against the onset of the depression and to break away from the traditional anchorage on which the system of international trade had been built since the early days of the last century. Upon the wreckage of a free and multilateral exchange of goods, everyone sought to take refuse in the formation of exclusive trading areas, or autarchy, which sowed the seeds of economic rivalry, and, in a large measure, precipitated the Second World War. "We now set ourselves to ensure that this post-war world should enjoy the fruits of our victory and should not suffer again the malaise of poverty among plenty. We seek to expand and not to restrict the tremendous power we possess to produce goods, the consumption of which by all peoples is the material foundation of prosperity. -30- "I am happy to say that our labours augur well, because, firstly, whereas the belated and spasmodic attempts made after 1918 all looked to the past, in the hope that the old system would work in a changed world, the plans which we have formulated, and are formulating, will reflect the needs of the future; secondly, the statesmen of yesterday endeavoured to uphold the objectives of the economic policy before they were agreed on how these objectives, might best be achieved, while we today have not only dedicated ourselves to the high ideals and common aims of full employment, but we have also agreed on the broad outline of ways and means to achieve our common objectives; and, lastly, after the First World War, there was no concerted plan for reviving world economic activity as a whole, but today there is an integral plan for setting up all the international machinery necessary for dealing, with the problems of post-war world economy. "From the experience we have gained in the past, it is clear to us that no individual efforts. however well conceived and vigorously prosecuted, can innoculate a national economy against the contagion of world depression. it is equally obvious that no international action can be effective unless it is implemented by the individual countries concerned. To secure the support of individual countries for such action, it is vitally important that consideration must be given to the interests of both consumers and producers, and account must be taken of the varying degrees of economic development in different countries and the special factors which determine the external economy of individual countries with the rest of the world. "The Chinese Government attaches great importance to the proposals which are now before us, the more so as special attention will, as we understand it, be given to the conditions prevailing in those countries whose industry is still in its early stares of development, is well as to the abnormal post-war situation in the national economy of those countries which suffered from devastation and dislocation due to the war. I should like to express my Government' s appreciation of the initiative taken by the Government of the United States of America. The Chinese Delegation is prepared to take the suggested Charter as the basis for our discussion. "The reduction of tariffs and the elimination of all trade barriers should be made on a balanced and equitable basis, having due regard to the progress of economic recovery from war devastation and the long-term policy of creating a balanced internal economy. Within the general framework of limitations on the grant .of subsidies, allowance should be made for special difficulties arising out of disparity between internal and external price structure and for the time necessary to. make the necessary adjustments. It is also important that the principle of such limitations should equally apply to manufactured goods. In the consideration of special problems inherent in the marketing of primary commodities, prompt action is essential for the maintenance of an ordered and stable production. In this connection, I wish to add that we heartily welcome positive and concrete suggestions for the purpose of achieving the early industrialization of those relatively undeveloped countries, and that, at the same time, we also feel impressed by the statement made by a number of delegates that some reasonable protection is a legitimate instument of developments "Although our task is a preparatory one, and on a technical level, whether or not a solid foundation will be laid for the expansion of world trade and the maintenance of full employment will largely depend on what we can accomplish by our deliberations in the field of commercial policies, which, in turn, will be shaped in the light of a general economic policy in regard to co-ordination of plans for reconstruction and foreign- investment. "I feel confident that, where the statesmen of yesterday failed, we will succeed, because not only have we pledged ourselves to the principles of international co-operation in reviving multilateral trade, as well as other economic activities, but we have also the support of a growing body of opinion that the primary objective of production is to make available to all peoples the things they require. "In conclusion, gentlemen, I wish to assure you of the sincere co-operation on the part of the Chinese Delegation to make this con- ference a success." H.E. . ALBERTO INOCCENE ALVAREZ (Cuba) said: "Cuba, being a country vitally interested in the existence of a wide, vigorous and healthy international commerce, desires, in the first instance, to express its fullest sympathy with the proposals in view to create an international commercial organization governed by regulations allowing for varying positions and economic requirements of the various countries of the world. "Cuba can state at this meeting with satisfaction that her previous history shows eloquently that in the conduct of her external political, commerce she has always been consistently on the side of a liberal and equitable 'treatment in relationships with other States. She can show, in support of this contention, that her customs duties are amongst the lowest in the vorld; there is practically no restriction on the amount of her imports, subsidies, Exchange control and other regulations which hamper the free exchange of international goods. "Finally, I think it relevant to say that for nearly half a century the commercial relations of our country have been influenced in no small degree by the existence of a special regime of commerce, her chief market being determined by powerful geographical, economic and historical circumstances. "By reason of these characteristics of internal economic life, our country views with sympathy any efforts that may be made to facilitate and expand external trade. Repeated experience, has, however, shown her that the expansion of international commercial exchange, although it represents the basis of her economic position, is not adequate to satisfy her requirements towards the obtaining of full and stable employment and a substantial and permanent increase in national income. She considers it is necessary to arrive at the full employment of her agricultural resources and the substantial and progressive development of her internal supplies. "She further considers that the regime of her comercial rel- ations with her chief and nearest neighbour, although not necessarily unchangeable, has for nearly half a century represented the basis on which her present economic structure has been built. For this reason she considers it essential that any change in or abandonment of such relationships should be accompanied by reasonable precautions, so that any system which takes its place should be in a position to render possible the attainment of the airs contemplated in the proposed Charter through effective measures taken to this end, "In order that the now commercial regime that we are now trying to set up iny be in a position to meet the needs and hopes of my country, it is essential that the Charter which is submitted for our discussion shall be so modified that the achievement of these ends may be facilitated, not only for those countries who possess an economic structure and are already highly developed, but also for others like ourselves faced with the urgent necessity -32 - of setting on foot their internal industrial developments and of obtaining for the people a higher standard of life and emloyment. "Without pretending to enter at this moment into detailed consideration of the modifications necessary for reaching the goals already roferred to, we should like to set put briefly the general principles which should be introduced into the Charter, so that it meets the requirements and aspirations of other countries in a similar position to ourselves. "These principles are as follows: "Firstly, the achievment of complete empoyment, is not sufficient to increase the purchasing power of countries. It is necessary at the same time to set up a wage system, working conditions and social benefits which will allow the working classes to enjoy an addequate standard of living, raising as far as possible its level of life and purchasing power. "Secondly, in countries which are at the outset of their industrial development or are single commodity producers, it is essential, in order to arrive at complete employment, that different varieties of agricultural and industrial employment be envisaged, for which end adequate methods of protection must be introduced for the creation and development of agricultural and industrial undertakings. "These two first points andi consistent with the position which has repeatedly been taken up by Cuba in international conferences, when she was represented, such as, amongst others, those of Hot Springs, Chapultepee and Caracas. "Thirdly, with regard to the system of preferential tariffs -which is in force in our country, we are of opinion that its suppression must be made conditional on the following: (a) That its suppression should not be merely the automatic consequence of putting into operation the terms of the Charter. A prior agreement between the countries maintaining such should be necessary, or alternatively the exercise by any one of them of its right to bring, it to an end; and (b) That in order to attain and enjoy tariffs analogue to the preferential ones, Member States must show that they have a monetary system and real wage scales together with working conditions And social protection for the worlkmen similar to those possessed by countries which enjoy such- preference. "Fourthly, subsidies should be considered and treated as though they were tariffs in respect of all the aims and objects of the Charter. "Fifthly, the regulation laid down, in the Charter for the operation of inter-governmental conventions on primary commodities should be supplemented by the introduction of the following principles: (a) The representative period to be taken as a basis for the fixing of quotas should be that period covering the years during which imports were not restrictcd by quantitative measures, by high protective tariffs or other trade barriers. 4362 -33- (b) A reasonable and just price level must be in operation, proportionate to those countries which are in a position to maintain efficient production by imports allowing the upkeep of the purchasing power of its people, as importers and consumers, to a level sufficient to maintain a worthy standard of living. This will be achieved primarily on a basis of working conditions giving the working people freedom from economic want and provide agriculture with adequate returns to meet its render it possible that consumer countries obtain the products that they require to import at a reasonable cost and in regular and stable conditions. My effective production is meant not that which reduces prices through the exploitation of the working man and the maintenance of a low level of life, but one which is achieved in a natural way on a basis of adequate, pay, so that the working man can lead a worthy life through good technical, agricultural and industrial processes. (c) That the Councils which are to be set up for the administration of each international convention should come into being independently of the International Commercial Organization after the said Organisation has recommended the ratification of the convention under discussion, with- out prejudice to similar Councils maintaining close relation- ships both advisory and consultative with the Organization. Similarly the voting system adopted by the Councils should lead to a just balance between the interests of the producing and consuming countries." H.E. .ERlK COLBAN (Norway) said: "Hardly any country is more interested in the freedom of inter- national trade than Norway. Our main industries are based upon the export trade and could not exist without it. Our import trade is vital in order to cover the needs of our population. Although out- side the scope of our present task, but in order to give a full picture, we wish also to mention that the freedom of international shipping is a necessary condition for our whole economic life. This situation makes it obvious that Norway must welcome all attempts to liberate the international economic life from as many restrictive measures as possible. Consequently, orway will co-operate whole- heartedly in the task before cur Committee. We understand that - as it was I believe pointed out in the introductory speech of the President of the Board of Trade - - we cannot all of us obtain every- thin we want without on our side making concessions. But we hope that solutions may be found whereby we shall all receive reasonable satisfaction for what we consider to be our legitimate expectations. "We shall not today enter into any details, but there are certain guiding principles which we find it right to submit at once. "Traditionally Norway adheres to the Most Favoured Nations Clause and we consider that it should be one of the main duties of our Commilttee to work cut such proposals as would establish the Most Favoured Nations Clause as a guiding principle in all international trade. The Most Favoured Nations Clause should be applied uncondition- ally and not only in tariff questions, but to the whole network of rules governing international trade. "Between the two great wars the, quota system was given very wide application. We consider that it would be in the interest of all of us to get away from this system. We realize that both with regard to 4362 -34- the application of the Most Favoured Nations clause and with regard to the quota system certain particular situations may require special consideration. But such exceptional measures as might be decided upon should not be allowed to go further than very strictly necessary. "The Norwegian Delegation are of opinion that the establishment of an unconditional and generally applicable Most Favoured Nations clause combined with the abolition of a wide-spread quota, system should lead to the re-establishment of multilateral trade which we consider an essential condition for development of the ecnonomic life of all countries. We believe, however, that these principles for international trade can- not be maintained unless the countries of the world, and perhaps parti- cularly the highly industrialized countries, do in fact pursue an economic policy which makes it possible to achieve and maintain high and stable levels of employment. All countries should endeavour to achieve these aims without creating unemployment in other countries. Only in this way will effective demand for goods and services render possible such exchange of goods and services, for instance, shipping services, which would be to the advantage of all and to the detriment of none. "Once more, the Norwegian Delegation s1; tisrn promises to do its best to further the purposes of our CommWittee. e now enter upon the detailed discussions of the manifold aspeectso ofm th prbles before us, and we would like to express our _,;preciation of the preparatory work done by the United Statews ien thee hit Papr submittecd to us, ontaining a draft of a full Charter of an International dTrade al Employment Organization. We feel that the paper will be of great help to the Committee in its coming work. r There ae points in it to which we agree; others on which wie need fplurther ;elanation and omperhaps se on which we entertain doubts. But the paper as a whole will cerotainlyval prve a uable con- tribution to our docu.mentation" MR. ALaPHAND (Frnce) said: "Fairst of ll the Frgench Dweleation ishes to acknowledge the initia- tive thetaken nmby Govtement of he United States whose propmosals for the basiwors of hthe komf eetis Comite. g The sumgestions ade to us, mark the cuLination of a long series of efforts w.ich bLgan long before the war, in America itaself , nd which were, I believe, first promoted by Mr. HUCordellULL. erunners Tfhe foWrrirs oFthe Thite ook -are to be found in the commercial treaties which the United States have concluded during the last fifteen years with the majority of the nations of the world and in the economic provisions of the Atlantic Charter, ana. at famous Article VII ofn the eeLeasc-Led agwrment, which e owe to the genius of the great ROOSEVELT who, at the crisis of the war, was already thinking of finding a solution fompr the most colex problems of peace. "Thus, in its. inspiration, if not in its application, the line pursued in this sAmphere by tehnee erican Govrmnt always remains straight. If this line is erroneous, one can Asay that the merican Government perseveres diabolically in its error. For our part, we do not think it is. We believe that the chief columns on which the edifice is to be built - the raising of the standards of living and the promotion of full employment, the lowemring of custmcos lbarriers,ultiateral exchanges, the principle of non-discrimination - are necessary both for the security and the prosperity of the world. "It is true., and the Hon Mr. WILCOX pointed it out himself this morning, that thee Uanited Stats hs not always put into practice the lesson is preacherued. It ismaiot t that thetenance of a tariff - often of a prohibitive nAmeatcure on the rian frontiers, contributed to a large exteent, afater th last wr, to the creation and spreading of the crises whallich affected nations, including the United States themselves. 4362 -35- "The Proposals submitted to us today, the praiseworthy educative effort of the administration with regard to the American people, the feelings of Congress, give us grounds for hoping that this time the United States understand that their immediate economic interests and their long term political interests require their active participation in the development of international trade. But I am not one of those who imagine that only selfish motives nave inspired the suggestions made to us, and that America's motive in proposing to the world a system which may result in placing a certain number of countries in a state of inferiority in international competition, is merely to acquite a better position for its formidable capacity for expansion. Rather, I admire the idealism of the authors of this document and I trust in the complete sincerity of Mr. WILCOX when he declares that his country is seeking to draw up a charter and to create an organization which will apply with equal justice to all the nations of the world. "If that is really the case, I should like to state briefly the conditions necessary for the achivement of the task confronting us. "I an official document, the declaration of 28 May 1946, signed by Mr. BYRNES and M. Leon BLUM, the Government of the French Republic and the Government of the United State stated their "complete agreement on the general principles they wished to apply for the removal of restrictions to international trade and the expansion of exchanges indispensibe to the prosperity of the world and the achievement of a lasting peace. "These principles are actually stated in the proposals submitted to this Committee. The Constituent Assembly has ratified this agreement concluded by the French Government. "This attitude corresponds both to the political ideals and the interests of my country. "Just as, in internal policy, no one dreams of disputing that our ideals are democratic, so in foreign policy, our diplomacy is founded upon the principles of collective security and international organization, principles to which were a attached as closely and as actively as possible by all our French traditions. '`Moreover, the French Government and people know that France, if it is to live and if it is to develop its prosperity and its influence, must be able to count on international trade. Economic isolationism is a luxury which we cannot afford. In declaring our support for the development of exchanges between nations, we are not making a choice, we are merely stating a self evident truth, a fact which all French Governments, whatever their political colour or leanings may be, have to face and will have to face. France depends on foreign sources for more than one third of the coal, for the whole of the oil, for ninety per cent of the non-ferrous metals, ninety six per cent of the cotton, eighty three per cent of the steel, sixty seven per cent of the fats, fifty four per cent of the wood pulp normally consumed by its industries. Unlike the Germany of Hitler and Schacht, it does not possess the coal to enable it to replace its raw materials by synthetic products. Therefore, it must buy abroad, and to pay, it must sell abroad. This necessity for exporting- becomes more imperative today than befoe the war, as other sources of foreign income are in process of disappearing through the progressive liquidation of French capital invested abroad. 4362 -36-- "As the goods which it needs are produced in most countries by countries to which it does not export in sufficient quantities, France rust normally prefer a system of exchanges and multilateral payments to the method of bilateral clearing. In order to find a market for its products, it looks everywhere for outlets and consequently for the removal of obstacles to trade. "Finally, we know that economic discrimination between nations would result in the formation of hostile blocs, and in the creation of different price levels, varying, according to those blocs, which is contrary both to our political ideals and our economic principles. "This official statement having been made, I now wish to call the attention of the Committee to a consideration which, indeed, has been widely expressed in the work of American experts; it is as follows: an international organization on economic relations pre- supposes between all nations participating a relative equivalency in their respective conditions of production. As Mr. Leon Blum pointed out to M. CLAYTON last March 'This equivalency is the basic condition of equality.' "Now, this state of equivalency does not, by any means, exist today between the nations of the world and, in this connection, may I cite the case of my own country, which is akin to that of many nations of Europe. "France only participated to her full strength in the beginning and the end of the war, but she suffered more than if she had fought from beginning to end. I am. not thinking solely of the systematic looting and devastation of theen mey nor of the material destructions carried out on our soil by this enemy nor evne of those destructions understandably enough) brought about by our friends. I am thinking also of the general depreciation of the means of production which was neither kept in order nor renewed for five years and which gradually fell into a miserable state of delapidation. M ay I dwell on this point for a moment. There is a sort of ccunteprart of war, the discipline of labour which it mpioses on awh ole nation, the concentration of effort on scientific and technical progress which has become today a necessary condition of victory. One must point out that thew ar has substantially increased the power of production of the United States, of Canada and ofm any other countries of the Western Hemisphere. In spite of the burden of taxes, in spite of the mass of debts contracted, in spite of the intensely generous help Siven to the other Allies, in spite of all these things, these countries have increased their wealth and antoinal revenue. "In France, on the contrary,w ar broughtiimproverishment and a loss of substance. Everything, depreciated: wealth, revenue, power of production. And furthermor,e and this is an essential point. often neglected, these blows fell on a natoin which had not yet recovered from its victory in the otherw ar, in which she made an effort which was probably beyond her strength end which had resulted for her in the loss of a great part of her foreign assets, in the devaluation of her currency as a result of the reconstruction of the devastated regions, which remained one of her liabilities in the extension, and later in the increase, of ehr military expenses, as the spirit of revenge was waakening in nazified Gremany. Consequently France isa nation twice ruined in the course of this thirty years war and she must face, not only the task of amterial reconstruction, but also the indispensable task of modernizing and re-equiping her production equipment. 4362 "France realizes completly the task u^ich lies before her. She knows it will take several hard difficult years to achieve such an under- taking. She is drawing up her plan for reconstruction and modernization which will be submitted to the Government in the course of a few weeks. Thus, one might say that France, this ancient country, presented to a considerable extent the characteristions of a new country. Speaking in her name and in the name of the territories oversea, associated with her, I declare that we have the utmost symmetry with the argument advanced here by other nations who wish to see their youthful industry duly equipped, before facing, the competition of other great nations in the world markets. "Who, then, can dispute the necessity for making special provision, to ensure this 'relative equivalency' in the conditions governing pro- duction which I mentioned just now, or the necessity for an interim period to permit of the progressive restoration of the balance of pay- ments and the application of such measures as would allcw the industry and agriculture of France to compete fearlessly with the outside world. "This interim period, gentlemen, is already taken into account in the proposals made to us. We shall, however, perhaps have occasion to make observations and amendments on the draft which has been adopted by American experts. "During the whole of tile initial period, it is not possible for the French Government to accept the abolition of a quantitative control of imports, which in spite of credits detained, is indispensible, to achieve a proper balance of payments. "I will venture to recall here the French-American statement of 26 May, 1946, to which I have just referred and which summarises suna Zanizes per- fectly thpneds ofrecognisze moreover, bd FurrAmericaan,ance, asSCo friends. The mFrencpehifie Ghat overnent scst it is obliged to control imports in themp forprogramme, bupm of an iortt wthis control ill only be appLeaslong as it is necesafeguardfssaryqe t or oouiib:'iu O te balance of accounts anre d e metheditao ensuticl carrying out of the reconstruction nand moderizationhe grantingplan. e Tr by th Fench Governmment of ipceortwi licens, limthsin the it ofgramme twhis pro, ill be carwried out sithout dion criminati he different for t_ aJ.z sources of Spl, as soon as Francee eposscissstsar i^ :: sition to acquire, a sufficmient aount eof fre currencay tw hejo lplr htseos urcd beyon the lint of bilateral commercial annd cfal icaieeurgrnents. "This text sees clearme toWe s mpl. siy ask thhejat future Charter should take account hof te nsectceesiis imposedmy on country by the results of Wtwo arsw in ,hich as a result of its geographical position, it suffered as much as, aod d-ubtlesslyemor: than any of the nations represented here. "Ye believe that, during tpes ocriohe too mere favoured nations all ll, have to facilitate ehpocxaerts of coies wes lhich are in a sitonuatip comarabole t owur aon, nceac the fac act, if thimit4it theim i.portsW ie hope that thws l il obe nfe o the important ad- vantages of the future Charter. "In closing, I should like to sayw ho much Franwce ishes that the onrgaizatiwon hiwch e have in wvien, ay exben teded to all the countries in the world as soon as possible. 4362 "As in the case with the prosperity of all of us, we cannot conceive of future security without the participation of all the great economic powers, and it seems to us that such a goal can be attained. In our opinion, there exists no necessary relationship between the form of production and distribution system adopted within a State and its foreign economic policy. The United States can perfectly well continue to apply the most orthodox principles of private enterprise, France and other countries of Europe can turn towards planned economy, the Soviet Union can uphold the Marxist ideal of collectivist, without our all having to refuse to support a policy of international organization based on Liberty and Equality. "If France considers that she cannot, without serious danger, iso- late herself from the world, she also believes that peace and the well- being of the peoples demand that this world should be "one". Situated between easy and west and hostile to the formation of blocs, she can only subscribe to any attempt which, on the universal plane, tends to create a real solidarity between nations." MR. R. K. NEHRU, I.C.S. (India) said: "Yesterday, in our Executive Session, I made a brief statement on the Indian attitude to the proposals for the expansion of trade and employment. On the mote general aspects of this question (and I presume at this stage we can only make a very general statement), I have very little further to say. Since we are greeting in a Plenery Session, however -- and it is only right that the larger public whose interest we claim to represent should know how our minds are working -- I would like, with your permission, Sir, to repeat some of the points I made yesterday. I must ask-my fellow Delegates to forgive me for presenting the same ideas again, so soon after yesterday's proceedings, but I have really not had the time to clothe them in a new language or to attempt any other elaboration of the main theme, and I can only hope, therefore, that they, will bear with me patiently for a very few minutes. The American proposals, Sir, have served a useful purpose in focussing atten- tion on major problems of trade and tariff policy. Our own approach to this problem is very different, and, as you will see from the document which we have placed before the Committee, on many points the disagree- ment between our exports and the American experts is fundamental. This has not, however, prevented us from carrying on discussions in the friendliest spirit with the Department of State Mission which came to Delhi only a few weeks ago to ascertain our views on the proposal. We feel, Sir, that the American experts have made a valuable contribution to the study of this question of trade and employment which affects the welfare and happiness of the common man in all countries, and we would like them to know that, so far as India is concerned, the importance of their work in drawing attention to some of these problems is fully recognized. "We have listened with great interest to the observations made by the leaders of the various Delegations. The leader of the American Delegation referred to the need for cultivating a spirit of co-operation in matters affecting trade and employment. On this point, Sit, I can only repeat what I said yesterday: that the Indian people are second to none in their desire to promote co-operation between the nations in every sphere of activity. We are firmly convinced that the true inter- est of our country, as indeed of every other country, lies in the further- ance of international co-operation, and we are anxious that no effort should be spared in making a success of the new Institutions which are gradually being set up for this purpose. Towards the Uinited Nations Organization in particular, the attitude of our Government has been recently defined as that of whole-hearted co-operation and unreserved adherence, both in spirit and in letter, to the provisions of the Charter. It is for this reason, Sir, that we have welcomed the Council's initiative in setting up this Committee, and have decided to accept the proposals as a convenient basis for discussion. -39- "There is, however, the important point to which I referred yesterday, namely, that this Committee should net be left in any doubt as to what exactly in, the Indian view is implied by the idea of co-operation. We feel, Sir, that it would be helpful, from the point of view of the further discussions which are to take place in this Committee, if our views on the subject were made known. The kind of co-operation to which we in India attach importance is a relationship17rLviznshi- pbased on recp;ct fpoe of equal rights ar the,)inciermaud sQf-det-nation of migpeopdd,les. I ht a sir, that this princaeiple is carly laid down ein the Usnio Neeatiod,nmo longChar- ana .s.as meInedi!is a abc of the Unnitedga Naatioos Ornwiztibn, iete ieavlul of e thuer of our rpresen- taetivu to se;that 'hpis preinci:er mado. npot %xan a ious npiration, buat is actully applied in practice. ln the economic sphere -- or, more specificallye, the sphre of trmpade und weloyment ith which we are conc ed, thisme would tha.:no scheme of co-operation whlich fai). to mdt the esseequiremerntialents of thee leopess dSelO nations (vhose interests, I might add, are the interests of pmoerhaps re tehan thre-- quarters of the worpulld's poation) or whwicuh sehosa ndu bis in favour of a particular coungtry or roup of countries, is likely to be accepted by India as a schegeme of nuine and fruitfuel co-oprWation. e are glad to seeh that tis commisttee ha been advised, in draftiAng the genda, to take into accounpt the secial conditeioilingns prva in primary pro;cing countries and countries awe hidch rn(llnxstia backvard. But we are not sure that the needs of such iecouenptrisl, secaly in the mtter of a suitabmleec alcoioei-olaicy, -lye fuel1undcstood, and as wour on country falls ein th[p gru of ethe lss devdeelop economies, we feael tht our position should be cleaxrlly edpainee. Th problem which faces our countsry, a I pointed out yesterday, isa noxcept n etional one, and tewhe vis we are puttoing frward opare doubt shared by other nations in a similar econposmic oitiona. I n mind hvre ipaticularly the nationAs of sdia an Afrmaiyca, n of which are Indimmea's idiate nei.bours win pose prosperaity nt arwelfpa we eze dzply interested. In other parts eeof h world also, there are countries in the same position, whiceh ar faced with same problemsthe and confronted by the same difficultie. KL f theess cuntries ar note- preeeno-st here today, but I am sure that, my fellow edlgeates willa gree withmet taht tehir inetrests should not eb overlooked. So far as Idnia is conercned, the Cmoimtte weill be inteersted to know that a ocnference ofun oficial f erpreesntativs eof het various nation sofa sia ise xpected t meeot in Delhi early exnt yera, and among the problems of cmmoon inetres to allaAs ansi which will be dsicussed at this conferencewiell be econmoic and traed problems. .Althoguh this con- fereace has ben sponsored by an unofficial gaenyc I have not the slightest doubt persoallny thty the views experssed by our fellowA sians dll hace a considerable infiuence.on the,G-ve-nme.t of India';s future policy. I have mentioned this, Jir. in order to emphasize that, athough cur primary concern is naturally the welfare of our own country, we do not wish to take a narrow view or to seekany special advantage which is ex- clusively in our own interest. Our objective is to bring into existence a co-operative system which is suited to the requirements of all countries which are not fully developed, without affecting, the genuine interests of the two groups are not irreconcilable that we have come to this meeting determined to play a constructive part in devising measures for the promotion of genuine international co-operation. 4362 Page-40-missing -?o - /V -41 - "Our whole attitude to these proposals for the removal of trade restrictions and trade barriers to which the principal industrial countries lay so much emphasis, is based on our conception of a sound employment or development policy. If our economic objectives are sound - and there seems to be general agreement that the rapid economic development fo all countries is a desirable objective -- then we must retain the power to regulate our trade relations with other countries by methods which are both effective and economical from our own point of view, and which will yield maximum results at minimum cost to all the interests concerned. Among these interests in any scheme of inter- national co-operation which is accepted by us, we could give a high place to other members of the Organization. Our whole approach to this question of trade regulation is a practical approach and we feel that it is wrong to take a doctrinaire view of the soundness or other- wise of specific trade measures. Trade from our point of view (and I am glad, Sir, that this point is recognized by the American Represen- tative and other Delegates) is not an end in itself, but a means -- and a very subsidiary means -- of giving effect to our larger economic plans. Foreign trade, I might add, is only a small fraction of our total trade, and our primary objective is the development of our vast internal market. Nevertheless, since our plans are of an expansionist character, our trade with other countries must also expand, but it will only expand if we take a rational view of the whole problem of trade regulation, and instead of rejecting certain methods of regulation on grounds which are not applicable to Indian conditions, make full and effective use of them for the purpose of building up our economy." MR. GEORGE HAKIN (Lebanon) said: "This Preparatory Committee is charged with a most important task. This task is nothing less than to lay down the principles of policy to be followed by all nations in their economic relations with one another. Such an undertaking is of the greatest significance for the future prosperity and peace of the world. By its success the efficiency of international co-operation in economic matters will be judged. "It will also be the task of the Committee to draw up the Charter of the organization which is to implement those principles of inter- national economic policy. In our deliberations, therefore, we should never lose sight of the basic principles which guide all international economic co-operation as they were laid down in the Charter of the United Nations. These guiding principles are stated in the Preamble of the Charter and in Article 55, dealing with economic and social co-operation. The Preamble states:- "The peoples of the United Nations (are) determined to promote social progress and better standards of life in larger freedom AND FOR THESE ENDS to employ inter- national machinery for the promotion of the economic and social advancement of all peoples." Article 55 reads:- "With a view to the creation of conditions of stability and well-being wh;,ich are necessary for peaceful and friendly relationsmourng nations based on respect for the principle oeqccual rights and self-determination of peoples, the UniteN nations shalp ;romote:- - 4362 -42- (a) Higher standards of living, full employment, and conditions of economic and social prcgress and development; (b) solutions of international economic, social, health and related problems; and international cultural and educational co-operation; and (c) universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language or religion." "These basic guiding principles lay significant emphasis on higher standards of living and on conditions of economic progress. In this emphasis special attention is paid to the economic development of the less advanced countries. Economic progress is to be promoted for all peoples. The United Nations have a special responsibility for those of their members who are still living under backward economic conditions. In order to achieve this aim of raising the standards of life of all the peoples of the wo I ild, t is not enough to provide for the full employment of menoanm Oe nat~rial resources. Such full employment is certainly necessorm tz :aintain a high standard of life in the advanced countries,fubut -mp ejtloyment in the less developed countries nill sot in itself rahse rded stanard of life of their populations. "What is more importaat th.n emulo mcplayent is the achievement o the. most productive empntyme mef' ran and resources. It is through the best and most productive utilizatioe of mconoiic resources that we can produce the greatest quantityoof g:ods fir the satisfaction of the needs of the populationIn La fact, this is the meaning and signi- ficance of economy in the utilizaoion )f resources. Economy means the utilization of resources in ucw -a ray as to produce the maximum possible quantity of goods her tog satisfaction mf hunan wants, Full employment will not in itself necessarily mean the most productive employment. The experience of the war as -well as certain practices developed before the war, shows oooy ti- clearly that we can have full employment without necessarily satisfying the needs of consumers. In the last analysis, ther, fore the proboem af productive employment is more important than the proolem jf fmull eployment. "In the less developed countries it can hardly be claimed that the most productive employment of me and. material resources is achieved. The methods of production in hese} countries are still generally primitive and not conductive to full productivity. For this reason, in these countries the standa d of' l ving, of the copulation is still very low. Furthermore, the structure of production in many areas is such that their resources are not fully exploited. Experience shows that agriculture alone will eot laad tomthe :ost productive u e of human and material resourcAgr Viticultpral Production has not gener- ally been able to probuce se ftcolt a high standard of living for peoples who engage in Man faiuu-e tur'- and industry is necessary if we are to raise the atdnof ; afe lich of the less developed territories. 4362 -43- "It is not an accident that the standard of living is higher where industrialization is greater, nor is it an accident that, as history shows, standards of living have only risen considerably since the industrial revolution, through mechanical and technical progress. If the United Nations, therefore, are to achieve the aim of raising the standard of life of the people of less developed countries, they should encourage the industrialization of those countries to the extent that their human and material resources allow. It may be said here that the development of industry in the less advanced countries will not only benefit the peoples of these countries, but will also further the development of world economy and the growth of production in the more advanced countries. "It is always worth while to repeat that the world is one. Poverty anywhere is a menace to prosperity everywhere. Fruitful economic co- operation can only be attained through the development of each for the benefit of all. In order to achieve industrialization in the less advanced countries, we must recognize that tariff protection is, in the words of the Australian delegate, the legitimate instrument of national policy. It is ture that we are all interested in the expansion of world trade, but there is no inherent inconsistency between the two objectives of the expansion of world trade and the industrialization of less developed nations. "I submit, Sir, that tariff protection practised by the less developed nations for the purpose of their industrial development will not reduce the volume of world trade, for in so far as tariff protection will result in the growth of industry and the rise of the standard of living of the people it is bound to increase the international trade of the less developed countries. Not only will they be able to produce more for export, but also their effective demand for foreign goods will increase. "Furthermore, in so far as the population of these countries will grow with industrialization, their participation in world trade will be greater. One might be inclined to think that tariff protection of industry would reduce international trade temporarily, but even that is not true. When protection is practiced by the less developed countries, for these countries will need capital goods from the old industrialized nations and will find it necessary to increase their exports in order to obtain their imports of capital goods. The result will be an increase in their foreign trade, even while they are developing their industries by means of tariff protection. "Not only tariff protection, but also tariff preferences may be necessary for the development of industry in less advanced countries. In certain regions small nations may find it impossible to develop industries even with the aid of tariff protection. For the development of modern industry a large market is required, and many small nations do not have a sufficient population to provide such a large market. One method of securing this market would be for the small nations of a certain region whose economics are complementary to form Customs Unions among themselves, but is not the formation of a Customs Union a method of creating tariff preferences? It seems to us that the Customs Union is the extreme form of tariff preference. "Instead of removing all tariff barriers between themselves, a group of countries may perhaps decide to reduce tariffs between themselves to half their normal level, while maintaining the normal tariffs as against other more industrialized countries. If the object of such a system of tariff preference is to develop the industry of a group of less developed countries by providing a wider market for each other's products, no harm to world trade will result. -44- "On the contrary, regional trade will develop and trade with other countries will, in the long run, be increased. If the system is rationally operated, it will develop industry in the regions where it is applied and will ultimately lead to an increase in international trade as a result of the rise in the region of the standard of living of the people and their greater demands for the products of other regions. "We should, therefore, not limit ourselves to the maintenance of existing preferences, nor set an arbitrary date after which no preferences will be allowed. It will be wiser to examine any proposed system of preferences on its own merits, so as to determine whether it is prejudicial, or, on the contrary, beneficial to world production and world trade. "In conclusion, Mr. Chairman, the Lebanese delegation stand for the policy of the fullest possible encouragement to be given to the less industrialized nations of the world. In this they also represent the general point of view of the other Arab countries with which they are bound by intimate political, economic and cultural ties. They also happen to be the only delegation from the whole region of the Middle East - a region which is still backward in its economic development. We feel that it is the duty of this Committee to study thoroughly all the measures that may be taken to encourage and promote the economic development of such less advanced countries. The aim we hope to achieve is ultimately the raising of the material and cultural standard of life of all peoples throughout the world so that they may mutually benefit one another and live together in friendship, peace and prosperity." The meeting rose at 6 p.m. Fourth Plenary Session of the Preparatory Committee Held on Friday 18 October 1946 at 10.30 a.m. Chairman: Mr. M. SUETENS (Belgium) General Statements by Delegations DR. SPEEKENBRINK (Netherlands) said: "On behalf of the Netherlands Delegation which - as you know - includes representatives of the Netherlands Indies and which also will have to keep in mind the interests of Surinam and Curacao, I take this opportunity to make a few provisional remarks with regard to the aims of this Conference. "On purpose I use the word "provisional" because I feel that - where this Conference has to deal with economic and social problems of such complexity and interdependency - a balanced statement can only be made at a later stage. This the more so, where as I said before, my Delegation will have to judge the Proposals which will be made at this Conference in the light of the interests of the four different parts of the Kingdom, which interests partly are of such a diverse nature. 4362 -45- "To prove this point, I only have to draw the attention of the Preparatory Committee to the great importance of stability in the prices of the primary products for the 70 million inhabitants of the Netherlands Indies. Moreover, in this territory the problem is not so much how to prevent unemployment but far more: how to raise the social and economic level of this population. Industrial development must be one of the further means here, as in other under-developed countries. "Thus I can associate myself to a great extent with the opinions expressed by several of our colleagues round this table. "On the other hand, the territory in Europe also faces a period of readjustment owing to the sufferings and consequences of the war. The late liberation of Holland and of the Netherlands Indies from a ruthless foe presents my Government with special problems for which a solution still must be found notwithstanding all the work already done in this respect. However, to be able to take further action, the Netherlands Government as well as the Governments of the three Overseas Territories will have to anticipate more or less the economic develop- ment of the world in the coming years. "In normal times my Government would have welcomed a Conference as this; it does the more so in the present circumstances. It fully endorses the initiative of the United States Government and thereafter of the Economic and Social Council, as it considers it to be of the utmost importance for the Netherlands and the overseas parts of the Kingdom that the international trade will as much as possible be freed from the barriers which have impaired its development in the past and might again endanger this development in the future. In this respect, I fully subscribe to what has been said by my Belgian Colleague on the subject of close collaboration between the Netherlands and the Belgo- Luxemburg Economic Union. "Mr. Chairman, I would like to take a firm stand in saying, that without an outlook such as the American Proposals ultimately suggest, the future would be without hope. "When thus applauding the ultimate object of this Conference, we should, however, not forget that those trade barriers did not arise in that fateful period between two catastrophic wars out of the sheer whim of Governments. After the 1914-1918 war, fundamental changes had to be dealt with as is the case now. For the Netherlands, for instance, there is the fateful problem of the Mid-European Hinterland, the present loss of which makes itself so severely felt not only in the agricultural and industrial fields, but not less with regard to transport and transit trade. "Welcoming this Conference on behalf of the Government of the United Kingdom - Sir Stafford Cripps so rightly stated; these problems cannot and may not be solved by simply exporting unemployment from one country to another. We are therefore of the opinion, that special stress should be laid on the regulation of international economic life. Keeping fully in mind the inter-dependency of international trade and employment and not laying too much stress on the word "Freedom" as yet! In our opinion there should be a regulation of full employment in a positive way, bearing in mind a set of rules which - within certain margins - must be followed by the countries of the world when trying to reach this common and so important aim. It may, however, very well be that the great intricacy of these employment problems, will only allow us to reach a few general conclusions which should be worked out in a separate conference. 4362 -46- "We also underline again the paramount importance of stability in the prices of raw materials. We therefore support once more the proposals for a World Food Board as prepared by the Director-General of the Food and Agriculture Organizations. These proposals have been studied and discussed at the recent Conference in Copenhagen where the general aims thereof were accepted. They read as follows: (a) "developing and organizing production, distribution and utilization of the basic foods to provide diets on a health standard for the peoples of all countries;" (b) "stabilizing agricultural prices at levels fair to the producers and consumers alike." "In our opinion eventual Governmental Commodity Agreements should be put into operation as a more permanent element in the forth- coming international co-operation and collaboration. "I want to make it quite clear that this is necessary both to avoid unwarranted expansion and too high prices as well as to avoid catastrophal contraction and slumps. "There is even at this stage a further point to make. If we are going to set up rules and regulations which the countries are able to accept and apply when engaged in international trade, it is obvious that difficulties cannot be avoided, in the course of time. Now I consider it as one of the biggest advantages of our work that we have to frame an Organization which may be used as an instrument to avoid one sided action and to make it possible instead to promote mutual understanding, concerted solutions and binding decisions in the interest of all. "Mr. Chairman, I would now like to conclude these provisional observations from which you will have noticed how much we are in agree- ment with the general purpose of this Conference and how much we welcome the directions of the Economic and Social Council with regard to the importance of stability in the prices of primary products and of pro- moting the economic activity of under-developed countries. "I should, however, fail in my duty if I did not again draw the attention of the Preparatory Committee to the special problems which face the Kingdom of the Netherlands together with many other countries in this very difficult transitional period, and which to a great extent must guide our attitude at this Conference. "I do so without any hesitation as I think that the Netherlands and the overseas parts of the Kingdom have amply shown in the past how much they value international co-operation in every respect." MR. CAMPBELL (New Zealand) said: "I would like firstly to say that New Zealand is in full agree- ment with the general objective of expanding employment and of increasing world trade and is pleased to have the opportunity to be represented at this Conference for the purpose of exploring ways and means whereby that aim might be achieved. New Zealand has a special interest in this question since her overseas trade per capita, represented by both imports and exports, is extremely high in relation to that of other countries. 4362 -47- "World trade is a tremendously large and complex problem which has not yet been covered by any comprehensive international set of rules. We feel, therefore, that the greatest contribution towards achieving something in that direction can be made at this meeting by a free and frank discussion of the problems as they are known to us, without attempting to be too dogmatic. That is, I understand, the purpose for which we are really here. "If they are to have wide acceptance, any set of rules which are ultimately adopted must, of course, take cognisance of the economic position of all countries and must allow for flexibility to meet vary- ing conditions. "Obviously, although each have their particular problems, countries which are highly developed industrially and which have large domestic as well as export markets are, in so far as they may require to adopt measures to achieve the general purposes aimed at, in a somewhat differ- ent category from countries such as New Zealand, which has a small population, which relies largely on a narrow range of exports of primary products for its economic stability, which is as yet under-developed so far as secondary industries are concerned and which must develop suitable industries in order to diversify its economy and provide avenues for employment of its people and of its material resources, from which would flow an expansion of production and demand leading to increased world trade. "Countries within the latter category should, it is felt, have access to means for achieving their purposes which are best suited to their particular conditions, subject to their being employed towards the generally accepted objectives. New Zealand will be glad to add its contribution to the discussions on the various aspects of commercial policy which will come under review in the Working Committees to be set up for that purpose and will co-operate to the fullest extent practicable in achieving the goal to which our task is directed." MR. A. T. BRENNAN (Union of South Africa) said: "I want to preface the remarks that I am making with the comments that were made similarly by my Canadian colleague, and I do so to make quite sure that, as a government official, anything that I may say now you will not be in a position to use in evidence against me afterwards. My colleagues and I from the Union of South Africa feel particularly honoured to have the privilege of sitting around this table as represent- atives of a country that has been appointed by the Economic and Social Council to carry out the work that has been entrusted to this particular Committee, and I regard myself as a member of that Committee. My colleagues and I like to think that including the Union of South Africa in this Committee, it may be an additional compliment was being paid quite directly to that grand old international Statesman, our Prime Minister, General Smuts. "In looking over the names of the Committee I find that it is quite a reasonable cross-section of the old-established industrial countries and many of those, like ourselves, whose general industrial- ization has only commenced over relatively recent years. We are all very conscious, however, that we are part of the same big international family. Some of us, I know, feel that some of our older brothers and sisters, and in particular in the realm of international trade, have not set us entirely as good an example 4362 -48- as they might have set. I recognize that some of us, not being as developed as they were, were disposed in many cases to follow some of the bad examples that they may have set us, and although the younger members of that particular group are disposed to be a little critical of some of their older brothers and sisters, and to feel towards them that they have made some mistakes in the past and have led some of the younger members of the international family astray, that is no reason why they should be absolved from any criticism by some of those younger members. In other words, those younger members may have ideas that age alone should not necessarily be the major criterion as to whether that calls for respect. If one had to think in terms like that one would be disposed to say that because a billycoat has a beard one should take off one's hat to it; - not that I for one moment regard my brothers and sisters as goats of any variety: "However, looking round the table and looking round the block that I find from right to left and left to right, I feel that I want a reasonably early point to pay particular tribute to that great and grand country, the United States of America, and particularly for the work that my American friends have put in with regard to assisting us to get together here and in having something factual as a basis upon which to operate. I notice in the original document that come out some time later, in or about December 1945, there was a joint statement issued by the United States and the United Kingdom regarding the understanding reached on commercial policy, and accordingly on that basis I should like to allocate a piece of that particular tribute to the representative of the United Kingdom, amongst whom I know there were, not only during the war but subsequent to the war, a large number of men, some young men, some middle aged, some older, who were very busy in those back rooms that one read about a long time back, who have been putting in a lot of thinking on the material that we are working on at the moment. "I look round here and find with regret that my Soviet colleague is not next to me, but I am confident that at some later date he will be there. I am equally conscious that I have a little bit to the left of me the great United States and the United Kingdom, out I am sure that is only a matter at present of just purely geographical position relative to the Union of South Africa. "Mr. Chairman, while listening to the remarks that have gone around this room I paid particular attention and derived a great deal of happiness and confidence in regard to the way that this Committee is going to develop its ultimate Charter and is going to prepare its final Agenda, in that I found without exception we are all aiming at the same objectives. We all have the same purpose in view, but because we enjoy living in the democratic way of life we decide that we want to approach that particular objective by our own particular road. We do not want to be told by somebody else which path we must follow in order to get to that particular objective. "I recognize that there has been a tremendous change - and each one of us recognizes the same thing - in the development of international trade over the last three or four or five hundred years. In company with many of our colleagues, we have been engaged in the practical but factual developmental aspects of international trade for quite a large part of the lives of some of us, and I notice the very big advance that has been made over a relatively recent period of history. 4362 "I am reminded of the stories that used to be alleged with regard to, maybe, some of my own forebears - and I feel that the remarks I want to make now I make with due decorum and with full recognition of the privilege that we are enjoying in being housed in these wonderful rooms and being given such wonderful accommodation, and I am confident my remarks will not be taken miss - in that it used to be said of some of those forebears that they started off round the world and had the Bible, the Word of God, in one hand, and samples of cotton piece goods in the other hand : In like manner it has been said that in the develop- ment of our conversations of an international nature we should comport ourselves in certain ways. I think it was quite a famous american gentleman who many years ago, or maybe not so many years ago, in regard to behaviour concerning international associations of trade and other matters of diplomacy - as there will be no diplomacy if there is no international trade - remarked that his attitude generally was to speak softly and to carry a big stick ! "Well, we are in this position here, that that generation has gone. We do not require to speak softly and carry a cane of any sort. We feel we are privileged to sit around these tables here and speak in a very clear voice, reasonably modulated, taking cognizance that our colleagues round about us are entitled to the same forum, and accordingly probably deriving and achieving very much greater results. "To continue, Mr. Chairman, I reiterate that I regard myself as being one of the technicians in the group that is around this tables and, as I have remarked, I feel a particular interest in that there is so much community of thought in read to that we are actually endeavouring to achieve. I think it was Abraham Lincoln who, one one of his many wonderful occasions, speaking to those round about him who had differences of opinion, merely drew their attention to the fact that, they were all going to the samle place. He was not talking in terms of their after-life; he was talking of the direction in which they were moving, although they were going by different roads. So we here have all been going by different roads in the past, but we are all going towards the same place, namely, the greater development of international trade, and connoting with that a development of employment, which necessarily to us means the right of every human being to work for his economic advantage and for his economic betterment; to give him the opportunity to improve as years go by, and thereby to achieve the wishes of each of our own parents, that each of our sons and daughters will start off a little better off than we started off when we arrived. "We have been travelling along different roads for quite a long time. Some of us wanted to go off into the jungle and got tied up with various types of vines and restrictions; others of us found that along the road which we were walking there were a number of rocks against which we stubbed our toes or against which we barked our shins; or there was a tariff wall tucked away somewhere that caused us to stumble somewhat; or we may even have had preference or various other problems that may have come in our way; but we are now at last gathered together so that we can start on something in the way of a blue-print of a road that will be sufficiently comfortable for each of us to wander along in our own time, but with due reward to the other fellow, and, at the smile time, a blue-print of a road that requires a lot of preparing. 4362 -50- "I recognize that some of my younger colleagues and maybe some of my older colleagues of the more industrialized nations may feel that in the preparation of that blueprint they would like to centemplate using more advanced road makers - bulldozers - where some of us might not feel that we had yet arrived at that particular stage, recognizing that possibly in the development of that road we may find that that road making machinery or that bulldozer will come up against rocks, pieces of flint in the road, and that you may have sparks operating from one section of the community to another in regard to the bulldozer's steel hitting up against the flints on the roadsides - and I was not for one moment referring to my AustraIian colleague when I was speaking of sparks flying! I was merely feeling that we know the type of road we want to prepare and we know the way we should go about it. We have been more or less handpicked as people who have devoted a lot of time and a lot of energy to the particular type of blueprint we are actually going to work out. "I feel that the preparation of that blueprint should not take us very long actually in our present discussions, but I feel that the ultimate development of the blueprint and the road is going to take very much longer. I read in an American newspaper sometime last month, and at a time when this was being brought to light, the remarks that were made on 4 September 1946, by Mr. Will. Clayton, the present Under-Secretary of State of the United States, who was at that time Acting Secretary of the United States, which included the words "Progress will necessarily be slow towards the attainment of our ultimate objectives, but by starting in the right direction, the nations of the world will be moving away from the chaos that will surely engulf them if they cling to the exclusionist, discriminatory practice that during the pre-war years diverted trade into uneconomic channels, resulting in a severe shrinking of trade volume, and intensified the political tensions that prepared the way for the Second World War." "I feel that our deliberations must be direted towards an expending economy, and, as I remarked before and I reiterate, I include in that expanding economy the right of everybody to work for his economic advantage and for his betterment. I feel that the Charter that we finally decide upon must necessarily be realistic and therefore must be elastic and flexible. Otherwise, we run the risk of setting up a machine which will be so cumberseme and so cluttered up with restrictions and strings and tapes, and require the pulling of so many wires that when we look back on it afterwards and history looks back on it afterwards, it will be found that instead of producing something that was really worth while, we have failed in the job that is our particular job as technicians, namely the preparing of the blueprint. 'I think there is a quotation from Tennyson to the effect that - "The war drums throb no longer And the battle flags are furled In the Parliament of man And the Federation of the world" I think we have a particular job, to set up a piece of that edifice. I recognize that it is not going to be a rapid process. It is going to be very slow, but I recognize at the same time that although it may be slow in terms of our lives, it is going to be wonderfully fast in terms of history." 4362 -51- MR. R. A. MARQUAND (United Kingdom) said: "When he welcomed the delegates to this Conference Sir Stafford Cripps described the attitude of the United Kingdom Government to the problems of the restoration and organisation of international trade. There is, therefore, no need for me to repeat that explanation. Having heard the views of the other delegations, however, there are some words which I should now like to add. "The British Government is basing its whole economic policy upon the belief that it is possible by wise planning to establish a high and stable level of employment. Some of the basic ideas behind that policy were contained in a White Paper on Employment Policy which was issued in 1944. At that time there was a Obalition Government in this country. Consequently, both the major political parties in Britain are committed to the support of the principles laid down in that White Paper. I will read an extract from the White Paper which has special relevance to the matters which we are now discussing:- 'A country will not suffer from huse unemployment so long as the total demand for its goods and services is maintained at a high level, but in this country we are ob -ced t .o consider external no less than interndl 'nda Th. IoveGcm.rn=ent are, therefore, seeking to create, through collaboo?ti-n betwten 'at nMiions, conditions of international trwhe ;Lichw =ill make it possible for all countries to pursue policofs OI fell cmployment to their mutual advantage.' "mid then in anotper gaap-rtih Whe ehiP p rater says:- 'A coundryedep;ndent on exportsd an_ relying largely, as we ao, on the export of manufactuged sood. of high quality, needs prosperity in ite oe'rsmas :tsker . sThae c;nnot be achieved with- out effectivl corlaborntamrng oue na; z s tiono. It is, therefore, an espential ^art of the Governmpnt's e!ypoyment Lolicy to co- operate actively withaothns n.tiohe, instri firot place for the re-establishgent of &-nermlcecoab_ie st:.ility after the shocks of the war, and, next, poo thesiregreszivQ expansion of trade.' "I woul_ like to emagasizehL--ihn Lat aat: is ' document common to both the major popitical oarties in this coNotry. oiw when the war endcd ve had a very full opportunityuss discCSSing with the Government of the Uaieed StAm's of ezericadwmys an; -eess of r-etoring and expanding international trAde. .fted those liscussionse hap takn .lace the Government of the United StAtes of wmerica published tpeir ProPosals for the establishment oe na Intmrantional gande OrardizaWien. ahun thpy were -ublished, the twm Gtvernrenrs, thc GovernmentUof the Jnited EinEdom anv the GosernmentUofteheSIniecd atAmus of esmrica, ade this statement: - 'Thcse Proaosals hive the eendorsemnt ofExthe ecutive Branch of theeGavernmtnt of ethe aUeniaddStts :n_ have been submitted to other Governments as a badsiz for iscussion preliminary to the holding of such a Conferencq. Eaually, thm Governzent of the United Xingdom is ig eull atr-eaent mp -ll iLaortant points in these Proposals and accepts theasas a be.is for international discussion, and it will, in commtnewith .h United States Government, use its bast endeavburs to 1ring such discussions to a successful conclusion ign the liht oe the vivws expressed by other countries .' 4362 "Since then we have been able to held brief separate discussions on these Proposals with the Government of India and the Governments of the Dominions. During these recent days we have heard for the first time the considered prenouncements of the Governments of other nations "Now I noted with interest and were appoval the praise and thanks which all the delegations extended to the Government of the United States for the initiative which it has taken in formulating Proposals and a draft Charter. As I have said already, we are in full agreement with the important points contained in the Proposals. "We were not parties to the drafting of the Charter, but like other delegations we find it a useful, a helpful document, which will aid us in our detailed discussions during this Conference. It is apparent from what we have heard that these questions are not simple; that many difficulties will appear as we go into details; but the difficulties are small indeed compared with the dangers we incur if we do not set up an organization. "I was much impressed by the clea;rwarn.igx givnl to us by the Dliea.te of the United Staets ofAme=ria w ehnh-e aid .ta"t er-y large countries Eike his own,w.ith abunaant antural esprnces, cCoudh probablyszurvive a failure to gain intera7tioal-agrnemen.t on tese : matetrs, ut that for the rest of usfa'ilure would peltl umstrophe. I g vveee rystg-ronly indeed with that view. I 'was glad, tooa the sta ed tas c early hv h1is convictioa thnt the ediffrences in emonophi o:ophy w ch ieXe so beioe ._:w.;en us need not prevent our collaboinatienefm th_ ofert tD -stablish an International Tradc OrganizWtion. Je certgree with h-m ..':ii about that. "Th delegate oa appi-red.^ou''ve somecdt. aubts about this. I wouldtlike 4m assmrehhi.thenpte-antr Brer: -itieh meGovtrnnt would not have agreehe Ptoposat.2rfslhey: t ad nvWd eiJ.n;olvmmaymeo-nitt~nt to abandpon our Pliricalppesncill--. "Hell,lrer, awe:adyeagahned -the-gra,ifying c impression that, though tha dre esediefof-emphasis,ze th e .rsrr is wudh a e'ice ara of -seontpOn Prineciand aimC dzsttha e thffere; es fc o: detain c-a b_ cvmrboWe. grea¢trettht o ghuh-e fhee -g.in3 oadtr-ce ahd tfe rzduction af berriare .srenz esttalseo ecpr_ Perosp ity- for the peoples oe tou w,rld. taee ir- nytthemselve'L -f sulficient. Twus ve are imp sy~athy wite th. gale_.from:Belgj m iu. aud mbxeziourg, Brazil, Chira, and Ie darsay with othwrs may have madeo ic this point ,lso. but those are the ones IedotuWe are in agreemcn eet with them that more than tnegadeve ccisiore requi:e.-from s0 ontei Cnefzrence, and thus -g eave Zmpathy o -t,,- e Australia pl n :n a1 that constructive suggestions shopld be -ut f In Com e weV% aC mtt;e --; shll ourselves endaavour to do th^t awardo oring for .-p op-nstructive PrPosals, to which we eahadealgof thougrt EVL ' D 'ht. 'On ehis geoerale uxstisnr1a th;. induzt.i lization of the countries not pedfully develodc; ao stmJesfaour ceunoriuo ore, I would like to gay to the Deaetates dfa,Chainr Ame Ineni. Ltin .-zrica and the Lebanon, th-t they will not fiympa us fothout s ohy o'r their pcint of view. 1362 -53- "We have great experience in these matters and we would like to make it available and place our experience at their disposal. And there is one piece of experience which I can assure them we shall never forget. King George III a very long time ago tried to prevent on undeveloped country from becoming more diversified in its economic structure, and the result of that is the slight division which separates us this morning ! "Sir, the Delegates from Canada and Czechoslovakia have indicated that this is an occasion for the study by experts of the detailed: implications of a policy of international trade organization; that it is not an occasion for Governments to decide whether or not they will set up an international organization; it is an occasion for the experts to consider the implications of that and advise upon it to the Economic and Social Council. We very much agree with that view of the purposes of this Conference. We are convinced that it can do its work only by detailed discussion among experts. We do not want to prolong this stage of discussion too much. It already does seem to us quite a long time since we first entered into these discussions with the United States of America. It is nearly twelve months since these proposals were published. and we are beginning to feel that it is time that somebody got a move on and that an organization was brought into being. We do not want to delay. Therefore I think we want, in a final word, to say to the Conference: Let us now get down to work; because these detailed discussions must go on; they must be pursued with rapidity, and they must have all the intelligence and all the attention we can bring to bear upon them." The CHAIRMAN announced the completion of the programme of general statements by delegations and inquired whether any other delegations wished to be heard. He expressed his pleasure that the statements made had revealed no great divergence of views, and he said that the universal good will expressed in them augured well for the success of the Preparatory Commit teemetctig . MR. YIDHAM WHJITE, Executive Secretar, requested ap-roval of the amendment to Suggested Ruls_ ofP rocedure referring to Rule4L7 dealing with rcwords of meetingswWhich aws adopted at the Second Preparatory Cmimittee Executive Session held on 16 October, 1946. The redrafted urle reads as follows: Rul.e 47 "Verbatim records of public meetings shall be available to the public. The verbatim records of private meetings shall be available to all Members of the United Nations and to specialized intergsovernmental geecoies." Rule 47 was approved. The me.tig_ rose at 11355 a.m. 4362 -54- Committee I : Employment, Economic Activity and Industrial Development First Meeting Held on Friday 18 October 1946 at 2.30 p.m. At its opening meeting, Committee I, under the temporary Chairmanship of Mr. E. WYNDHAM WHITE, Executive Secretary, unanimously elected MR. WUNSZ KING (China) as Chairman, and Mr. S. D. PIERCE (Canada) as Vice-Chairman. The Committee next considered a suggested agenda which had been submitted by the United States Delegation. Some discussion arose over item B. of this suggested Agenda, relating to the question of industrial development which has been deferred to Committees I and II by the Preparatory Committee. The Committee decided to suggest to Committee II that a joint meeting of both Committees be held later in the after- noon, to consider the manner in which the question could best be dealt with. With regard to the Agenda as a whole, the Committee agreed to accept it as a provisional basis for discussion, on the understanding that a more detailed plan of work, incorporating the suggestions made to the Preparatory Committee by the United States, Australian, Brazilian and Indian Delegations, would be considered. Committee II : General Commercial Policy (Restrictions, Regulations and Discriminations) First Meeting Held on Friday 18 October 1946 at 3.45 p.m. After opening of the meeting by the Executive Secretary of the Conference, Mr. WYNDHAM WHITE, the Head of the Australian Delegation, Dr. H. C. COOMBS, was elected Chairman, and the Head of the Netherlands Delegation, Dr. SPEEKENPRINK, Vice-Chairman. A provisional agend;a was aopQeud, but it was greed that the agenda was subject to modification in the light of further discussion. -n invitation from ommiiteE o I to hold after the conclusion of the meeting a joint meetingwmith Committee II to consider problems connected with industrialdecvelopment was adopted. ItwYas sgg-ested that a plan ofw-ork should be drawn up by the Cahirman andc the etcretariat and be put before the next meeting of the C mmoiteecwvhich would be held onMiodCay, 21 October 1946, at 3.45 pm. 4362 -55- Committee III : Cartels (Restrictive Business Practices) First Meeting Held on Friday 18 October 1946 at 5.00 p.m. After the Temporary Chairman, Mr. J. A. LACARTE, Deputy Executive Secretary, opened the meeting, Mr. DIETERLIN, of France, and Mr. GONZALEZ, of Chile, were unanimously elected Chairman and Vice-Chairman, respectively. The Committee then adopted its provisional agenda and held a brief discussion of its methods of work. These discussions will be resumed at the next meeting which will be held on Monday 21 October, 1946, at 3.00 p.m. Committee IV : Commodities (Intergovernmental Commodity Arrangements) First Meeting Held on Friday 18 October 1946 at 3.45 p.m. After the temporary Chairman (Mr. J. A. Lacarte) declared the Meeting open, Mr. J. R. C. HELMORE (United Kingdom) was elected Chairman and Mr. Bjarne ROBBERSTAD (Norway) Vice-Chairman. Consideration of the suggested Agenda was postponed until the next Meeting of the Committee. Committee V : Administration (Administrative & Organization) First Meeting Held on Friday 18 October 1946 at 5.00 p.m. The meeting was opened by the Executive Secretary who after introduc- ing the members of the Committee Secretariat referred particularly to the rules of procedure as approved by the Plenary Meeting and in particular to the rules regarding interpretation and translation. Nominations for officers resulted in the unanimous election of Mr. L.R. EDMINSTER of the United States Delegation as Chairman and Mr. H. CABAL of Brazil as Vice- Chairman. A suggested agenda based on the relevant provisions of the U.S. Draft Charter was briefly considered, final action being deferred until the first business meeting. In connection with the Committee's programme of Work, the view was expressed that the progress which the Committee could expect to make would depend to a certain extent on the progress made in the other Committees. It was considered, however, that the Committee could usefully begin discussion of a number of topics relating to organizational and administrative questions and that the next meeting should therefore take place on Monday 21 October 1946, at 5.00 p.m. 4362 -56- Committees I and II : (Joint Committee) First Meeting Held on Friday 18 October 1946 at 4.30 p.m. (Hoare Memorial Hall) According to the decisions taken by Committee I and agreed upon by Committee II, a joint session of Committee I on Employment, Economic Activity and Industrial Development, and of Committee II on General Commercial Policy, agreed to establish a Joint Committee on Industrial Development. Mr. H.S. MALIK of the Indian Delegation, was elected as Chairman of this Joint Committee, and it was agreed that Mr. WUNSZ KING, Chairman of Committee I, and Mr. H. C. COOMBS, Chairman of Committee II, should act as Vice-Chairmen. It was agreed that the Chairman would consult with the Chairmen of Committees I and II about the work of the Joint Committee, which would meet after Committees I and II had held a few meetings. 4362 -57- IV. DOCUMENTS DISTRIBUTED On Friday 18 October 1946 Symbol No. E/PC/T/4 Title Provisional Agenda V. MISCELLANEOUS A. Accommodation The following Delegations have offices in Church House: Delegation Room No. Australian 232 and 232A Brazilian 233 Canadian 234 Chinese 235 French 349 Indian 346 and 347 Norwegian 138 United Kingdom: Delegation Secretariat United States 337 333 and 340 348 and 350 Tel. Ext. 92 and 141 143 144 146 151 156 512 415 and 131 495 and 155 159 B. Telegrams and Cables Delegates wishing to send telegrams or overseas cables can hand them in to the Registry, Room 547. Delegates will be asked to give their names and Delegations so that accounts can be rendered in due course. C. Lost and Found Lost A Lady's brown felt hat. A hat (belonging to M. Calmes) appears to have been taken in mistake from the hat stand outside the Delegates Lounge. A similar hat (black homburg) has been left in its place. Will Delegates who have used the hat stand be good enough to see that they have the right hat, and if not bring it to the Lost Property Office. 4362 -58 - Found One fountainpen One cigarette lighter One door key One despatch case. Lost Property Office: Room44 144 (Order of the Day Offic.), MOUNhLICATIONS TO THE EDITOR PLreaial for insertion in the JOURNAL should be addressed to the Editors, Room 413 and 414 (Telephone extensions 29 and 255). 4362

GATT Library

qb570np5895

Preparatory Committee of the International Conference on Trade and Employment London 1946 Journal. Journal No. 6 Monday 21 October 1946

United Nations Economic and Social Council, October 21, 1946

United Nations. Economic and Social Council

21/10/1946

journal

5-23

https://exhibits.stanford.edu/gatt/catalog/qb570np5895

qb570np5895_90240021.xml

GATT_157

United Nations ECONOMIC AND SOCIAL COUNCIL -59 - Nations Unies CONSEIL ECONOMIQUE ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT LONDON 1946 JOURNAL No.6 MONDAY 21 OCTOBER 1946 Comittee I. PROGRAMME OF MÉfETIGCS o.day 21 October 1946 A. Plenary Meetings Nil. B. Committee Meetings mdtee I: SecMeeNond ung Hoare . " SecoMeendng ti (continued) " SMeeecond ting (continued) t II. AGENDA Monday 21 October 1946 CoI :mmittee Me Second eting 1. Consideration eopf frummtur rogae (Statemeent by th Chairman) 2. Consideraltion of etter from International Chambere of Commrce W(E/PC/T/.17). Room loriaL-Hll ,, ti- l I. ' 'I 4408 Time 11.00 am. 3.00 p.m. 5.00 p.m. -60 - III. SUMMARY RECORD OF MEETINGS Committee IV : Inter-governmental Comodity Arrangements. Second Meeting Held on Saturday 19 October 1946 at 10.30 a.m. It was decided to have a general discussion of the problems facing the Committee after which the Chairman and the Secretariat would suggest any points requiring further discussion and not covered by the Provisional Agenda. The Committee then proceeded to a general discussion which is to be continued at its next Meeting. It was unanimously agreed that Mr. J. HELANDER (Norway) should be elected Vice-Chairman instead of Mr. ROBERSTAD (Norway) who had found it necessary to withdraw from the work of this particularr Committee. IV. DOCUMENTS DISTRIBUTED On Saturday 19 October 1946 Symbol No. E/PC/T/INF/3 Title Notice to Delegations Committee Arrangements. V. MISCELLANEOUS A. Accomodation Addition to list of offices of Delegations published in JOURNAL No.5: Delegation Room No. Tel. Ext. Union of South Africa 244 173 B. Missing Property An imperial from Rooma 402. the Order of the typewriter, No. Z. 158071, English keyboard, is missing Would anyone who knows of its whereabouts please inform Day Officer, Room 144. COMMUNICATIONS TO THE EDITOR Material for insertion in the JOURNAL should be addressed to the Editions. Room 413 and 414. (Telephone extensions 29 and 255). 4408

GATT Library

bb778sw0111

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Eighth Meeting procedures Sub-Committee of Committee II held at Church House, Westminster, S.W.1. on Friday, 8th November, 1946 at 3 p.m

United Nations Economic and Social Council, November 8, 1946

United Nations. Economic and Social Council

08/11/1946

official documents

E/PC/T/C.II/PRO/PV/8 and E/PC/T/C.II/PRO/PV/7-8

https://exhibits.stanford.edu/gatt/catalog/bb778sw0111

bb778sw0111_90050502.xml

GATT_157

E/PC/T/C.II/PRO/PV/8. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT . Verbatim Report of the EIGHTH MEETING PROCEDURES SUB-COMMITTEE of COMMITTEE II held at Church House, Westminster, S.W.1. on Friday, 8th November, 1946 at Chairman: Dr.A.B.SPEEKENBRINK (Netherlands) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.1) 1. ._ _ _ . _ _ _ _ _ _ _ _ _ _ __ .. . A.2 THE CHAIRMAN: The meeting is open. I would like to refer to our last meeting. Last time we ended with a request to the Rapporteur to submit a draft for the first sentence of Article 18 for our approval, and to state further the question of state trading in that Article. Before I ask the Rapporteur to explain what he has done there is the question of our next meetig. I understand that eight o'clock tonight is available, tomorrow morning or both, whichever you prefer. Mr. SHACKLE (United Kingdom): I suggest tomorrow morning. THE CHAIRMAN: Tomorrow morning at 10.30. Is that agreed? MR. McKINNON (Canada): Do you think we can possibly get through in Committee II if we do not hold night meetings? My impression is that we are holding up the work of the whole Preparatory Committee, and that the longer we go on the more likely we are to hold it up. I notice that the technical sub-committee is meeting tonight; they have met this morning, and they are, meeting this afternoon. I am just wondering whether, now that we have set a target data - to which, as far as I am concerned, we are going to adhere we can hopa to conclude by the 2Otn to the 23rd if we do not do more in the way of night meetings. MR. SHACKLE (United Kingdom): What subjects remain on our agenda? THE CHAIRMAN: We still have to clear Article 18; then we have to deal with Articles 29 and 30; and after that we still have to deal with Article 33. Later on I think there will also be combined meetings of with Committee V. Also, we are still awaiting certain decisions from Committees I and II. MR. McKINNON (Canada): Do not you think we will also have thrown back to us from technical committee that part of their terms of reference called "General provisions", which to my mind have nothing to do with the technical committee but should be in here? They are entirely policy matters. I cannot see how we can possibly complete our work. 2. .U./I-U/T/C. ïi/1?,0/1>V/G - B.1 E/BC/T/C. II/PRO/PV8 THE CHAIRMAN: I am inclined to agree with you there. I am prepared to meet tonight as well as next week. New that we have finished with the work of the main committee as far as possible, I am quite prepared to meet tonight. We would have met this morning, as I asked, had that beoen possible. There is another point - we must consider our Rapporteur, who must have some time to prepare something for us. However, he says he can strain him- self to meet the wishes of the Committee. Mr. MEKINNON (Canada): I have no doubt about that. I have not much sympath with the Rapporteur, I know his capacity. THE CHAIRMAN: Mr. Hawkins is also a very busy man in another Committee. MR. HAWKINS (United States): I can come at any time when the Committee meets when there is no other meeting. THE CHAIRMAN: But what is the priority for meetings? I suggest that we should get through our work, as much as possible, because Mr. Hawkins will be tied up with other meetings again. I am afraid we shall have to meet at 8 o'clock tonight as well. Now I would ask the Rapporteur to explain what he has done with the first sentence of paragraph 1 of Article 18. MR. HAWKINS (United States): At the last meeting three amendments were suggested to the parenthetical phrase in the first paragraph of Article 18. The Delegate of India suggested that the words "of production" should be deleted since, if they were left in, it would imply that fiscal tariffs were not to be considered. The Delegate of the United Kingdom suggested that the phrase should be repoated in a suitable form after the phrase "margins of tariff proferences" and it was generally agreed that if the references were to be kept there some appropriate cross-reference should be made to Article 27, which deals with the question of margin of preference. On looking it over I suggest to the Committee that the matter can be very easily handled - 3 - B.2 E/PC/T/C. II/PRO/PV/8 simply by deleting the reference entirely from the first paragraph, since Article 27 provides for a commitment where by members maintaining State monopolies on individual products agree to enter into negotiations in the manner provided for in respect of tariffs under Article 18. So it is already taken care of, and cross-reference in Article 18 is unnecessary. A minor amendment in Article 27 would seem to the desirable to make it clear that both tariffs and preferences - tariffs and proferential margins, really - are dealt with in Article 27. The redraft of point 4 of the paper which you have before you simply omits entirely the parenthetical reference and incorporates a minor change which was agreed on carlier at the last meeting, so that the language covers both tariffs and imports and exports, and other charges on imports and exports. I suppose that it is not intended to cover such things an internal taxes, but simply charges placed on imports alone. That is all I have to report. THE CHAIRMAN: Then before we approve this I think we have to refor to a number of arguments that have been put forward in Committee I and II. The question of industrialisation we still to be covered. I understand that that question is still under discussion in Committee I and II, and I think the Rapporteur feels also that it would perhaps be better if we did not consider that question at this moment, but simply waited the results of Committee I and II. We could then see 'whether we should have to draft anything to put in here. MR. ALAMILLA (Cuba): The Cuban Delegation agrees that these points on which the three amendments have been proposed, one by the Cuban Delegation, one by the Chilean Delegation, and one by the Indian elegation, should be delayed until we know were about what the Industrialisation Committee is doing. At the same time I just want to make a reservation. Our Delegation at least, and I understand others too, would like to have the right to bring back this problem to the consideration of the Committee at any moment . B.3 E/PC/T/C. II/PRO/PV/8 they may deem convenient, even if no agreement or progress has been made in the Industrialisation Committee. we do not want to do it unless we see that the Joint Committee is not getting anywhere, and in that case we want to have a discussion here. THE CHAIRMAN: of course I have only said it was postponed for discussion later; it is not taken off the agenda. MR. MCKINNON (Canada): I presume, then, that if the Joint Committee sees reach some reasonable and acceptable chapter or article in respect of under-developed countries, you would not raise again the point in connection with Article 18? MR. COOMBS (Australia): If I could speak on that, perhaps I could assist, since we are responsible for drafting the Rapporteur's draft on the Joint Committee. I think it was generally agreed at the meeting of the Drafting Committee of the Joint Committee that it would not be desirable to write into the chapter on industrial development, if there were to be such a chapter, matters which were in fact relevant to the other parts of the Charter. The sort of structure that we envisaged was that the chapter relating the industrial development would establish the right to use protective measures for industrial development subject to the pro- visions of the Charter, or something to that effect, relying if necessary on the modification of the relevant parts of the Charter which deal with tariffs, subsides and so on to ensure the necessary freedom to use these things for industrial protection. It will therefore be necessary, if that general approach is adhered to in the Industrial Development Com- mittee, for Article 18 to be examined, at any rate to see wheeher it is consistent with that decision. THE CHAIRMAN: A few other remarks were made on the question of "substantial reduction" of tariffs. One related te the question of low tariffs versus high tariffs, and I think still another point was raised to the affect that there was even a possibility of raising tariffs. I just mention - 5-. B.4 EsssssssssII/PRO/PV/8 these points because they have a bearing on the further clauses we have to fit in. I do feel that the question of low versus high tariffs is one for the tariff negotiations, and should not come in here. The question of substantial reduction should still be gone into, and also the possibility of an increase in tariff. We should also keep that in mind before we finish with Article 18. I still feel that when we say here "Enter into reciprocal and mutually advantageous negotiations with any such member or members devoted to the substantial reduction of tariffs" and so on it is flexible enough to cover most of these points. There should therefore be no need to put in any more here, Before we definitely approve this part of the article 18, I think I must mention these points to prevent confusion later on. MR. COOMBS (Australia): If I may make a suggestion - when Mr. Hawkins dealt with that point in nis reply he did make it clear that in the opinion of his Delegation at any rate a level of tariffs operating in the countries concerned in the negotiations was a relevant factor in deciding whether the reductions which the country was propared to make as part of its bargain were substantial in the sense meant here. I am not quite sure, but I think there was some suggestion that the level of development reached by the county would also be a relevant factor. It does seem to me that in view of the very great interest in those two points on the part of a number of delegations in the full Committee, it might be wise to consider adding after "substantial reductions" something which would say "having regard to the level of tariffs in the countries concerned", adding perhaps the stage of economic development reached. That would net be proper drafting, but the point is whether it right not be wise, in view of the interest shown, to make some reference to those things, not in any absolute sense, but indicating that the interpretation of the word "substantial" would be in the light of such factors as would be relevant. MR. HAWKINS (United States): I think there are really two questions there. -6- B.5 E/PC/T/C.II/PRO/PV/8 Entirely apart from the stage of development of the country, I think it should be made clear that in the negotiations, if a country has a low rate on a particular product in which another country is interested, that rate should be given just as much weight as if it had been high and had been reduced to that figure. That is one point which would apply irrespective of the stage of development. It might apply to British tariffs, to American tariffs, or any other. Then there is the question as to whether special provision is needed relating to the stage of development of a country. That seems to me to be another and broader question. THE CHAIRMAN: There is also the point we left open, as far as I understand it, awaiting the results of Committee I and II. The main point here is whether there would be any confusion about the words "substantial reductions" because it would be a general obligation for every country to give a substantial reduction of their tariffs specifically, or does it mean tariffs generally? I things that is the main confusion arising out of the present drafting of the clause. - 7 - . C.1 E/PC/T/C.II/PRO./PV/8 MR HAWKINS: with a view to trying to clarify the issue and to see if I interpret rightly what is in the mind of the Indian delegate and others, I wonder whether this question that is bothering there does not arise in connection with paragraph 3 and its relation to paragraph 1. Paragraph 3, if I may just read what it says, lays down that "If any Member considers that any other Member has failed, within a reasonable period of time, to fulfil its obliga- tions under paragraph 1 of this Article..." Now, to refer back to paragraph 1, it says the obligation shall be to encourage the "substantial reduction of tariiffs". Let us imagine a country - there are many of them - whose general level of tariffs is very low. Then the question would. arise, if it bound these rates, whether it has complied with the provisions of Article 18, Is that a correct interpretation of the position of your delegation? MR ADARKAR (India): With a slight difference. It might be necessary for a country even to keep certain items absolutely free. It might be difficult for the country to bind even the existing rates in order to provide for any protection that may be needed for industries still to be developed. MR HAWKINS (USA): Mr Chairman, I think there are two questions there and they should be discussed separately. There is first of all (this, I think, is fairly clear) the question whether a more binding - assuming that a country has a low level of tariffs and in general what it does is to bind rates - is to be regarded as compliance with paragraph 1 of Article 18, which says "the substantial reduction of tariffs" is desired. My own view is that the paragraph from that point of view needs some clarification. It is a technical point, but I can understand that anyone on a low level of tariff's might be concerned about it. The remedy for it would be the insertion of appropriate language to the effect that the granting of a low rate (I am not trying to draft the language now but it might be roughly this) shall be regarded as the equivalent to a substantial reduction under a high rate. That would clarify that particular point. THE CHAIRMAN: Would that be a matter to be put under a., b., or o.? DR COOMBS (Australia): Would it be appropriate under paragraph 3, as Mr Hawkins has suggested, where it reads, "The Organisation, if it finds that a Member 8. C.2 E/PC/T/C. II/PRO./PV/8 has, without sufficient justification, failed to negotiate with such complaining Member as required by Paragraph 1 of this Article"? We might put in there something which relates the obligation to the existing level of tariffs. That would possibly meet it. I agree with Mr Hawkins that the point about the state of industrial development really ties up with this other question, which should be left until we get something from the joint body. Would it meet the point if we said this, "If the Organisa- tion finds, having regard to the existing level of tariffs, that a member has, without sufficient justification.... "? I am not sure which would be the best place for the phrase to come in, but it does seem to me that something like that should be put into that sentence. MR HAWIKNS: The point is important, and for that reason it might be set off apart from the rest of it, It could be done by a new sub-paragraph, for which I hvae a tentative formula here. It would be c. under paragraph 1, and it would read in this way: "The binding of low rates of duty or of duty-free treatment shall be given equal weight with the reduction of higher rates of duty". Then, in order to the that to paragraph 1, you would say, "in accordance with the requirements of paragraph 1", or words to that effect, so as to show that you are defining "substantial" as it relates to low rates for the purposes of paragraph 1. THE CHAIRMAN: I think we could continue on the basis that this addition should be made to paragraph 1, as proposed by Mr Hawkins. 'In that case, I think we should be able to accept the new draft of the first sentence of paragraph 1. There is only one point that I would ask before we do that officially, and that is this: there is the difficulty of the question of the negotiation of quotas. You remember some countries have at thismoment a combination of tariffs and quotas. We have a special Sub-Committee to deal with that, composed of representatives of the U.K., U.S.A., Australia, Canada and New Zealand, I think. I wonder whether we could give our approval to this paragraph without hearing anything from the other Sub- Committee, or whether we should wait to hear from them. MR IGONET (France)(Interpretation): Mr Chairman, before the war we had also a combination of quota and tariffs. 9. Now this is suspended. We have suspended C. 3 E/PC/T/C. II/PRO./PV/8 quota and customs duties, and I should like to point out that before the war we were in the same position as these countries mentioned - New Zealand and so on. DR COOMBS (Australia) They are not quota tariffs; they are preferences which take the form of quotas rather then of tariffs. I do not think the Committee mentioned just now has met up to now. As a matter of fact, this has relevance to an earlier clause that you dealt with. THE CHAIRMAN: There is also the same thing here, I think. DR COOMBS (Australia): It comes back in 8, I think, where the present rate is limited to import tariffs in the form of import duties;. but I think the question could for the time being be ignored, provided that when the Sub- Committee has met and discussed the thing any relevant clause is re-examinoe in the light of whatever conclusion is reached. THE CHAIRMAN: I only mentioned this point because we speak of the binding of low rates and we also perhaps ought to speak of the abolition of quantitative restrictions at the same time; or perhaps that does not fit in there. I want to hear what the Committee feel about that, otherwise I have to keep it on the agenda. MR ALANILLA (Cuba): We have the some thing here in regard to state trading, and we have decided that in Article 27, if it is necessary, proper reference should be made to the fact that they would be subject to the reductions envisaged in this Artiele 18. This Article only deals with reduction of tariffs and elimination of preferences. I think if the other Committee reach tho conclusion that quotas should be subject to a process like this, they might make a eross-reference with this paragraph here. THE CHAIRMAN: In that case I could, as it were, throw it on the plate of the other Committee. My point here is that I want to get rid of it; that is all. MR HAWKINS: I agree with what the Cuban delegate has said. I do not think you can even touch it here intelligently until you know what the Quota Sub-Committee is going to say on this subject. I just do not see how we can deal with it. THE CHAIRMAN: Then is it agreed that we simply pass that on to the Committee C.4 E/PC/T/C. II/PRO./PV/8 on balance of payment restrictions and so on? Then I will repeat my first question: Can we now agree the first sentence of paragraph 1? MR HAWKINS (USA): I do not want to delay this, but the Rapporteur, I take it, is going to draft something on this; or do we deal with it later? THE CHAIRMAN deal with it later, I imagine. Then is that adopted? MR McKINNON (Canada): You are really adopting the report of the Rapporteur in so far an concern the revised wording of the first sentence of paragraph 1? TRE CHAIRMAN: Yes. Then we come to the second part of paragraph 1, and at present it says, "These negotiations shall proceed in accordance with the foliowing rules". Before we discuss that further, I would remark that it is the idea of the Rapporteur that we say more detailed questions with regard to the coming negotiations should be dealt with in a separate memorandum. I think that is one of the terms of reference of this Sub-Committee - to draw that up - so that only the very important points of prinoiple should be covered in this paragraph; and before we can really finish with the whole of article 18 we must have that memorandum before us. I would suggest that we take now only the real points of principle in paragraph 1. The first sentence begins, "Prior international commitments shall not be permitted to stand in the way of action in respect of tariff preferences", and so on. There the Cuban delegation at the last meeting submitted a proposal which I think is in the hands of everybody here. . 11. DI E/PC/T/C. Il/PRO/PV/8. Mr ALAMILLA (Cuba): "prier international commitments shall not be permitted to stand in the way of action with respect to tarrif preferences, it being understood that this provision shall not require the termination or modification of existing international obligations except by-agreement between the contracting parties or in accordance with the terms of such obligations". This was the amendment which we first proposed to introduce into Article 8, but after studying the way the Charter was drafted we thought it better to put it in Article 18 and not in Alrticle 8. The object is not that we would not negotiate, but they are going to be negotiated The object is only that the obligations can be terminated at any moment. Once the obligations are out of the way they can be dealt with without any difficulty. If they are in they can still be negotiated. Mr SHACKLE (UK): I should like to say that the U.K. delegation support the principle of this Amendment. I think I can say that its wording appears satisfactory also. It is a point which I mentioneod in the discussion. in the Main Committee II, namely that we felt that the word "action" should in effect mean action agreed apon in the course of the re- negotiations. - As a matter of fact that really rather/produces some wording in the proposals of last December, which spoke of "action agreed upon". Mr ALAMILLA (Cuba):- I should like to have Mr Hawkins' comments on this. Mr HAWKINS (USA): I do not think that the Amendment changes our intention as we expressed it in paragraph (a). I think it carried out what we had in mind, and therefore it is acceptable to us. Mr McKINNON (Canada): If, as Mr Hawkins says, it does no more than carry on the intention of the words in the draft, then I fail to see any advantage in the revised wording. After all, subsection (a) as it. appears here, if I am not mistaken, is word for word with the Section. as it appeared in the proposals approved by the United States and the United Kingdom. I may be wrong; I speak from memory.y. lIHACKLELE (UK) : If I bright ietorveno at that point, the proposals say .2. D2 E/PC/T/C. II/PRO/PV/8. "action .agreed upon". Mr ALAMILLA. (Cuba): This is a point which we have very great interest in getting clear. I believe that we are not adding, any now thing, and we are only making very clear how that Article should be interpreted. We feel very strongly about this and would like to have these words put in in order that everybody would know exactly what they meant. Mr. IGONET (France) (Interpretation): I do not quito understand this Amendment which has been put in by the Cuban delegate. At least, the beginning does not seem to me to be consistent with the end. There seems to be a contradiction between the third and fourth sentences, and the first. I do not understand the word "exist". When will they exist? At what time will they exist? What is meant by this word ? THE CHAIRMAN: As it roads now, it should exist at the tine of the negotiations. Mr SHACKLE (UK): Might I say a. word about this. As I understand the position it will be something like this.. Let us take, for examile, the case of the Ottowa Agreements between the Deminions and the United Kingdom and other parts of the Commenwealth. The position is that they lay down contractually a whole series of preferences. Some of those may - some undoubtedly will - be modified in the course of the forthcoming negotiations. Others on the other hand may net be so modified. The intention of this Clause, as amended in the way which is suggested by the Cuban delegation, would be, if I understand it rightly, that insofar as in the course of these negotiations it was agreed to nodify particular preferences, the fact that in the Ottowa Agreements those preferences were bound at particular. levels should not stand in the way of their being changed now. On the other hand, insofar as there night be profer- onces which are not modified in these negotiations, the undertaking would still exist. In other words, you have not struck out the whole of the Ottowa Agreements at one stroke of the pen, but where particular preferences contained in them are modified as thc result of these negotiations, the Ottowa Agreements shall not stand in the way of those modifications being made. That is my understanding of the intention 13. D3 E/PC/T/C. II/PRO/PV/8. of this Amendment, and if that is so, then I support it. Mr HAWKINS (USA): Could I add just one thing. It also serves this purpose, that the more existence of a control, obligation is a reason for reducing. THE CHIARMA: Do I understand that if, ftheinstance, the United States should agree to change certain prefoeences and that would affect you, the United states cannot do that wtihout consulting you Mr LA&LMLLA Cu(na): Thoethin is quite clcer. We have to negotiate and vw do negotiate. In thc course of thos ne notiations tho earibifnmy be reduced and ve agre eto that. The trcey we have says that we have these prefreences, but that trcey ïay be tcreinated. The United States aym ays, "All right, we call off t!t tredy". As souo as the treaty is off there is no more obligation and wcea c proceed, and we do not have to be bound by anything at aill They can therofroere eterminated or they can be negotiated, as they are going to be, Mr ADLKRA R(India): iM Chair-.m, th eefefct of the Cuban Delegation's aïendnent, as far as I sec it, ïians broadly to mkea it necessary for the country giving the prfeeren eteo a country which does not enjoy the preference, to obtain the consent of the country which enjoys the preference. Takcea practical instance. If there are preferences between India and th Uenitod Kingdo, mand India receivos a request for a reduction in preference in a particular item from the United States, it is necessary, in the tures of this ndAmeOnmty,for India t coonsult the United Kingdom before granting that reduction. The result is that in respect p oevery proposal there will have to be negotiations not nimely between the country vwich givs ethe preference and the country which at present does not enjoy the preference, but als noegotiations between the country which gives the preference and the country which at prioent enjoys the preferences. As part of the bargain, the country which atpr esent enjoys the prforeence, and therefore stands to lose to an. xtent in the reduction of the margin, may tiapulatoecertain other terms because it affects the terms of the xiestinCgbargain between that country and the 14. E/PC/T/C.II/PRO/PV/8. othor country. For example, in this particular instance of India and the United Kingdom. India may agree to the United States to roduce the margin, provided the United Kingdom agrees. Before giving permission the United Kingdom ay suggest some medification in their agreement. So far as the Indian delegation is concerned, I think this particular Amendment makes the position very clear and the Indian delegation would like to support it. 15. E.1 E/PC/T/C.II/PRO/PV/8. Mr. McKINNON (Canada): It was argued earlier in this discussion, five minutes age, that there was no real differeence in substance between A. as it appears in the Charter and A. as it appears in the Cuban resolution. I think there is a very great deal of difference, both in formal and substance. Under the draft Charter those various political entities - if I may call them that - with a proferential area or regime are completely free to enter those negotiations. Mr. ELAMALLA (Cuba): No. THE CHAIRMAN: Just let the Delegate for Canada finish. MR. McKINNON (Canada): They arc free to enter the negotiations, because it says that any contracts "shall not be permitted to stand in the way of action." Under the draft amendment it is definitely understood, surely, that unless they get agreement with everyone also concerned in that particular preference they cannot proceed, unless they denounce the existing preferential arrangment. Now, I think there is a very great difference. I may be making an inference that is not intended, but I cannot help going back to the assertion early in the argument that there was no substantial differenec between them. I think there is a very great point of difference, in that one appears to contemplate the necessity of formal denunciation unless the agreement a with the other party is reached, whereas the draft amendment does not contemplate that. It gives elbow room to all parties to do their negotiations and see what results from it. It may be that what results will require an amendment of the existing, preferential arrangement, though it may not. For the purpose of the negotiations everyone is complete- ly free to do as his likes until he sees what the result is. It is obvious he will consult the others and talk with them about it, THE CHAIRMAN: You have a combined body. MR. McKINNON (Canada): You have the possibility of one body of six or seven, who might in respect of the whole of the action refuse to agree 16. E.2 E/PC/T/C .II/PRO/PV/8 with even the neigotiating party of the first part under the necessity, as I see it, of formally donouncing his agreement with that particular member - which he may not want to do, and which may not be necessary, DR. COOMBS (Australia): I do not follow Mr. McKinnon's point quite clearly, but I do not think the Cuban Delegate's proposal does require that. MR. McKIMNON (Canada): Well, it says, "except by agreement. . . or in accordance with the terms of such obligations.". Now surely one of the terms of the obligation would be, if you are narrowing, the martin you must, unless you can get the agreement of the other party, denounce the agreement. DR. COOMBS (Australia): But it does not affect the negotiations. It says: "Prior international commitments shall not be pormitted to stand in the way oe action with respect to tariff preferences it being understood that this provision shall not require the termination or modification of existing international obligations", which, as I see it, do not arise until after the negotiations are complete. MR. McKINNON (Canada): I should think they might arise very early in the negotiations, DR. COOMBS (Australia): You may enter into discussions about whether you will in certain respects modify all existing international obligations. It seems to me there is nothing in this which prevents you entering into such negotiations and coming presumably, to tentative conclusions. But when you have reached such a conclusion, as I read it, the Cuban Delegates redraft would require you to carry through that modification or termination either with the agreement of the other pary or in accordance with the provisions of the agreement concerned for its termination, 17.~~~~~~~t . . mio. 17 E.3 E/PC/T/C. II/PRO/PV/8 THE CHAIRMAN: If, for instance, Canada accepts the olimination or reduction of tariff preference, that will stand anyway, and then she has to clear the position with the other party. The commitment will stand. DR. COOMBS (Australia): It stands, but if Canada agrees to do it and desires to do it as part of the bargain, it this means she does it in one of two ways. Suppose the United kingdom was the other party. She does it is either with the agreement of the United Kingdom, or, if the United Kingdom is not prepared to agree, the procedure required under the original U.K -Canada agreement for the termination of that agree- ment is gone through. MR. McKINNON (Canada): That is the difference. I think it is a difference. I quite agree with your explanation. DR. COOMBS (Australia): ls it possible for a country to interpret A. in the way in which Mr, McKinnon's idea would suggest? I mean, can you as a matter of international law enter into an agreement which says that you will not carry out an agreement entered into previously? MR. HAWKINS (United States): I would like to dot the Cuban Delegate's view on it. I thought Mr. McKinnon's description would be in line with the Cuban amendment. MR. ALAMILLA (Cuba): No. What we want is only this. The effect of this international agreement of the I.T.O. cannot and our international agreements. We say in here that we are going to negotiate them, and we will negotiate them, but they are not going to be terminated except if we agree to that; or, if they are terminated by the parties themselves, it is only by agreement. That is our position, which is so basic for us that we would not bc able to enter into this Organization unless this thing is absolutely cleared up for us. MR. McKINNON (Canada): Would it not be clear in this way, that all parties to this committee accept A, as it stands in the American draft, and then we without are free, / the necessity of formal denunciation, to proceed to. negotiatiate it. 18 E.4 E/PC/T/C.II/PRO/PV/8 Mr. ALAMILLA (cuba): But we are going to negotiate it. we are obliged to negotiate, and we will negotiate, but the thing will not be terminated automatically. I do not think any country can enter into this I.T.O. agreement by which automatically their contractual obligations with third parties would be terminated without their consent. The only thing we are doing is just making very clear that that thing does not happen. That is our only object here. MR. HAWKINS (United States): Without suggestion amendment of the Cuban text, I would like to see if this does not.meet the point: "It being understood that this provision shall not of itself effect the tion or modification of existing obligations." That is the sense of it. That is, in effect, what you are trying to say - "shall not of itself effect the termination or modification of international obligations." As I understood the Cuban Delegate's explanation he wants to be sure that by agreeing to provision A. in this he does not thereby wipe out existing contractual engagements. MR. ALAMILLA (Cuba): Which we will negotiate. MR. HAWKINS (United States): I think the easiest way a is to say exactly that - "this provision shall not of itself effect the termination or modification of existing international obligations." MR. SHACKLE (United Kingdom). I venture to suggest an even simpler amendment might have the same result, if after the words "in the way of action" you add "agreed upon in negotiations." The United Kingdom would very definitely associate itself with the interpreation which Dr. Coombs has given to this matter. I think that is also the Cuban view. It seems to us that it would make for a much more orderly and . satisfactory negotiation if in fact that is the rule. If one had as one's starting point the fact that all previous commitments were cancelled before beginning to negotiate you would have a number, of separate. arrangements made, which might not balance out amongst themselves at all 19. E.5. E/PC/T/C. II/PRO/PV/8 in the last resort, and you might be faced with, so to speak fresh negotiations in order to re-establish the balance as between the parties who were parties to a pre-existing preference. If, on the other hand, it is all dealt with in the way of triangular negotiations as you go along you will and up with a balanced and satisfactory result, which I think you would not get if you followed the other method of independent negotiations in attempting to balance out the different results afterwards. DR. COOMBS (Australia): Could I suggest another version? Suppose you say: "prior international commitments shall not be permitted tod to d in the way of negotiations in respect to tariff preferences,cos, eing understood that this provision shall not be required bu oquirmd e or modify existing international obligations except:ations cxcpt between the contracting parties or in accordanceor in accord=cc of such obligations.ch ubli, ati.na" Orgperhaps you mi.ht say, e it boinaLuwhere the result of theseic result of' tese noCotiatione werminaequire thl tcri.iition or modification of existing gnternational ermi;ations this tcçlination or medificamay be, will be carried out byll lx carried out y he contracting parties or in accordance withor in accordauice wth igations.s of such olli::ation" ere are two points. theoranadian Delegate wantsna.ian DcJlc.atc ;7:ms that irrespective of any commitments that you 0any co0-uratCaontu tt you n go ahead and negotiate, and these negotiationsoti.tc, ,.nd tlwso nc-otiator1 ll mean you do intend to carry then throughu lo intend to carly tl'cir.u hrauJh kings. The Cuban Delegate wants tolort5kin:s. 'i'o Cuban Dclcaatu wnts to at when you get to the stage ofoZr haUnd, tliat w*hen you -,ot to tho sta;. of the negotiations, you doain5;s you -ruy ;c to do in thlc ni,.otiations,you do that with duc rc:rd te cstablislhed proccélure. ou have the obligationstin.;, "ny nciotiatod reduction you havc thc obl½ztifl to efi'ect i. 20 E.6 E/PC/T/C. II/PRO/PV/8 MR.McKINNON (Cuba): Of course. That was part of the negotiations. MR. McKINNON (Canada): That might mean that any, let us say, reduction in the marginal preference that you may negotiate with a third party could not come into effect until after the terms of notice of denunciation in respect of your other argument had expired. DR. COOMBS (Australia): If you cannot get the agreement with the other contracting party. MR. SHACKLE (United Kingdom): Unless, of course, it was modified by agreement, bocause any pre-existing, agreement can be modified by agreement between the original parties. MR. McKINNON (Canada): But if one did not get agreement obviously this could not take effect until the denunciation under whatever term is provided under the other instrument has expired. MR. HAWKINS (United Statas.): It seems to me the Cuban Delegation's purpose must be this very simple one. I want to be sure I understand him. He is merely trying to make sure that when you sign this Charter you do not thereby cancel all your contracts. His amendment jis intended to make that clear. It does make it clear to me. It seems to me acceptable. As I understand it, that is all he is trying to do. MR. ALAMILLA. (Cuba): Yes. THE CHAIRMAN: The other point is, it should not be an escape clause. MR. ALAMILLA (Cuba): It is not an escape clause. THE CHAIRMAN: As it stands it could be read in a different way. It cannot ba that. 21 F1 E/PC/T/C. Il/PRO/PV/8 MR. ALAMILLA (Cuba): It is not that. We have said here that we are going to negotiate, and we will negotiate, but this negotiation will not automati- cally cancel contracts, It will be negotiated. Of course if the nego- tiations do not come to anything, the contract will be cancelled by itself, because the other party would do that. Therefore it is a fallacy to think it would be an escape clause, when all those contracts have in themselves a clause by which they can be dispeesd of. THE CHAIRMAN: You could have further clauses. Once you have accepted it you can try to work it out; you find it impossible, so you say, "I have not foreseen this, I cannot do it," MR- MCKINNON ( Canada): I should have thought that the wording in the Draft Article as it stood, bald though it may be, gave complete freedom if all who the parties to those preferential agreements/are represented here accept "A" as it stands in the Draft Charter. Then donunciation does not enter into it. MR. SHACKLE (United Kingdom): But in fact the parties will not all be represented here in some of those cases. I think one may take that as certain. MR. COOMBS (Australia): Where the two parties to a preferential arrangement are present, neither can prevent the other from giving away a preference which affects a third party, and that I take to be the position. It would be unnacceptable to Australia, for instance, that either they or any other country with which Australia has an existing preferential arrange- ment should be froc to trade that preference without Austraila being a party to the revised bargain. MR. SHACKLE (United Kingdom): I should like to support that view. MR MCKINNON: What is the wording we are considering now, Mr. Chaieman? MR. ALAMILLA (Cuba): It is: - 22 - . 1' F.2 E/PC/T/C . II/PRO/PV/8 "Prior international commitments shall not be permitted to stand - in the way of action with respect to tariff preferences, it being understood that this provision shall not of itself affcet the determination or modification of existing international obligations except by agreement between the contracting parties or in accord- ance with the terms of such obligations." MR. HAWKlNS (United States): That, I am affraid, does not fir structurally. That exception does not quite tack on there; there is something wrong about it. I would suggest a period after Winternational obligations". That would be complete in itself, the point being, as I understand it, that no country when it signs the Charter shall thereby terminate bilateral obligations. The purpose of this amendment is to state thta is does not. MR. MCKINNON (Canada): That is right. MR. ALAMILLA (Cuba): The only thing is that this clause is so important to us; it has been cabled to Cuba and approved word by word, so I should like too te it accepted as much as possible, or ie, I shall have to staot te cable it again. MR.IMCK[NNON (Canada):eOthors ofmay ïet bc ie preci ole3thme ar.lposition. CHAIRMAN3ltAamI se preparod te sitof, if , ifthat is the case. IGONETGOFrance5n(o): interpretation): I do not khinl trenFmmnch translation cf thisoriginal text douli ery clear. ar. It woued bc ambiguous, and if thmendment is adopteddoaphouldlprefer to have the e t various suggestions grouZht in. MR.INNKCNNON (Canada): You halreadyroaggested tod thet wo haee got ee lot thisgsugWestion stand foreothor reasons, Is not tcat ectraet? TIE CHAIRM1N: Yes, we haoe teerefor te it ngaiaelator on. lRK MCMINNON (Canada)Can we allowlleo. "A" to dtanle thon, with teadpiecepioc, oe te spoak, and proceod te "B"? - 23 - . 2 F.3 E/PC/T/C. II/PRO/PV/8 THE CHAIRMAN: I am agreeable to that, if we want further study of the matter. MR. ALAMILLA (Cuba): I would not like to let "A" stand as it is. MR. MCKINNON (Canada): I do not mean accept it as it stands, but simply to let it stand and proceed to "B". MR. ALAMILLA (Cuba) Why do we do this? Why not ask the Rapporteur to try to put his idea clearly and bring it forward at the next meeting? MR. MCKINNON (Canada): Yes, that is the same thing. THE CHAIRMAN; Just to get clear what we are asking the Rapporteur to do - we understand that the point of view has been put forward that if we enter into these commitments to negotiate reductions in tariffs and pro- ferences we are fully prepared to accept tariff reductions in those negotiations, and carry then through, but only if we can do it by agreement in casus where we have to terminate present arrangements? MR. ALAMILLA (Cuba): That is correct. THE CHAIRMAN: I think the main points that we want to put into that clause are those. Does everybody agree to those principles? If not the Rappor-. tour will not know what to do. MR. MCKINNON (Canada): I do not say that I do not agree, or that I refuse to agree with it; I would prefer the wording in the Draft Charter, but if it is going to stand, for an attempt at rewording by the Rapporteur, I should be glad to leave it in that position until we most again. THE CHAIRMAN: Thank-you. Then, I think, we have to come to paragraph "B", on which a few questions were raised which, should be clarified. For instance, the method of operation of the principle - will it prevent a reduction of preferential rates? I think that was one of the questions raised. .. 3 F.4 E/PC/T/C. II/PRO/PV/8 MR. HAWKINS (United States): The basic provision here is containned in the first two lines of "B": "AII negotiated, reductions in most-favoured-nation import tariffs shall operate automatically to reduce or eliminate marginsns preference"o". ehcercst it is explanation as to what is meant by that.. will attempt to explain what the last part means, and I think I could eost do it by illustration. Take for illustration teose figures: on the date on which the negotiations are baeud,whatever that may be - in our Draft it was 1939, but that is now left for agreement among the parties- MR. MCKINNON (Canada): Is Mr. Hawkins now saying that he proposed to strike out the date July 31st 1939 from subsection "B"? MR. HAWKINS (United States): I was going to do the later on, ana make still another anendment, but that is necessarily involved; you will have to substitute for July 1939 the date to be agreed upon. MR. MCKINNON (Canada): Therefore it is a necessary assumption, if we.i- wo follow intelligently what you are goinbg gWig to say. WKINS WJYINS (Unitee StaMos): 1y peinwascw iza not te whether lletheit should bc July 1939 or notmerely thattlyete thcrc eust bc a base dawe to vhich thci nrgotations must relatee Th*hypthetical rates I wkel talc as a baeis aro, say, 40 per cent eor tho most-eavourcd-nation rate, the gancrally applicable rate, and a preferentiel rato of 30eper cont. eo taim the simplest application of that principlee if hogotiatikns tale place om the nost-edvour=onnati-. rate and it eedagrcod that 'it shall be dedocca te 30epar cont,wthat vipes eut eho proeerence. Tho maximun pro- e there e tiuecan bc in that situation is zerw. Noi ye e tamoree :ti diffiaset coec in whice therc is a doeble sot of negotiations going on. The 3ost-favoured-naties ratc eareedoducuo to 30meanwhile theilO th parties to tfo proterential ementgo;iae hdve hal negotiations and eaveerodueod thc eroforontial rate to 25. My interpretation of this provision i9 that - 25 - E/PC/T/C.II/ PRO/PV/8 the, maxinurm preference in that case also is zoro, because, relating the reduction in the most-favoured-nation clause to the situation existing at the tine of the negotiations, thu reduction of the most-favoured-nation rate wiped out tho preference as at that time, hence it would not be per- missible under this provision to reduce the preferentinl rate and widen the margin. But if the proforential rate is reduced by negotiation or rather- wise, the most-favoured-nation rate ;would also have to go to 25. The reasoning behind that is this. A country that has negotiated on the most-favoured-nation rate, in this or any other situation, is very likely to have one or both of two motives: it may be inter sted in the height of that rate and its protective effect, but it is certain also to bo interested in the margin of preference. Therefore when it asks for a reduction front 40 ro 30 in those circumstances, it is deliberately looking at the margin of preference and trying to wipe it out. It is defeated in that if there are simultaneous or subsequent negotiations which result in a reduction of the proferential rate, because a margin of preference is again restored. The only way therefore in which a reduction of the most-favoured-nation rate can automatically operate to reduce the margin of preferonece is in the way I have indicated. Any subsequent negotiations or any other adjustments in these rites would be to create a situation such as would exist if the mostfavoured-nation rate had been reduced and the preferebtial rate had remained unchanged. I do not know whether that is clear or not ; perhaps it might be discussed. THE CHAIRMAN: It is important enough to be discussed. MR. MCKINNON (Canada): May I say this, then, Mr. Chairman? Assuming that at the spring negotiations seme favoured nation asks that the rate of 40 , cent, which Mr. Hawkins sites, be reduced to 30, and that that is done.The preferential rate would then remain at 25 and the new most- favoured-nation rate at 30? MR. HAWKINS (United States): say that again, please? - 26 -. F. 5 F.6 E/PC/T/C.II/PRO/PV/8 MR. MCKINNON (Canada): I was taking the illustration you gave, a. proferential rate of 30 and a most favoured nation rate of 4.0. Someone amongst the most favoured nations asks for a reduction to 30 percent and that is agreed. The preferential rate romains at 30. Is it possible then for the country which is granting the concessions to say to the other proforential areas and the most favoured nations that it wishes to reduce both by a further 5 per cent? MR. HAWKINS (United States): So that both are 25? MR. MCKINNON (Canada): Yes, that would make both 25. MR. HAWKINS (United States): Yes. MR. MCKINNON (Canada): Alhough it is a socond narrowing of the margin of preference? MR. HAWKINS (United States) That is right - so long as the preference is not restored. MR. COOMBS (Australia): It seems to me that in a case where a country was interested in the margin of preference the nature of their request would be for a narrowing of the margin of preference. At last, that is what w would be involved in the request. As I understand your interpretation, it means that it is never possible to reduce the preferential rates until the most-favoured-nation rate reaches the preferential level? That is, if the British preferantial rate was 30 and the most favoured nation rate 40, you could not bring the British preferential rate down unless you bring the most favoured nation rate down to the same point. - 27 - G.1 E/PC/T/C.II/PRO./PV/8 MR HAWKINS (USA): By the same amount, otherwise you widen the margin. DR COOLBS (Australia): It would be acceptable under your interpretation if they were both reduced by the same percentage. If you reduced them both by 25 per cent, so that they came down to 221, would that be acceptable? MR HAWKINS (USA): On the assumption that there is no negotiation on the m.f.n. rate. MR McKINNON (Canada): Dr Coombs' case is a purely unileteral reduction and, as I understand it, Mr Chairman, what Dr Coombs suggests could not take plane on a negotiation. DR COOMBS (Australia): That is what I am trying to get at If you get a request from both the m.f.n. country and the other country on a particular item, you cannot reduce the British preferential rate unless you reduce the m.f.n rate - not by the same proportion but completely down to the preferential rate. That is if there is any negotiation. If you want to reduce the preferential rate, then you have to wipe out the margin. MR. HAWKINS (USA): Or, to use an illustration, taking the 40 and 30, suppose instead of reducing the 40 down to 30 the negotiations had reduced it down to 31, all that is required is that, whatever is done to the preferential rate, any simultaneous or subsequent negotiations shall not give you a preference of more than one. DR COOMBS (Australia):That amounts to the same thing that it is impossible under your interpretation to reduce the preferential rate unless you bring the m.f.n. rate down to the same as the preferential rate. MR HAWKINS: (USA) That is right. THE CHAIRMAN : The only thing you could do is, I think, to say, "I will not traded with you", or "I am prepared unilaterally to reduce my proferential rate", and I then reduce automatically my m.f.n. rate". MR SHACKLE (UK): Might I ask a question to make sure I have this clear? I think it would be convenient to take the last case of which Mr Hawkins spoke, in which the m.f.n. rate is reduced from 40 not to 30, which in% the preterential rate, but to 31. If that happens, as I understand it, 28 E/PC/T/C.II/PRO./PV/8 there is nothing to prevent the preferential rate being reduced to . figure lowar than 30, provided that the m.f.n. rate always follows it down at one dart so to speak, so that if the 25 comes down to 20 the m.f.n. rate automatically boomes 21. MR. HAWKINS (USA): that is the point. MR ADARKAR (India) .We are still net clear about the procedure that would be followed in the raatter of these negotiations, therefore whatever remarks we make are purely exploratory. The Indian delegation, studying this part of Article 18, had some difficulty about this sub-paragraph b., because the effect of the first sentence is to, so to speak, kill two birds with one stone. The idea is that whenuvor there is any reduction in m.f.n. tariff. it should have two effects: one, to reduce the amount of protection given to the domestic industry; and, two, to reduce the margin of preference that may have been given, Now, Sir, we think that a more satisfactory procedure would be to tackle these two problems separately: that is to say, where the intention is to reduce the amount of protaction given to the domestic industry, or to encourage the consumption of the particular article by reducing the duty, where there is no domestic industry at all it is best to ask for a production in the m. f. n. tariff without any commitment whatsoever with regard to the margin - except that the margin will not-be increased. That is to say - to take Mr .Hawkins example - if the object is to reduce a reduction in the m.f.n. rate of 40 per cent and the country ask in for the reduction seaures the reduction from 40 to, say, 35, then it should not affect by itself the commitment in regard to the preferential margin. The preferential margin that exists is 10 per cent. When the m. f. n. rate is reduced from 40 to 35 it should be open to that country, in the sense of separate negotiation, tu reduce the prèferential rate from 30 to 25 so as to restore the preferential margin to 10 per cent. The only obligation on the part of that country is not to increase the preferential margin. So if the intention is te reduce tho preferontial margin another negotiation should be undertaken which should- ask for a reduction in the margin only. The existing margin is 10 per cent. The country wanting the reduction should ask for a reduction in the margin from - 29 C.3 E/PC/T/C.II/PRO./PV/8 10 per cent to, say, 5 per cent. Now, supposing, for example, in the. second set of negotiations the margin is reduced to 5 per cent, then it should be open to the country concerned to decide whether it should give effect to that changed margin by a reduction in the m.f. n. rate or an increase in the preferential rate, or partly by reduction in the m.f.n. rate and partly by increase. The choice between these three matters ill depend on the circumstances of the country concerned. It may be that although the particular m.f.n. rate has not at present been described as a protective duty, it may be having at present a protective effect. There may be certain domestic industries which want that particular rate to be Laintained et the existing level. In.that case the country may agree to a reduction in the preferential margin frm 10 to 5 per cent, but it may give effect to it by raising the preferential rate frcm 30 to 35. It may be that some. revenue consideration is involved: that where, for example, the bulk of the imports at present come from non--preferred sources, a reduction in the m.f.n. rate would naturally affect the revenue very seriously. The country may not be entitled to afford that reduction in the revenue but may agree to a reduction in the preferential margin. In that case it may agree to increase the preferential rate from 30 per cent to 35 per cent. I may tell you, Sir, that, when we negotiated the Ottawa Agreement, in most cases the preferences were given In the form of definite margins - 10 per cent,. 8 per cent, 7 1/2- per cent - in that way - and it was left to the country concerned to decide whether the margin was to be given by raising the existing rate of duty against the foreign country or. by lowering the existing rate of duty in favour of the British Empire country, or partly by raising and partly by lowering. If we are to enter this d oduble Commitment simultaneously In simultaneous process of negotiation, then' our willingness to grant a reduction in the preferential margin will also be influence by our desire to as safeguard the domestic industry. I think these two are absolutely different considerations and they should be dealt with by different sets of negotiations; otherwise was shall be tempted to refuse to grant any reduction in the preferential margin just because we 30 C.4. E/PC/T/C.II/PRO./PV/8 want the m.fn. rate to remain at a particular level. THE CHAIRMAN; There is still one thing to be discussed, if I have followed the whole sense of this argument, and that is this what do the countries want that are going to do away with quantitative restrictions and bind their tariffs and other things - what do they want? Do they want to be as much as possible on the same level of competition as other countries no; having a protective margin? If you follow your system I think the other countries will say, ."Well, that lowers the attractivness of those coming reductions to a very great extent." I think that is the whole sense of the proposal of Mr Hawkins, is it not? That has to be considered from the other side, I think., MR ADARKAR (India): I did not follow your particular objection, Sir. THE CHAIRMAN: I mean this. You can say, if I lower the m.f.n. rate from 40 to 35, that you can get over the insurmountable barrier of m.f.n. rates of duty; but I stil night stil find my competitor from another part of the world still 10 per cent better off than I am, so it does not help me in the end. I think that is the point. MR ADARKAR (India): In the negotiations they should make a double demand and leave it to the country as to which of these two are acceptable to it. here, for example, a country is faced with a double rate, an m. f.n. rate of 40 por cent and a preferential rate of 30 pur cent, then it should ask for a dual concession: one part of the concession would be to reduce the m.f.n. rate from 40 per cent to 35 per sent; the other part of the concession would be to reduce the margin from 10 per cent to 5 per cent; and it should state to which of those concessions it attaches the greater importance; and the nation which is faced with the demandost should be free to decide which of the two concessions it is propared to give. These two are entirely different considerations. The effect of one concession is to put two supplier on un equal footing or on a less discriminatory footing than at present; the effect of the other concession is to reduce the protection at present enjoyed by the domestic industry: 31- C.5 E/PC/T/C.II/PRO./PV/8 that is to say, to equalisc the terms on which the domestic producer and all foreign buyers enter the mariket. THE CHAIRMAN: That will as a rule moan the lowering of the m.f.n., rate, if you still have the old margin of preference. DR COOMBS (Australia): One important consideration which I think does tend to support to some extent the Indian point of view is that the reduction of the margin is a matter which concerns not the country granting the reduction but thc. country which enjoyed the preference. I think the reduction of the level of duty, whether it is preferential or m.f.n., is a matter which concerns and is a concession granted by the country which is doin; this particular piece of negotiation. 32. B.1 E/PC/T/C.II/PRO/PV/8. It does seen to me that it is quit important to separate those questions of the negotiations about the margin of preferences from those about the margin of the tariff. It does seem to me to be necessary. There are three suggestions. There is one suggested by the United States delegate which binds the two together completely, and at the other extreme there is the Indian proposal which would enable a country. which was agreeing to a reduction in a preference, to give that by an. increase in the preferential rate of duty. An intermediate position would be one which required a reduction of the margin of preference to be granted by a reduction in the most favoured nation-treatment, but still regarded the negotiations about the margin as distinct from the negotiations about the rate of duty itself. The middle one would enable a reduction in both rates to come about provided that the reduction did result in a narrowing of the margin to the extent agrecd, upon in the negotiation. Mr HAWKINS (USA): This is a matter of some importance to the United States as we have had, and still have, rather strong views on the subject. Therefore I am going to status them plainly and say why we want to get rid of preferential arrangements as fact as possible. We would not like to sec negotiations take place on margins and for this reason. If you do that you may get an elimination or narrowing preference at a high rate. Our whole aim is to get equal treatment at a low rate. That, in essence, is why we have put the provisions this way, Mr IGONET (France) (Interpretation): You leave the way open to increases. In other words, equalisation at a higher rate. That is what we want to avdid. I will not say that that could happen, but it would not be the general rule. Mr McKINNON (Çanada): There may be cases where that would be the only way in which negotiation could be done at all. But as I gather from Mr Hawkins remarks he would hope that was not the general approach to it. As between the two methods suggested, the one by Mr Coombs as the extremist, and Mr Hawkins' suggestion of an alternative route, I am not 33. H.2. E/PC/T/C.II/PRO/PV/8. at all satisfied that we will not find ourselves later on in a most confused state in carrying these things out, with possible recriminations all the way round the board. If we attempt to conduct negotiations simultaneously on the M.F.N. rate and on the preferential rate, I am not sure that it should not be in two steps. Mr Hawkins interprets the word technical" to apply only to the first negotiation. After that if a. country unilaterally decided to reduce both rates, then the second negotiation does not necessarly cntail a narrowing of the margin. Have I stated your aspect correctly. Mr HAWKINS (USA): I think so. Mr McKINNON (Canada): Though it might take more time, the best way would be in the best interests of the negotiations to think only of the M.F.N. rate, the reduction of which must - if we accept the Charter - automatically narrow the margin of preference. As a second stage, any one of us in a preferntial area may desire to go further with both rates, but we are not obliged then to narrow the margin of prefereence. Mr HAWKINS (USA): Not obliged to narrow, and not obliged to increase it. Mr McKINNON (Canada): But- not to narrow it. I am just afraid that if we attempted to carry on the two simultancously, then with the best will in the world we are going to find ourselves in some very difficult situations owing to misunderstanding. THE CHAIRMAN : There is only one point there. If you do that you can ask nothing for it in return. In the set-up of Mr Hawkins it would be a matter of give and take. If you negotiate with the M. F. N. rate, and later on you decide to give the preferential rate at the same level, and so you lower it, as I understand it you would still be obliged to lower the M. F. N. rate to a certain extent without getting anything for it in return. Mr McKINNON (Canada): But here is the vital point. If, as the result of negotiation, we reduce the M.F.N. rate, we do narrow the margin of preference. It is then possible for anybody in a preferential area to say, "We should like to bring them both down from that level another 34- H.3. E/PC/T/C.II/PRO/PV/8. step, say another 5 per cent". On that second operation we do not have to narrow the margin of preference again. Dr.COOMBS (Australia): But in the ocantime you get a request for a reduction in the M. F.N.rate and countries in preferential areas are very likely to have requests for reductions in the rate about which they are expected to negotiate, ... This is net a hypothetical problem; it is on our doorstop already, THE CHAIRMAN: You are giving away something and getting nothing for it. If you like to do that, well it is all right. Mr SHACKLE (UK): I think the explanation Mr Hawkins has given is on the assumption that the first stop in the negotiating procees in every case is to negotiate about the M.F.N. rate. But it is only after that that there could be any question of a possible reduction of the preferential rate, and then subject to conditions he has explained. It does seem to me that that leaves out of account one theoretically possible case, that in which there is a tripartite or three-cornercd negotiation which affects at the same time both the M.F.N. rate and the preferential rate. I wonder if Mr Hawkins would like to explain his ideas as to whether that could arise, and if so how the situation would work out, Mr HAWKINS (USA): I think that could take place. You could have simultaneous negotiations on the M.F.N. rate and the preferential rate. The tire when the preferential. rate comes down is not important so long as the margin resulting, if any, from the reduction of the M.F.N rate based on the starting point, is not increased. MR SHACKLE (UK): That raises this further question. If in fact you have not got a reduction of the M.F. N. rate agreed as the first stop, then you have not got that measure to apply to the rate which the preferential margin must not excced.. The two things are being dealt with simultaneously so you have no measure or yardstick first. Mr HAWKINS (USA): Your yardstick is what you started with, Suppose when you start your rate is 40 and 30, You reduce the M.F.N. rate to 30, and occur simultaneously/the negotiations which result in the preferential, rate 35. H.4. E/PC/T/C.II/PRO/PV/8. being reduced to 2C. The offoct is that since the preference rate would have been wiped out with the reduction in the M.F.N. rata based on your starting point, the M. P. N. rate would. have to come down to 20. Dr COOMBS (Australia): Suppose you got a request on the proferential rate by itself. You have 40 and 30, and you have a request from; the people with the 30 rata for reduction to 25. Mr HAWKINS (USA): The M. F. N. rate then goes to 35, because you would have increased the preference above the starting point. Mr McKINNON (Canada): An yet this is not a negotiated item. Dr COOMBS (Australia): Suppose there is a stage when you get a request from. a preferential suplier to reduce the rate from 30 to 25. You agree. and you correspondingly reduce the M.F.N. rate to 35 in order not to widen the margin. You then got a request fron the M.F.N. people to reduce the 35 to 30, and you agree. You have thon got a position where the rates are 25 referentialal and 30 M.F.N.Now that is possible if the two requests come seperately the first from preferential and the second from M.F.N, But if by chance you get those requests at the same stage of negotiations, the final result must be 25 and 25. Mr HAWKINS (USA): You said the M. F. N. rate went from 40 to 35, did you not ? Dr COOMBS (Australia): Yes. Mr HAWKINS (USA) : It would have to be 25, 30. Going back to your starting point, the reduction of M.F.N. by 5 leaves a margin of preference of 5 which has to be maintained. Mr McKINNON (Canada): Take Mr Coombs' illustration where you get them simultaneously. As I understand. it you have got first to deal with the M.F.N. request even although they come simultaneously. Mr HAWKINS (USA): I do not think you would necessarily have to do that. Actually if there are two parties, each working on these two rates, each would known what the other Was doing. I should not think it would be necessary ta consider one before the other. Mr SHACKLE (UK): Except that if you do not you do not have your yardstick. 36. H.5 E/PC/T/C.II/PRO/PV/8. Mr HAWKINS (USA): Dut you got your yardstick thc mement the M.F.N. rate is dealt with. The moment you reduce the M.F.N rate you have fixed the preferential margin which has to be applied whatever else happens. Mr McKINNON (Canada): When you talk of 30 and 40 as your basis in this illustration, you really mean tho margin at the date of negotiation. I think you are agreeing with that as an example. Dr. COOMBS (Australia): I do not think he does. Mr McKINNON (Canada): I understood him to mean 30 to 40 Mr HAWKINS (USA): You :mean a change in the rate ? Mr McKINNON (Canada): No.. I took you te mean that prior to the start of the negotiation your two rates were preferential 30 and M. F. N. 40. My point was this. Starting at those rates, with the margin of 10 per cent, if you get two requests simultaneously it seens to me you have got to first dual with your M.F.N.. request in order that you carry out your obligations and narrow the margin. From there on you can do as you like. You do not need. to narrow any more margins, Dr COOMBS (Australia): I would like to know; whether, if you get requests on your preferential rate and the M.F.N. rate at the same time, it is possible to finish up with a margin between the M. F. N. and the proferential rate. Provided that the margin is less than the one you started with - you start with 30 and 40 - is it possible, whon you have simultaneous negotiations, to finish with two rates, say 30 and 25 ? Mr HAWKINS (USA): Yes. You are now taking a situation where you have two rates, one 25 and one 30, after negotiations. Dr COOLBS (Australia): You agree previously that if the requests came round the other way and separate, that you could finish with a rate of 30 and 25, and if you first get a request on your preferential rate to bring 30 down to 25, in ordor to keep the preference margin 'no greater you would then automatically adjust the M. F. N. rate to 35. You Let a request on the M. F. N. rate for 30 and you bring that down leaving the preferential rate the same at 25, anx you have got a rate 30 and 25. Now that means that you had two requests coming in the order of preferential and M.F.N. the result is that of a reduction in both rates 37. and a reduction in the maiargin, but a proference still exists. On the. H.6 E/PC/T/C.II/PRO/PV/8 other hand you any that if you get those requests simultaneously in the same set of negotiations , the result must be to wipe out the preference. Mr HAWKINS (USA): Still applying the rule as laid dowm. If your negotiations got down to 30 and 25, applying the rule the actual rate applied tc the M..F. N. could not exceed 25, because the reduction front 40 to 30 is your starting point. THE CHAIRMAN: I think the main point is this. If you have both requests at the same time you are net at liberty to choose whether you start with the preference or with the M.F.N . rate. You have to start with the M. F.N. rate and then wipe out the preference. I think that is what Mr Hawkins states here. Mr McKINNON (Canada): No. He did not think it mattered which one you started with a moment ago. Dr COOMBS (Australia): I quite agree with your interprdation of the clause as it stands, but it does seem to me that it creates somewhat of an anomoly if you can get two different result merely according to whether you happen to get the two requests simultaneously or in a particular order, Mr HAWKINS (USA): I should not' think that in practice there would be ahy difficulty. The two countries negotiate with the third and they would be very likely to know what the others are doing. Dr COOMBS (Australia): That is the point I was trying to load to. It does not seem to me that that is the way in Which such negotiations should. take place, if they are simultaneous. The thing I must confess I am not entirely clear about is this. What is the reason why you would wish to exclude that type of result from a simultaneous negotiation ? Why do you wish to exclude a result which reduces both rates and reduces the margin, but left a smaller magin than existed before ? Mr HAWKINS (USA): To get rid of the preference, of course. THE CHAIRMAN: To get euqal treatment at the low rate in the and. Mr SHACKLE (UK): I am not in any way going to move an amendment, but I am going to suggest a sentence which might conceivably come after the 38. E/PC/T/C.II /PRO/PV/8. existing sentence, and I am going to ask Mr Hawking whether it is admidssible or not. It would consist of adding these words: "This shall be without prejudice to possible simultaneous tripartite negotiations affecting, both the M.F.N. rate and the preferential rate, and resulting in such modifications of the M.F.N rate or preferential rate respectively as may be agreed between the three parties". I fols. 39. I.1 E/PC/T/C.II/PRO/PV/8 I am not suggestion that as an amendment, but merely asking if Mr. Hawkins regards that as a legitimate point. MR. HAWKINS (United States): That is an easy one to answer. Anything, that might be agreed upon I should think-would be permissible. It is a waver on the part of one of the teeamicalities of a rule. MR.McKlNNON (Canada): You might easly live four parties within the preferential agreement. Mr. HAWKIS (United States): .that I should like to suggest is that you leave in only the principle here, and levelop this in a procedural memorandum. It seems to me it is in line with what we have done We are looking into procedure, not a constitution. I would say, leave the first part of the sentance, and then develop the rest of this in some detail in a procedural document. We are going to have a procedural memorandum. MR. McKINION (Canada): You stop at the word "preference." MR. HAWKINS (United States): Ycs. MR. McKINNON (Canada): I think that would be highly desirable for getting on in the sub-committee and dealing with it in a procedural momorandum. THE CHAIRMAN: What we are trying to do here is, trying to frame some paragraph of a Charter which will only come into force after the negotiations. What we need is a memorandum for the negotiations which have to be gone into before we all agree on the Charter. That is onc of the technical difficulties here. MR. ADARKAR (India): The only difficulty I feel about letting it stand as it is is that it would involve - if it is to operate in the manner described by Mr. Hawkins - a reduction in the most favoured nation rate every time there is a reduction in that preferential rate, whether or net the extent of the reduction in the most favoured nation rate has been negotiated or not. Take Mr. Hawkins's example, that the most favoured nation rate is reduced from 40 to 30 and the preferential rate is, by separate negotiation, reduced from 30 to 20, the final position would be a preferential rate of 20 and 40 I.2 E/PC/T/C.II/PRO/PV/8 a. xxxx most favoured nation rate of 20, even though 20 was not negotiated: what was negotiated with the most favoured nation party was 30. Wherever the most favoured nation rate has any protective effect whatever this sort of automatic reduction will be a very scrious matter;. As I see it, the position is such that where the mostfavoured nation rate is the principal source of revenue for the country, where the bule of the import is from a non-preferential source, under the most favoured nation rate there is also an I automatic reduction whichh would have scrious consequences. Thc result will be that wherever there is that sort of possibility the threatened country concerned will merely have to refuse to consider any request for a reduction in tho preference rate but rely entirely on the most favoured nation rate because to agree to consider to negotiate the preferential rate would have the further consequence. of reducing the most favoured nation rate to a greater extent than it was negotiated. Therefore, if this principle is to operate in the manner suggested by Mr. Hawkins it would have rather serious implications. MR. HAWKINS (United States): of course, the motive is to prevent new preferences. MR. ADARKAR (India): That can be provided for, without this principle, by laying down that the existing preferential margin should on no account be increased, and no new preferences should be granted. Of course, that i' a different matter and may be one for discussion later. Existing preferential measures should on no account bc increased, and no new preferences granted. That would prevent the possibility you have in mind without entailirg, us in this procedure. I would favour the restoration of the working which appears in the proposal in respect of this particular Provision. In tho proposal there were three clauses, A, B and C. B corresponded with the existing B, but there was a C, namely, that no new preferences should be given and existing preferences 41 I 1/2 3 E/PC/T/C.II/PRO/PV/8 should on no account be increased. If anything is retained it should be the old C, and not the existin, B. MR. IGONET (France) (interpretation): As far as I have understood what the Delegate for India has said I should like to support him. In the French Colonies they enjoy preferential tariffs as compared with the metropolis. Between the Colonies the customs tariffs may vary. In the Colonies those customs tariffs have a fiscal value; they are fixed by administrative or local authorities, and sometimes, in order to balance the local budget, it is necessary to increase the customs tariff. It must be possible in some cases to increase those customs tariffs without incrcasir; the margins, of prefornce; it must be possible to increase simultaneously the xx tariffs in connection with the metropolis and triffs in connoction with foreign countries. THE CHAIRMAN: We are talking about an increase of the tariff now. 42 J.1 E/PC/T/C.II/PRO/PV/8 MR. IGONET (France): Those are fiscal tariff s which have for thoir purpose the balancing of the local budget. MR. HAWKINS (United States): As I understand the comments of the Delegate of France, he wants to be free to increase rates without increasing margins. In other words, to increase both the preferential and the most favoured nation rates. There is nothing here to prevent that provided the rate is not bound by negetiations, MR. IGONET (Franco)(Interorutation): I wish to support thc statoment of the Delegate of India, if I understood. him correctly, THE CHAIRMAN: I understand that it is not a question of negotiations, so I do not see why it comes in here. If you want to increase certain fiscal rates which are not bound in any way by any negotiations, you are free to do so, provided that you do not increase the preference. It has nothing to do with the problem we are discussing here. MR. MCKINNON (Canada): If they are not bound, you can increase then whether they are fiscal or anything else. If they arc not bound, a signatory to the Convention can do anything he likes with them. THE CHAIRMAN: So I think that this has nothing to do with the subject we are discussing, which is, requests made to reduce tariffs and proferencos. MR. HCKINNON (Canada): In order to make progress, I would liko to support Mr. Hawkins' suggestion that we delete everything in subsection "B" after the word "preference" in the second or .third line. It would then road: "A11 negotiated reductions in most favoured nation import tariffs shall operate automatically to reduce or liminate margins of preference." THE CHAIRMAN: Leaving out also the dates? - 43 - J. 2 E/PC/T/C.II/PRO/PV/8 MR.MCKINON (Canada): Leaving out everything after that for discussion in the proceduralmemorandum, where we have to go into these things in much greater detail. MR. HAWKINS (United States): That is the paint, we are not abandoning our discussion, but we will try to work it out in detail in a procedural memorandum, to sec how these situations applying the principle would be handled. THE CHAIRMAN: I think that is the best way, because as I said before what we arc doing here at the moment is simply to put some principles in the Charter which will be debated after the first sot of negetiations. So I do not see any point in trying to olaborate then at this point. MR. COOMBS (Australia): I wonder whether, if the sontonce finishes at "pre- ference", the word "automatically" might not be embarrassing? MR .MCKINNON (Canada): I quite are. I would like to delete the word "automatically". MR. COOMBS (Australia): It would then read: "All nogotiated productions shall operate to reduce or olininete margins of preference." "Automatically" does not really add anything to it and suggests the sort of thing which, presumably, would be obodied in the procedural document. MR. VIDELA (Chile): But the meeting is changed absolutely in regard to countries which are not enjoying the preference. THE CHAIRMAN: I cannot see that,, because "'automatically" is closely connected with the second part of the sentence. If you will leave it at that, and state here only the principle, working it out in the memorandum, after you have had the memorandum and the first seto f negotiations you will know how you want this clause to appear pormannontly in the Charter. MR. VIDELA (Chile): But we do not delete the word "automatically until we know what is in the prodedural memorandum. -44- J.3 THE CHAIRMAN: Then we should refer to the memorandum in the Chartor. MR. VIDELA (Chile): If you take away the word "automatically" the countries which are not enjoying a preference will never be the first to make negotiations until they are satisfied the that the preference will be reduced accordingly. THE CHAIRMAN: I wonder whether it would be wise here -- MR. VIDELA. (Chile): This word "automatically" is very important. THE CHAIRMAN: Yes but we could refer here t an annexe, being the uemorandum on prodedure, which could later on be redrafted after the first set of negotitations. Then we could simply leave out anything else in this. MR. SHACKIE (United Kingdom): Would it be well to let the sontence stand reserved until the memorandum on procedure has been thoroughly dis- cussed? It is difficult to say where the discussion may lead us, and until we see that it is difficult to see how this sentence should be worded. MR. MCKINNON (Canada): I think that is a good idea. MR. ADARKAR (India): There iis a point I would to have recorded so that we do not lose sight of it next time we refer to this particular paragraph. In caso tho sontonco is alloviod to stand as it is," all negotiated reductions in most favoured nation import tariffs shall operate to reduce or oliminate margins of preferenee", this particular provision should not exclude negotiations on the basis of preforential margins unless it is agreecable to the parties concerned. That is to say, it was Mr Hawkins idea that negotiations should not take place at all on the basis of the margins, but should take place oxclusively on the basis of the most favoured nation rate. That is an idea which is not acceptable at the moment to the Indian Delegation. They - 45 - E/PC/T/C.II/PRO/PV/8 J.4. would like it to be recorded that in their view negtiations on the basis of proforontial rains as distinct from those on the bais of the rmost favoured nation rate should also be permmitted. MR. VIDELA (C ilo) Or vice'-versa? MR. ADARKAR (India): A seconds point is that reductions in proforontial ratos should not be required to invelve, or should not necessarily involve, a reduction in the most favoured nation rate below the negotiated level unless such a reduction is required to establish a negotiated margin of preference. I repeat; the reductions in the preferential rate need not necessarily involve a reduction in the most favoured nation rate below a negotiated lava .unless such a reduction is required to establish a nego tiated margin of preference That is the consequence and corollary of "A". That is ha.t I woant to onsur¢, that negotiations should bc cn the basis of margins of prference where it suits us, and secondlly, where we have negotiated both a most favoured nation rate and a preferential rate the final position should not require us to reduce the most favoured nation rate below the level required to establish a negotiated margin of preference. MR. HAWKINS (United States): I should like to considor those ideas further, but off hand I should say that there is more than mechanics involved in that suggestion. There is a point of principle. MR. ADARKAR (India): It is subject to the twocvor-riding considerations that existing margins should not be increased oither, When I say negetiated margins of preference, it is subject to the obligatio on the part of members to see that existing margins are reduced and no now preferences given. It is within the meaning of that. Of course the provision about new preforencos is covered by another pleause. MR. HAWKINS (United States): In other words, your last stipulation is that there can be no inerease in margins, but there can be bound margins ? - 46 - E/PC/T/C.II/PRO/PV/8 J.5 E/PC/T/C.II/PRO/PV/8 MR..ADARKAR (India) There can be bond Margins and reduced margins. MR.: HAWKINS (United States): It is the bound margins which bother me a little. MR. VIDEla (Chile): In paragraph 1 are mentioned two very practical words, "reciprocally"and "mutually". Why do we not say again in paragraph "B" "reciprocal and mutually"? Or some similar wordling? THE CHAIRMAN: I cannot see that it will help us hero. MR. COOMBS (Australia): One possible situation sems to me not an unlikely one, and I would like to knw the views of the Delegate of the United States upon it. Suppose you got a country with preferential and most favoured nation rates, and it receives a request for a reudction on one item of the most favoured nation rate, aimed partly at a reduction of the rate and partly at a mdification of the margin, as Mr. Hawkins said.. That item many be one which the country, for reasons associated with its plans for future development, may be unwilling to bind because it contem- plates entering into manufacture in that ficld itself. would these provisions as they at present stand prevent, in that case, negotiations relating to the margin? Suppose you have got, sticking to our standard formula, a most favoured nation rate of 40 and a preferential rate of 30, and the country is asked to reduce the former say to 30, wiping out the margin. The interest of the country is partly in the reduction of the rate and partly in getting on to equal competitive terms. Suppcse the country replies, "That is an item which we propose to manufacture ourselves", we therefore are not prepared either to reduce thu rate or to bind it, because we may find it necessary to increase the rate to 50. We are however prepared to put yoa -in the sa!ie terias as the others by the elimination of the proforence, that is by reducing the most favoured nation rate at tho moment to 30 without binding, or alternatively to eliminate the preference by an increase." Would that be possible under these provisions as they stand? - 47 - J.5 J. 6 E/PC/T/C.Il/PRO/PV/8 MR. HAWKINS (United States): Taking the case you cited, a reduced but unbound rate is rather unusual, in fact I do not think I over heard of ono. But assuming it in the case cited, you would have wiped out the preforence but you would be free to move the rate wherever you liked. It could. go up, but- it would be the same rate for all. MR. MCKINNON (Canada): Both would go up? K.1 E/PC/T/C.II/PRO/PV/8 DR COOMBS (Australia): It is not an unlikely situation. Whether you would be able to solve it by that method, I do not know; but that seoes to mie to be a iot unlikely situation for a country to encounter - to be prepared to modify preference net necessarily to bind itself as to the rate of duty. MR, HAWKINS (USA): I think that viould be in effect a way of negotiating to climinate the margin DR coombs (australia : Yes. mr hawkins (USA): You get into complicatons here when you try to work out the procedure. the chairman: I think we, must try to move some headway here. We are all agred that in order to sce this thing clearly we shall have to have the memorandum on the procedure of negotiations. For the tine being I think we have only this question: do we leave this sentence or wipe out "automatically"? There the remark was trade that we should like to see the Memoradum first before we decide to wipe out the wordl "automatically", so I think the best thing is to end our disussions for the time being, leaving t.e first sentence as such and provisionally agreeing to wipe out everything from "so that". MR McKinnon (Canada): Are we not also leaving the first sentence provisionally? mr alamilla (Cuba): Yes, the whole thing- is bettor loft provisional. the chairman to see the whole thing in writing ? mr hawkins (USA): This is subject to the procedural arrangment being worked out. - the chairman: Yes. then f we do that we still have to go into the third question, where we are supposed to have a new subparagraph c. included, that the binding of the lower rates should be the same in principle as the reduction of a high rate. Perhaps this can also be dealt with in the memorandum. mr hawkins (u.s.a.) Mr Chairman, that point is of a rather fundamental and constitutional Importance, I night say. Whether it is put the way -49- K.2 E/PC/T/C.II/PRO./PV/8 it has been phrased so far or not I should rather think that the countries which are most concerned with the question would probably want to see that written into the charter. It is for then to say, but I should have thought that would be so. THE CHAIRMAN: I agree that it is a fundamental point. The proposal, if I may remind the Committee, was that the new sub-paragraph c. should rcal to the: effect that the binding of a ioul rate should have in principle the same importance as the reduction of a high rate. That was one of the points made during the discussion in the main Committee II. MR IGONET (France)(Intcrprotation): This A.t;ans that the fart that a country already has low tarifs should be taken into consideration during the negotiations for a Lunura1 reduction of tariffs? THE CHAIRMAN: Yes. mr videna (Chile): I think it nas the Belgian delegate who raised this is the Committee. the chairman: Yes, and we made another point frorn our delegàtion. mr mckinnon: In your reading of the wording just now, mr Chairman, I8 think you omitted the reference in the earlier text given us by Mr Hawkins to "duty free treatment. the chairman Yes. mr mckinnn (Canada): The first wording was to the effect that the binding of low rates or of duty-froc troat.ent should bu Liven equal importance with roduations of hij- rates. mr videla (Chile): Taking into account the proference as well? when we are starting frosh nogotiations, if we have low tariffs at the time that should bc taken into consideration along with the proferençes that are existing. Supposing I am a country with excessive preferences and another country has low tariffs, what I mean in that the consideration of preforences should also take place and be binding here. the chairman: If I have followed what you are saying, you mean this: that the binding of a low rate or of a duty-froc entry into a country should be considered as the same typo of concussion as tho reduction of a high rate or the narrowing of a margin of preference? - 50 - K.3 E/PC/T/C.II/PRO./PV/8 THE CHAIRMAN: Yes, because the countries which are outside the preferences consider the preferences as the highest obstacle. If the meeting is agreeable, we might ask our Rapporteur to draft raft this clause, andCould we oull see thatat omeetingt i.eting. The only point r we agree to its inclusions inclusi as sub-paragraph c. Ie that thc feeling mmittee?o.rAgreed (iexoad.we ormally f orilly request him to do that. The othcrwpoint nomemorandum presented by the ed by the Polish Obsei'vo with regard to the question of countries which have not at this moraen stabilised their currencyill They wii have a certain time in which to do that, but when they do it it mayemean amentdjust-.ie of certain specific dutees w thc nev; value of currency in their country. That Ves the spocimade int i.taoby the Pulish Observee, who doas not appear to beavith umomenthe 1xowould like Mr Hawkins' advice againdvico aga aswto ihat e swould.do vmatter.s i.iattu ï7d VIDEI (Chile): This morningechnicalTacirnimm SueeCweaittec Ni had a similar difficulty,sand we azked the representative of the International 1.ontarycomed to cor. in and advise uW on itcewe put mortain questions to him about couitries whlch have not yet stabilised their exchange. I think, therefore, that it usefulbe Itsefg to bIMFé eheeIkY roprosentative into this discussion aed in a vcry short time ee could oxplain tu us what is thc positeon ontries concernedccncL.rna. MR HAWKlNS (USA). I thimoret is saor question of the effect of a chaiage or deprociated currency upon the level of protectien affordod by specific rates of duhink I tliin thapoint here)oint' he. MAN:C1;IRSN: a s have l chort note aeout iomhure freo the .ecrrhaps. Pehrhps I mnay read it. It says this: European gurolpcw countries, previously occupicd bm the eneny, At present have currencies thconvertibleiivertibl and are likmainto reiuai so for a certdin perio, after the beginning of the exchange transactio s of the'Inalrnatiow.. monetare Fund cSoe Artiele 20(4) Ff the meT Agreerint). Thisonransiticd mayerio-xl i go beyond the date of the proposed tariff agreements and perhaps beyond the date of the ontrycento foroi ofementagreuemnr. Thoir tariffsmain,d reuiain -51- K.4 E/PC/T/C.Il/PRO./PV/8 for some time, suspended or not caressed in a convertible. currency. But after having stabilised their currency these countries will have to revise their tariffs upwards in accordance with the new par values of their currencies. There should be a provision for inclusion (a) a signatory of the proposed agreement who avails himself of the exception contained in article XX. Section 4(a), of the IMF, to intrduce or change his tariff after the entry into force of the new agreement; (b) if necessary, an undertaking concerning his future tariff negotiations corrosponding to those proposed Article 18 of the suggested United States Charter." MR IGONET (France); Mr Chairman, I should like to point out that France will be faced with the same difficulties. Our customs tariffs before the war also were specific and since 1938 our currency has been devaluated, and therefore the specific protection is not the sale in value. We have tried to evaluate the percentage and it is on the basis of the ad valorem value that we are going to enter into dis- cussions. on the customs tariffs. THE CHAIRMAN: I think that is what we might call the starting point of negotiations. In this agreement, as far as I can see, there is nothing to say what the tariff will be when we start. The point is that when we come to Geneva in April next year we will be expected to say, "Those are my tariffs and those are my proposals and these are my requests". But in the ase of these other countries which have not yet stabilised their currency and may not by that time have done so, what are they to say? They will come along and say, "I cannot enter into those negotiations because I have no tariff at all as a basis for such negotiations". I think that is the main point. He may say, "Later on I can enter into negotiations, when I know what my tariff is," but, an far as I know, there is no obligation at all on him for the time being. Is that the position? MR HAWKINS (USA ): I think that if a country negotiating next year did not have a tariff, or had one which was suspended, it would create a difficult position. There might be several ways of handling a case like that, one of which might be that perhaps these countries should base their requests upon their existing law, even though it might be in suspense; and the response to such requests would have to be met in the light of the adjustments other countries right be able to make in relation to them. -52- L.1. E/PC/T/C.II/PRO/PV/8. That is the only proper way out of our serious difficulties. I think we have again got very difficult procedure. It is not help us much until we consider the procedure on memorandum. I think we are right in doing so, because it does no belong in a basic document. Mr SHACKLE (UK): Might I make a point there. Of course I do not know what the Polish observer at that time had in mind, but there is possibly a difficulty which would exist even beyond the initial negotiation. He may be suggesting that supposing he did agree to fix a specific rate at a particular figure, then should there be some charge in the value of his currency, that might have disturbing effects. It is concoivable that he may see a difficulty in those circumstances in fixing a rate. at all. THE CHAIRMAN: Then he could not enter into negotiations, because he would have nothing to offer. You want to know what you are trading. Mr HAWKINS (USA): In circumstances like that there is nothing in the draft charter which would compel negotiations in paragraph 3. You will notice that the phrase in that paragraph deals with countries who, without sufficient justification refuse to center negotiations. If the country has not a tariff they are certain justified in postponing negotiations. THE CHAIRMAN: I think the only print which I think is still worrying him is this. we have the Charter and we have at the same time an obligation to enter into that low tariff club, and he cammpt enter into that club. Mr VIDELA (Chile): We are all members of the International Monetary Fund, and therefore we have to accept the obligations of stability of our currency. Other countries may differ grealy on many things here. THE CHAIRMAN: He does not forosee the possibility of stabilising his currency for perhaps two years. He fears that in that position we will say to him, "All right, you cannot enter us a member of the Charter". I think that is the main sense of his argument. Mr HAWKINS (USA): I do not think that would preclude his joining the organisation.. Dr COOMBS (Australia): "Within a reasonable time" is the phrase. Mr HAWKINS (USA): He would thereby subscribe to the general obligation to L.2. E/PC/T/C.II/PRO/PV/8 bring down tariffs. If so obedy invoked Article 3 and said: "The Polish Government refuses to negottiate", and presents a case, he then comes within the phrase "without sufficient justification". THE CHAIRMAN: There seems to be no difficulty at this stage except the difficulty that we cannot enter into negotiations for the time being. I think we will now adjourn and resume our meeting with the discussion of paragraph 2. The greeting is adjourned. (The meeting rose at 5.50 p.m.) (For verbatim report of evening session, see Part 2 of E/PC/T/C.II/PRO/PV/8). ----------------------- 54. A.2 E/PC/T/C.II/PRO/PV/8 Part 2. The meeting resumed at 8 p.m.: THE CHAIRMAN: The meeting is open. Before we come to paragraph 2 of article 18 there are a few points in the memorandum of the secretariat into which we ought to go so as to see how we will dispose of them. One is on page 12 of the memorandum. You see the remark of the Australian Delegate: "Countries should not negotiate about reductions of tariffs on a commodity the principal supply of which is outside the negotiating group." I think that is a point which we ought to cover first, to see whether we could deal with it on the memorandum on procedure, which seems to be our general escape clause at the moment MR. HAWKINS (United States): I hesitate to say it, but I think it is a matter which comes in the procedural memorandum. It certainly is not the sort of thing that would go into the Charter. I think I would agree that normally speaking, and without making it a rigid rule, negotiations might be confined to products of which the countries concerned are the chief suppliers. In that way there is some inducement, some motive, for other countries to carry out their obliga- tions under paragraph 1 of the Article and enter into negotiations in order that the products in which they are primarily interested may receive consideration. I would like to rather stress the point that I do not think you can lay down an absolutely rigid rule on this point. For example, there are quite a numbe of products of which ex-enemy countries were the chief suppliers in the past; but other countries now are and are likely to be the chief suppliers of those products. I think it would be better, if you are going- to phrase any general rule, to say "products of which the countries concerned are actually or potentially the chief suppliers." However, I should hatu to see that rule absolutely rigid. I think you might find exceptions to it, so that if it were adopted in the memorandum of procodure I think it should be rather loosely worded. 55. B.1 E/PC/T/C. II/PRO/PV/ 8 . THE CHAIRMAN: Any comments on that? I think we can all agree with Mr. Hawkins that in order not to make those coming negotiations too difficult and complicated one should as a rule try to confine ones .demands to the principal supplier, but we should try to make it more flexible. We will ontrust that to our faithful rapporteur. Then we have another point which could perhaps bo explained - I think there, are a few Australian delegates in thc background. That point is: "If internal measures taken by a Government to ameliorate the hardship - not forseen during tha negotiations - resulting from concessions afforded to other countries, such Govornment should be entitled to seek postponement of introduction of concessions made." Is it an escape clause or something of that kind? MR. COOMBS (Australia): I think that should be considered in later THE CHAIRMAN: I am rather doubtful whether we canstart writing in escape clauses in that way. What does Mr. Hawkins think? MR. HAWKINS (United States): I think the point was that they were intcndod to go in Article 29. MR. COOMBS (Australia): That is right. THE CHAIRMAN: We will deal with it then whon we discuss Article 29. I have still a last sot of remarks, on page 16 of the memorandum, where the Delegate of Chile put forward some reasons for exceptions. They are: "Chile wishes to stipulate exception in the case of `circumstances in which a refusal to reduce tariffs would be considered Justified, viz.: (a) when a concession affects or might affect a national industry in its initial stage of development". We will doal with that when we come to the question of employment. "(b) When a concession affects or might affect a national industry which is vital to production and employment in a particular region and cannot easily be replaced by another industry; (c) when home industries are sufficient to supply internal consumption; (d) when homo industries use for the most part domestic raw materials." -56 - B. 2 E/PC/T/C.II/PRO/PV/8 Those points all come up with regard to the question that members should be prepared to enter into reciprocal and mutually advantageous nego- tiations, and so on. MR. HAWKINS (United States): On the first point, THE CHAIRMAN: The question of employment will be referred to at a later MR. HAWKINS (United States): With regard to (b), "national industry which is vital to production and which cannot casily bc replaced," I think this is a case where the country concerned would simply have to say that it was unable to take action on that particular product. It might cost them something to do do, because thay right lose concessions for their exports, but they would not be precluded from saying it and would not be compelled by anything in the Charter to reduce or bind that rate. On (c), "where home industry is sufficient to supply the demand", a somewhat similar consideration applies except that , should think the country concorned would want to ask itself whether those industries are suppling home consumpion at a reasonable price, or whether a little healthy competition might not be useful, but in general the same point =pplies. If in the case of that product there were reasons. which made it difficult to take action, that would be taken into consideration. THE CHAIRMANL But is it not truck that if we put in all these exceptions, if we always play for safety, what is the use of those negotiations? We are supposed to offer something. There is nothing we offer if we are always on the safe side. If a country triad to use all those escape clauses, if I may so call them, the other members will say, "Look here, you are not playing ball." MR. BURR (Chile)(Interpretation): I wonder whether, when the denial is justified, we could not use the same terms as in Article 29. - 57 - B.3 E/PC/T/C.II/PRO/PV/8 THE CHAIRMAN: If that is so, perhaps we could refer to it when we come to Article 29. MR. HAWKINS (United States): I do not think that fits in Article 29, does it? All those are exceptions, in the casa of circumstances in which a refusal to reduce tariffs would be considered justified Article 29 covers a case where a concession has been made and duty reduced and then, because of something not foreseen at the time of the negotiations, there has been a sudden flood of imports, and there might be a temporary cancellation of the concession, under the machinery prescribed there.I think we should be extremely urwise to take this in as exceptions when they are really taken care of in the negotiating process. MR. SHACKLE (United Kingdom): I would like to support that. If we once start specifying particular cases Almost every country will have some specific case which it will justifiable able to claim should bo included. Ono could mention a country which during the war lost a considerable Part of its foreign investments and for that reason made and excuse for not making tariff reductions. There is no end to it once you start. THE CHAIRMAN: I am inclined to agree there because, as I hava stated before, in my opinion negotiating means that you really have something to offer. It means also sacrifices must be made, otherwise the whole spirit of the Charter will be wiped out. As for my country, we accept those things for tho common well-being, so I would very much advise against including all those special circumstances. Of course members are entirely free to give their arguments against it. MR. LECUYER(France)(Interprotation): We must not lose sight of the fact that all this will lead to negotiations first on the bilateral and then on the multilateral plan, according to the procedure which will be fixed later. We should not lose sight of the fact that in the course of those negotiations each county will state its difficulties, why it cannot lower tariffs -58 - B.4 E/PC/T/C.II/PRO/PV/8 absolutely or relatively, and each naturally will give its reasons. Each will say why it cannot be generous regarding concessions, so I think all these exceptions will have been envisaged in the negotiations. Each country will present its own situation and I do not think it is of any use to mention those exceptions here. MR. BURR (Chile): I do not insist. THE CHAIRMAN: Having dealt with those arguments the only other points that he. to be dealt with are when we discuss pararagraph 3. We now have to deal with paragraph 2, "Each member participation in negotiations pursuant to paragraph 1 of this article shall keep the organisation informal of the progress thereof and shall transmit to the Organisation a copy of the agreement or agreements incorporating the results of such negotiations." I do no think that will raise any difficulties. Adopted. THE CHAIRMAN: Then we get paragraph 3. This has been called the penal clause. Here there are a few arguments stated,but this is a very important article and I prefer to ask Mr. Hawkins' to explain it to us. MR. HAWKINS (United states): I think I can best explain it by reading the Article and commenting on the main points. "If any member considers that any other member has failed, within a reasonable period of time" note that reasonable time is allowed "to fulfil its obligations under paragraph 1of this Article" - that is, has foiled to respond to requests to negotiate and take effeectiv action in the negotiations - "such member" - that is, the complaining member - "may refer the mattter to the Organisation, which shall investigate the mater and make appropriate recommendations to the members concerned. " The word "recommendation in that case may be a recommendation to the -59- B.5 E/PC/T/C. II/PRO/PV/8 to the member which has refused to negotiate or failed to accomplish anything in the negotiations, in order to learn that the difficulty is. "The Organisation, if it finds that a member has, without sufficient justification, failed to negotiate with such complaining number," - "without justification" should be underlined, because there will be cases in which it will be impossible at once to negotiate, such as those mentioned this afternoon, as when a country is just revising its tariff policy, or whose currency may have depreciated. "... if it finds that a member has, without justification, failed to negotiate with such complaining member as required by paragraph 1 of this article, may determine that the com- plainig member, or in exceptional cases the members of the Organisation generally, shall, notwithstanding the provisions of Article 8, be entitled to withhold from the trade of the other Member any of the tariff reductions hich the complaining member, or the members of the Organistion generally, as the case may be, may have negotiated in pursuance of paragraph 1 of this Article, and if such reductions are in fact withheld, such other member shall then be free, within 60 days after such action is taken, to withdraw from the Organisation on 60 days notice to the Organisation." 60 C1 E/PC/T/C.II/PRO./ PV/8 Going back now to the long sentence, I call your attention first to the words withoutut justification", and that the Organisation "may determine that the complaining Member, or in exceptional cases the Members of the Organisation generally, shalI, notwithstanding the provisions of Article 8, be entitled to withhold from the trade of the other Member any of the tarifff ruductions which the complaining Member, or the Members of the Organisation generally, as the case may be, may have negotiated". Now, the whole effect of that is that if negotiations have not been entered into by a country and it has no justification for it, the benefits of the tariff reductions which have been made by the complaining member or members - and this is of some importance - can be withheld from the member who has failed to co-oporate or to carry out his obligations under the first paragraph of the article. MR McKINNON (Canada): I suppose that "any" there would mean '"any or all"? THE CHAIRMAN: The matter is now open for discussion. MR ADARKAR (India): Mr Chairman, there are onu or two points of clarification concerning this paragraph. It is not quite clear, Sir, whether the penalties which are contemplated in this paragraph will be applicable at all to the countries which will take part in the initial negotiations or whether the arrangements agreed-amongst this initial group of countries will be more or less taken as the standard with reference to which the concessions made by the new members will be judged. This point is rather important because it is not quite clear whether the negotiations referred to in paragraph 1 refer only to the negotiations which are to take place next Spring or to the whole series of negotiations. That is one point, Sir. ln any case, the attitude of the Indian delegation towards the principle underlying this paragraph is broadly this: that the question of penalties. is a. very delicate one and the undertaking to impose penalties on other countries can properly be considered only after we have some experience with the kind of multilateral negtiations that are contemplated. It is the first tine that we are experimenting in this process of multilateral tariff negotiations, and we should see how these work - how many countries 61 C2 E/PC/T/C.II/PRO./PV/8 feel genuine difficulties in making tariff inductions - and it is only after seeing that that each country will be able to decide what will be the practical implications of applying this kind of sanctions to the countries concerned. We feel, Sir, that in the case of other international organisations like the International Monetary Fund a country can either keep out or get out of the organisation without incurring any penalties whatever; and it is therefore a difficult natter for a country which in the case of this organisation finds that by being outside the organisation it is incurring very severe penalties, in that its trade will be subject to dislocation in several countries. Generally speaking, ve believe that equality of treatment and a reduction of tariffs should be treated as two distinct principles. It is possible for a country to agree to complete equality of treatment, while it may have genuine difficulties in making substantial reductions in tariffs. If it agrees to equality of treatment it will also make a contribution to the promotion of international trade which is worth something, and we should not deny ourselves the benefit of that contribution merely because the country has certain difficulties in offering reductions of tariffs. We do not know at this stage what is going to be the network of our commercial relations in the next few years. It is quite true that thc countries which are represented at the preparatory meeting are countries which have been responsible and which have accounted for the major part of our foreign trade, but with the change in the economic structure of the country and with an increase in industrial production it is quite possible that the whole position of our export trade will undergo very material change; and if that happens our trade relations with countries which are at present not included in the preparatory, group will change. Our trade with those countries will certainly increase. It in therefore a matter of very great consequence with us that we should not accept any undertaking which may have the result of disrupting our trade relations with countries with which we hope to develop tirade. Therefore at this stage countries in the position of India are not able to see the future clearly, and they would therefore prefer that, on the analogy of article 31, which has been deferred for later consideration, this paticular provision should 62 C3 E/PC/T/C.II/PRO./PV/8 also be deferred. They fuel that such a procedure would also be conducive to the bettor conduct of the tariff negotiations. Each country with the proposed negotiations before it should, be in a position to consider the demands for tariff concessions on their own merit and should not also have to take into account this further consideration that if it faiIs to make concessions it may be sub- jectod to certain reprisals. So we feel, Sir, that the whole process should rest on a mutually advatageous basis. It should be an association of willing members and it should be mutual interest and not coercion that should be the sanction behind the whole thing; and we think, therefore, that from this point of view it will create the proper setting fop these negotiations if we do not hold this threat over the heads of the negotiating parties; and from that point of view I fuel we should defer consideration of this particular provision until we have some experience of this must difficult and model experiment in multilateral tariff negotiations. 63 D. 1. E/PC/T/C. II/PRO/PV/C. THE CHAIRMAN: I think the answer to the first query of the Indian delegate as to whether it should refer to the coming negotiations or to the future negotiations should be that normally speaking it should be to theho future negotiations, because eh- Chaetor willonctebchtnere when we hevo our first negotiations ineGevzwa.However,cr ww vill have to treat the future negotiations dn= eho first negotiations in theamest way,ose it certainly has a bearin ,,im ;y opinion, on ehQ first negotiations. But you are not officially memberbr up toowac because you are not a member untiloycu have accepted the Charter as such. thit regard to the second point, m nust say I find it a little diif cult, because you are not in a position to gedefiniteit conclusions with regard tmembers .iwho do not fulfill their obligations, because they would get outebofore that and ehcyowculd be nomembersab, and we would then be in theame positionio. am quite itin agrmenten with the idea underlying it, that ifewc allo something and give certainrt concessions and accepteccatzin obligations ineboing memberai of that club if m,ey use that expression - it should not be allowed for another te more iotc the cluandnc say, "am here and thereth is nothing more to be said about ".,, PARANAGUAAi (Brazil): I have merdoubts'abooout this tariff negotiation, and I would be glad if I could asMr.à, Hawkins about this, The tariff negotiation THEHAIRMANZA: On a point of order, wd Ciscussed ehu principlo cf the negotiations this afternoon. ItsiX mpryly a question of the penalty clause. MrARAWAUGtA (Brazil): Thmethod hoof negotiation untilowcr, as I haveescen it, isote present a list of products to countries int erested, and there are 17 countries. Tham leans 256 listo enc countrpreersentingote the others. To examine this list is aevcry difficult question, and if they are not examined in time aeponaltcaannebo givengainstti the country. eryer cntrytrsiu obligedote study eh( list,ote consult eho organisations concerned, a d'mmerciaial soasciations,ndui all that will take enmousCu 64. D.2. E/PC/T/C.Il/PRO/PV/8. time. I cannot understand how we can finish that in that in time, and if it is not finished in time it is unreasciable for a country to have a penalty against. it. It is more like an imposition than a negotiation. It means we are obliged to agree. We have always this menace facing us, "If you do not agree, you fail ". There is another Article here saying that a country, in the case of emergency, can suspend the concession. Why so condescendigly in the case of an emergency and so drastic against a member in saying that they failed in their negotiations. We might receive unreasonable requests, and we be do not want to/accused of failing. There is another aspect, too. Sometimes the negotiations can go very slowly, because one country is a non-member, and we arc not going to lose our trade with a neighbour who is not a member and incur a penalty. I would like to have sone explanation about these cases. Mr HAWKINS (United States): Mr Chairman, if you can tolerate me for ten minutes I should like to outline the whole procedure as we see it and try to pick up these questions in the course of the outline. I should like to give you our conception of the procedure and how it would work, and also how this third paragraph fits into it. Our idea is that next Spring the countries who are members of this Preparatory Committee - 17 or 18, or however you count them - would negotiate schedules for the reduction of tariffs. In answer to one of the delegate's questions which referred to the nature of these schedules, there would be 17 schedules and not 256 schedules. Each of the 17 countries would offer a schedule of tariff reductions applicable to the imports of interest to the other 16. In a sense that does amount to that many bilateral agreements, but it can be a groat deal more simple than having 256 bilateral negotiations, and for this reason. The United States, for example, finds on looking over the schedule of, we will say, the United Kingdom, that there are some reductions which are not adequate, and we are not very happy about them" 65. E.1 E/PC/T/C. ll/PRO/PV/8 If it were a bilateral negotiation, we would do what we once did - spend about two years negotiating. We will have before us, however, the sixteen other schedules simultaneously. We will look at all wc are granting, and we will consider the benefits we are getting from all the other fifteen countries. They may more than compensate as a whole for any deficiencies there may be in a particular country's schedule as it affects our products, so that we do not need to be so particular. We do not need to haggle, as is often done in bilateral negotiations. MR. PARAGUA (Brazil) : Does that mean that the products would all be the same? They are not different? For example, the list presented to the Brazilian Government would not be the same as the list presently to the other Governments?raruentp? NS. ïItK12Take the American schedulerisam schmes it cor.; out of the negotiThe schedule2 zohedul thatmeould would apply.-;ld arp to the products of iotsixteenu ritxtoc countriwill run in then1 in th3 orrer offf schedule, and the commitment on each rate willrate Y.41 not be to themainnlyy nairnly interestede brt on cor theae OI- i. others. Isinglene :nz' schedule -- an obligao the otherc ot.-cr sixteen countriewill Ie v;il bc ratherandlong aie elschedule.clizdulO We inmake ts ra.k it so; isgto para the cohn3.,e wurtriarethambers mf this o?' thi Preparmmittee represent, przent, I think, aogood crios-seot;Ln of the coof the world., ou haveYul hgeoga'l jEographic regions tedresYou have large countries, you have small countnL. cQunries. You hariesowith different systems of temoing and you haae.c youvo s in different stages of development. What such Wat a group of countries ll e in thS way of tariff reductions creates a fair standarge what jud vat other countrt to do.. o do. E. 2 E/PC/T/C. II/PRO/PV/8 If you will refer to Article 56, it provides that when these seventeen countries, which, I repeat, are pretty representative of all sort of conditions, have concluded their negotiations and have elaborated these seventeen tariff schedules, those schedules would represent a text by which to judge what other countries should be expected to do. Those seventeen countries would be constituted as an interim tariff committee for the purpose of judging how far other countries not parties to the original negotiations should go. You would expect, given the very representative character of that group, that they would be reasonable and tolerant, and ready. to take into account almost any condition which any other country might be in n imjiaking a juemraent as to whether such other country had got far enough with its negotiation. "s each other county mpleteset its negotiations and comes up to the standard set by ehc original seventeenounJutries, it uldLl be ddled to the ietcrim tariff mmitteett, and the provision eoas onota say that when two-thirds ofhelà countries ermemberser of the cmiuiteec, the whole conference tekis it over. Vithin that framework I should like to try to answer sane of the questions. The first questions were raised by the Delegate of India. It was whether the penalty provisions would be applicable under complaint of moie country other than the original negotiating group againsmembersbe or that group. I inkin they would. Ifsomeor outsddc country that sa3 not a party to the original negotiations should want to negotiatw vith a country a member of eho original group, in derleota get more favouraelo trtment of his product which had not been co covered by .7, E.3 E/PC/T/C. II/PR.PV.8/ the initial negotiations, it could complain and the procedure of Article 3 could be invoked against that country if it were unreasonably refusing to negotiate. I think, however, in practice it would turn out that the original negotiating group would probably have gone as far as other countries would bc expected to go, and that the provisions of paragraph 3 are more likely in practice to be applicable to countries which did not participate in these thorough- going initial negotiations. The next point of the Indian Delegate was that these provisions in paragraph 3 should be set aside until some future time; I think he had in mind a time some time after the initial negotiations next spring had been completed. My only comment on that is this, that there would be somewhat less inducement for countries te enter into those negotiations if it were possible by not entering into them and by invoking most-favoured -nation clauses of a bilateral agreement to get very substantial benefits without conferring any. The Delegate of India spoke of pennalties and of coercion. I do not think that is really a proper description of what is contemplated. I think it would be fair to say that countries which do not conform; to the provisions of the first paragraph of articlee 18 fail to get benefits. It is not as though penalty duties were applied, or that extra increased duties were put on. The provision is merely that they would not get the benefit of reductions in duties which other countries had made and which they extend to countries which have also, reduced the duties. I do not know, whether I have answered all the questions or not, or whether my explanation is satisfactory, but if not I should be glad to try to clarify those points. 68. F fols. F.1. THE CHAIRMAN: Before we proceed further I would like to say a few words about how I see things after the explanation of Mr. Hawkins. Firstly, in Geneva we will have 17 or 18 countries coming together to negotiate. How we will deal then will be covered by our memorandum of procedure. We only have before us the principle of what will be expected of us in the first place, under article 18. We can leave that for the time being with what Mr. Hawkins has said about how he envisagecs negotiations taking place, which will be covered as far as is suitable in the memorandum. The second stop comes when we have had the negotiations which have resulted in something - tariff reductions and so on, which for the time being will or will not come into force. If they come into force for the time being before the world conference, we would then have the question whether it should apply to all countries for a certain specified period until those countries have had a chance to enter into - to use the phrase again - the low tariff club. That would be after the world conference. When the world conference is a success were on with the charter, and we go on with the whole procedure of further tariff reduc- tions and tariff negotiations. We would then have 17 or 18 countries who have studied this for a long time making an agreement in April. They could say fairly soon, "Yes, we will definitely accept the obligations of the Charter." There will then be the 18 countries mentioned in Article 56 being the Interim Tariff Committee. If I am not right in that, perhaps Mr. Hawkins would correct me later on. This committee will then judge of the new members who have accepted the world Charter at the world conference. At the world conference, with 36 countries, we cannot have a complete set of tariff negotiations. Again if I am wrong I would like Mr. Hawkins to correct me. You more or less accept the obligation to enter into tariff negotiations in the same spirit as the former countries. They are provisionally new members and have an 69 E/PC/T/C.II/PRO/PV/8 obligation to enter into tariff negotiations; and already the existing members would have an obligation to enter into new negotiations if it was found in March that not enough had been done in certain cases Once the new members have accepted the obligation to negotiate we would find that the Interim Tariff Committee would have to judge within a reasonable time, whether they had failed to fulfil their obligations without sufficient justification. I think there cannot be much objection to that. I would like to Mr. Hawkins to say if I have under- stood him accurately in relating the procedure which I have just sketched out. We also have to take it that we will have succeeded in solving the difficulty with regard to the relationship of non- members, which was left out of Article 31, in which he said we could not deal with it now before we knew more about the negotiations in Geneva, and perhaps the world conference. MR. SHACKLE (United Kingdom): Might I suggest tha there is perhaps a certain difference between the position of non-members under Article 31 and the position under paragraph 3 of this Article of provisional. members, who may not have negotiated satisfactory tariff reductions. It seems to me that in the case of the provisional members who have not negotiated satisfactory tariff reductions there is a difference, in that by the fact of becoming provisional members they have already agreed to go through this procedure; and if the procedure into which they have agreed to do involves these penalties as part of the procedure, then they have accepted those consequences in advance. In that way they differentiate themselves from the pure non-members under Article 31. THE CHAIRMAN: I entirely agree with that. I only made the remark because in my opinion in settling the question with regard to the non-members there may not be sufficient incentive to come into the club, because there would be hardly enough. Mr. Hawkins, perhaps you would say if I stated it correctly. 70 F.3 E/PC/T/C.II/PRO/PV/8 MR. HAWKINS (United States): I believe you did. I cannot think of any point in it which caused me any doubt. THE CHAIRMAN: We now have to look into this with regard to procedure. MR. ADARKAR (India): With regard to the question of giving something without receiving anything, is not it a difficulty which arises wherever any country operates the most-favoured-nation tariff? The principle has been to main principle of Indian tariffs, apart from Imperial Prefercnce - which was in 1922. Therefore, if India has made any chances in tariffs the benefit of that has gone to all the countries in the world with which she was trading, without receiving any great reward. THE CHAIMAN: Thereagain I think we hive to refer to what we discussed this afternoon. We added two clauses of principle to Article 18: one was on the question of industrial development and employment, for Committee I and II combined; the other was the question of the low tariffs being the same as a reduction of a high tariff, or the decrease of preference. I think that would cover your point. That will be taken into consideration once it is seen whether a member has without sufficient justification -- you understand that -- failed to fulfill its obligations. MR. ADARKAR (India): The difficulty with us is that we do not know what types of cases will arise in which penalties will have to be involved. We do not know yet how the principle of, for example, remaining tariffs concessions would apply to economic devolopment, as Mr. Coombs said this afternoon. We have not sufficient information on that as yet, and that is our main difficulty. THE CHAIRMAN: There again you do not accept the Charter before the negotiations. You accept the Charter after the negotiations, and even after the world conforence. Therefore, I do not think this difficulty can arise. 71. F.4 E/PC/T/C II/PRO/PV/8 MR. ADARKAR (India): Maybe not as far as the original members of the Preparatory Committee are concerned, but it will arise in regard to other members; and in so far as penalties are applied to those members it will affect the trade relations between tho original members and the other members. MR. McKINNON (Canada).: What do the various speakers mean by the word "penalty"? There is no penalty mentioned in this Article. No penalty is suggested in the Article, directly or indirectly. I am unable to follow tht discussion to date. THE CHAIRMAN: Withholding the tariff ruductions. MR. McKINNON (Canada): Quite, but that is no penalty. That is merely the withholding of a favour that was to be granted to those who joined the "club." There is nothing suggestive of a penalty about it. For that reason I just have not been able to to allow the discussion. MR. ADARKAR (India): There are two ways of describing the same thing. When five or six countries withhold the benefit of tariff reductions from one country, and when a number of its competitors are eligible for it, that is a situation in which the trade of the country from which the concessions are withheld is bound to suffer, and any suffering of that sort is a penallty. MR. McKINNON (Canada): Surely it is no penalty to withhold the privileges of the "club" to anyone who has failed to become a member? There is no penalty involved in that. MiR. HAWKINS (United States): I would like to point out one think, that may have been overlooked, It may be the delegate for India is overlooking it. This is not a mandatory withholding, of benefits. This does not require the benefits to be withheld. The number who is complaining about another member could be authorised to withhold benefits. MR. McKINNON (Canada): By the Organization. 72 F.5 E/PC/T/PRO/PV/8 MR. HAWKINS (United States):. By the Organization. Allowance is made for the possibility that all might be authorised, but they would not be required: they would only be authorised to withhold. Now, there iss one sort of cicomnstanc .teore whch makes it desirable that alll embers bee authoriecd in particular cases to withhold eoefiits. Let us support teocomplaininggmember is one e of thoec raeo countres w ith a low leeol of tarfefs. 73 G.1 E/PC/C.II/PRO/PV/8 Let us suppose the concessions are mainly binding. It has not got much to withhold. In these circumstances there are bound to be a number of other countries affected by the failure of the number complained of to reduce its tariffs, and the Organisation, in these circumstances, may, broaden the authorisation to all members, so that they can withhold the tariff cuts they made, they having made many more, possibly, than the complaining member whose tariff is low and has been in large measure bound. THE CHAIRMAN: We have now heard the further explanation of Mr. Hawkins, and I think the position must now. be fairly clear. Can we agree to this clause as it is? MR. ADARKAR (India): I think the Delegation of India would like some time to consider the full implications of this. I think the clause includes an important point of principle. It would be better from the point of view of the Delegation of India at rate if consideration of this clause were deferred. THE CHAIRMAN : Ther terms of reference of this Committee are just to pre- parc and discuss thc different articles to ser whether or not alterations in thr Draft arr nrcessary, not committing the members here. They should be free, if it comes up again in Committee II, to make any reservations they still wish to make. Our point is whether we can still improve vO on the draft or not. we vznnot agree on itonwe vu eava to seatcath-t, but as I eako it that ywant more time to reflect on it, perhaps if wes i e&opt thas Lrteclc as it is ywouldou. eafo Vulleedom to refer to it it again inetmaina nmmina.eetoc. IA. RDAPKJR (India)W .rould ie bc recorded inetha review thwe we vouhave .VO preferrodetwholehol provisioo have been taken up for considerationiao afterethcgneCotiations eavaken place in Spring?M? . SHACKLEEUnited Kingdomgo):MayIa I ggestus thatewo should probaylY have - 74 - G.2 E/PC/T/C.II/lPTC/PV/8 to take a decision about this not later than the time at which the Springn negotiations are held, and when they are concluded will become a question to which we shall actually have to have an answer. I feel that we cannot defer a decision until after that time. THE CHAIRMAN: I think that was the idea of the Delegate of India, not to go further until after Geneva, if we can agree. May be he could agree pro- visionally at the main Committee's meeting, but ut I weantod to eivcm timeino to coner this qs question. MR.AARIUNAAGU (BrazilAt the time of these tariff negotiations the Charterer ll come into force, will it not, among the 17 members? That menaans that uo sll11 be bound by the whelu Charter. Thatmpliesli to a certaiextetont the revision of eho Charter. MR.AWHWKINS (Unetod States): deror e present p planhe meeting next Springri villebc theesCcondeeting of the preparatory committee which is formulatingti a Draft Charter for smbnissn to a world conference. At the same time thein mbersrs of the ercparatory mmissionCl arimplementing among no tmseoulves enc of the oiga"ations of ehc arletornamelyly ehî provisions of pagraErph 1 Article u 18. I do not suppose atIt eh; Chaetor wll!ateko foal effectt mong the members of the preparatory Commiittee, although you would expect that, they having formulated and agreed to it, the" would export it and adhere to it in the full Conference As to the tariff part, the tariff schedules, there is a question as to whether they might not decide to put it into effect sooner;. They do not have to, but they might decide to. If they did there would be certain thins in Chapter 4 which they would pro- bably iiant to incorporate by rapports - certain things which are related to the tariff schedules. To give one illustration, the provisions regarding quantitative restrictions. If that is not done the tariff schedules would become meaningless. National treatment regarding internal taxes would be anothor, safeguarding th concessions granted, otherwise a discriminatory - 75 - G.3 E/PC/T/C.II/PRO/PV/8 internal tax might nullify tariff concessioins. There are certain things of that sort which, if the schedule were put into effect at once by the 17 countries, could be put into effect by rapports to the Charter. The formal adherence of the members would presumably not take place until the world Conferece later on. MR. PARANAGUA (Brazil): I understood that by this note on page 37. There is a footnote to Article 56, according to which I have the impression that more or less all the principles embodied in this Charter would be put into force among the countries signing the tariff agreement. MR. LECUYER (France): If we can agree in January or February regarding certain tariff reductions, it may be interesting to have the Charter enter into force as soon as possible, as in that case a minimum of conventions would have to be agreed to. It may be that some provisions might enter into force at the same time as the tariff reductions. Then, if I remember correctly the term of the first American memorandum, it was envisaged that at last we should think of this if the tariff negotiations were satisfactory. But then it would be useless to ccnsider the third paragraph of Article 18 at this stage. That does not necessarily imply that this text is an intangible one - it is only a mere possibility. It might come into force if the text was agreed to and if the negotiations were satisfactory. THE CHAIRMAN: I think that was always the underlying idea. Nothing will come into force if we do not succeed with our negotiations and so on in Geneva. Therefore the idea is that we should try to clear this text as much as possible so as to prevent further work. in Geneva, when we shall have enough to do. We cannot have these meetings again. - 75 - G.3 H. 1 E/PC/T/C.II/PRO/PV/8 Then, subjcct to the reservation of the delegate of India, do we agree to the principle here? I have one further point to raise, and it is this difficulty: that we do not only withhold tariff concessions in this charter. There are my other obligations we take upon us. I think I must raise this because the positions of certian countries are so difficult, as Mr Hawkins pointed out, with regard to countries with low tariffs. The point is whether we add here, after "withhold from the trade of the other Member any of the tariff reductions which the complaining member, or the Members of the Organisation generally, as the case may be, may have negotiated", some words such as "or other obligations which may have been granted in the charter such as the elimination of quantitative restrictions pursuant to Article 18 of the charter", and then go on with "and if such reductions are in fact withheld", and so on; and perhaps at the beginning of the suntence we should say "in special cases". But the question I would like to ask Mr. Hawkins is whether we put it in here or simply restrict ourselves to the tariff reductions. Did I make my meaning clear? MR HAWKINS (USA.): Mr Chairman, if I get the, sense of that it is this: that that under the draft as it is the benefitsi/would be withheld are only the tariff benefits; but you, in effect, are saying that a country or countries might be authorised to withhold any of the benefits granted under Chapter IV of the charter? THE CHAIRMAN: Yes. That, in my opinion, is here logical than it is now. MR HAWKINS (USA.): The effect of that, I think, is to make it pretty severe, let again whether it does so depends on what these other obligations are. If there is a general undertaking not to use quantitative restrictions subject to certain exceptions, then the thing a country would be relieved of would be that obligation, which would mean that they do not merely withhold benefits but they would be entitled to put on real penalties in the form of quantitative restrictions. I see fully the logic of the point, but I wonder first whether it is not unnecessarily severe. I think that the case which you must have 77 H. 2 E/PC/T/C.II/PRO/PV/8 in mind is the case of a complaining country which has a low level of tariffs. That is somethig to consider. My point was that in that sort of case the Organisation could authorised other membes to withhold tariff? beefits. Now you will ask, I am sure, what is their interest in doing it. The answer to that is that inevitably other countries than the low tariff countries could have an interest in the reductions of tariffs by the member complained of. I am quite sure that that is not conclusive - what I have just said - but there are some considerations tthere which I think to bear on the point. MR SHACKLE (U.K.): It strikes me there is possibly a further point here in that while the withholding of particular tariff reductions is, so to speak, a measure which can be completely and fully defined (you know exactly how far it goes and whatit involves) when you get away from tariffs and are dealing with other maters such as quantitative restrictions and so on, and subsidies, it is not at all easy to see exacatly what would be involved. by reverting to the previous regime. Would it involve putting back your quantitative restrictions and then giving to the particular country concerned a quota of the same size as it had before, or what? It is difficult to see what would be involved. in reverting to the previous regime in matters other than tariffs. THE CHAIRMAN: I will certainly not insist on this. I only wanted to point out here that perhaps it is a.good things for a low tariff country, which will not have many things to do, It will simply ask the brothers in the "club" with high tariffs to impose tthe penalties. It: comes down to that. That is the only point I want to make. MR. HAWKINS (USA): I think this would help to meet your point; to substitute "benefits" for "reductions" and say "be entitled to withhold from the trade of the other Member any of the tariff? benefits", and so on. That would release a low tariff country from its bindings. MR McKINNON (Canada): It struck me that your suggestion, Mr Chairman, does add to the severity of the paragraph, and that it was not entirely logical, either, in that it destroys the consonance between the so-called offence and what some of those present have been calling the punishment. After all, 78 H. 3 E/PC/T/C.II/PRO/PV/8 what the country country complained of has failed to do is one thing - to negotiate the tariff reductions - and therefore having failed to do that one thing, the others withhold from them the beneifit of the tariff reductions that they make. I think it might be going pretty far afield to impose upon them what might then become penalties but which are not penalties, to my mind in any shape or form here. If the paragraph were to be made more severe, I should submit that the proper to do it would be to make it mandatory upon the othor member to withhold the benefit, because under the article as it stands, if we had 18 members in the club and one compleely failed to carry out his obligations, it is only optional upon then to withold the benefite and your night have mine or ten deciding not to withhold them and the remainder of the group withholding them. Therefore I think that if it is not severe enough as it is it is in that aspect; but I would not think it fair to impose upon them other punishments. if you want to call it that, beyond a mere withholding of the tariff benefits. THE CHAIRMAN I only raised he point because I am from a country which would not be able to do much in this way. I still think perhaps it would be wiser to take over the suggestion of Mr Hawkins and speak of tariff benefits and not of tariff reductions. MR PARANAGUA (Brazil): A very important point arises here. It is very important to have tariff reductions but if we have restrictions that will nullify the reductions. I would call attention toa the note here at the bottom of page 37: "It is contempleted that the Agreement would contain schedules of tariff concessions and wouldincorporate certain of the provisions of Chapter IV of the Charter (e. g. the provisions relating to most- favoured nation treatment, to nationol treatment on internal taxes and regulations to quantitative restrictions, etc. :" That is your' points THE CHAIRMAN Yes. MR PARANAGUA (Brazil) If we are to have the reduction of tariffs nullified because of these restrictions the agreement will be absolutely useless THE CHAIRMAN . A former should also undertake not to apply those restrictions. MR PARANAGUA (Brazil): .That is the reason why I asked if to a certain extent. the charter would be in force amongst the countries having the agreement and I think we must have thut, because that means the real enforcement of the tariff concessions. 79 I.1 E/PC/T/C.II/PRO/PV/8. MR McKINNON 41 (Canada); I not want to misunderstood. I have no objection whatever to making it much mere severe. We think it errrs on the a different way if it is to be made more severe, then I think there is a different way of doing it. I could not help noticing that those of those present second to feel that it was already tco severe. Mr HAWKINS (United States): I just wanted to refer to what the Canadian delegate has just said. I think he is right that if you bring the tariff schedules into force, the ones which would be negotiated next Spring, there are certain provisions which must be brought into force immediately, or your tariff schedules de not mean anything. THE CHAIRMAN: On the other hand, I think that as we have not yet reached the results of the Committee on the balance of payment restrictions and quantitative restrictions, it would be perhaps sufficient now to mention the point to the other Committee for them to take it into consideration when they study the whole thing and here confine ourselves to tariff benefits. Mr PARANAGUA (Brazil): There is a reference here to Article 56. It says: "in accordance with the provisions of Article 56". Could we not add to that, "and the note appended", because then we would know in what spirit those tariff agreements must be within the Schedule. THE CHAIRMAN: Article 56 already has a note appended, so I think there is no need to mention the note specifically. Mr PARANAGUA (Brazil) : I am not sure that note is incorporated there, It is not an article or a paragraph, but a note. Mr McKINON (Canada): I do not think we should take cognisance of the note at all as long as this is a draft Charter. After all, the note is merely an expression of what might happen if those who negotiate sec fit to bring into effect the tariff provisions in advance of the adoption of the Charter, which may never come about. I read that note as purely an explanatory one relative to the Articlc under which it is headed. It is much more part of the procedure memorandum. THE CHAIRMAN: I think it would be best to leave it to the other Committee 80. I. 2. E/PC/T/C.II/PRO/PV/8. to consider this point. We have to deal with the other part of the Charter, an it has not been covered. Mr HAWKINS (United States) :You mean this, last, point ? THE CHAIRMAN: Yes. Again there "and if such benefits are in fact withheld." Can we agree to this paragraph? (Agreed). Mr LECUYER (France) spoke in French, which was not translated. THE CHAIRMAN: There is no need to translate that. It is simply with reference to how the tariff negotiations procedure will be carried out. We discussed that this afternoon and we decided that the Rapporteur should draft a memorandum in which all this information should be incorported , and it would come before this Committee before being formally adepted. We have covered, for the time being, Article 18. We will come back to that again when we get the drafts of sub-paragraphs (a) and (c) of paragraph 1. We have still to cover Article 29 and Article 30 of Section G. Article 29 is "Emergency Action on Imports of Particular Products". This was also discussed by the main Committee 2, and also applies to quantitative restrictions and subsidies. The remark was also made that at the end of paragraph 1 there appears the words, "to modify the concession to the extent" and so on and that should include a higher duty. It was also said that prior notice Would not always be practicable and that we should change the wording as follows: "As early as practicable" or words to that effect. Then there was a reference made to Article 54 and Article 55. Mr Hawkins, have you anything to say before we discuss this Article further ? Mr HAWKINS (United States): I do not think I have anything to say that I have not already said. Just in brief, its purpose. is to avoided such complete rigidity in the commiotments that any sudden unforeseen emergency could not be taken care of. It is not intended as a permanent let-out. The prosumption would be that action taken would be only for such time as the difficulty lasts, and that the situation prior to the taking of action would. in due course be restored Any escape clause, of course, I.3. E/PC/T/C.II/PRO/PV/8. involves the danger of abuse. That has been made to limit or prevent the mis-use of the clause by giving other members a right of taking action if they do not think that the clause has been used justificably. J.1 E/PC/T/C.II/PRO/PV/8. THE CHAIRMAN: I propose that we first discuss paragraph 1, which speaks at the end of ..."the Member shall be froe to withdraw the concession, or suspend the obligation, in respect of such product, in whole or in part, or to modify the concession to the extent and for such time as may be necessary to prevent such injury. " I take it that by suspension of the obligation, you also mean quantitative restrictions? MR. HAWKINS (USA): Yes. MR. SHACKLE, (UK): There is a point I should like to make, and it arises out of a suggestion I made in the full Committee. There I suggested that the scope of the Article should be confined to tariffs. I can see the arguments against attempting to confine it in that way. If you did confine it in that way, one light find greater reluctance to accept some of the other Articles in the Charter. On the other hand, I would like to suggest two points. First, if it is from the reduction of tariff that the sudden influx of imports has resulted, any action taken should be confined to a reversion, either complete or partial, to the pre-existing, tariff. You should not deal with a situation which has arisen from a reduction of tariff by the application of a ncw quantitative restriction, and vice years, that if the influx of imports has resulated from the removal of a quantitative restriction, the remedy should be a total or partial re-application of the quantitative restriction as it existed before, and not the application of a tariff which did not exist before. I would like to make this further suggestion, that in no case should the action taken go further than a withdrawal of the original concession. It may be that was the intention. It seems to me it would not be right, where you have given a tariff reduction and it is found that there is an influx of imports, that you should them apply a completely new quantitative restriction in order to meet the effects of that. 83. J. 2 E/PC/T/C.II/PRO/PV/8 MR. HAWKINS (USA): I should like to ask Mr. Shackle how you would handle a case in which the concession was the binding of a duty if you could only restore what you had done? The only thing you could do in that case would be to say you are free of the obligation, but not do anything. MR. SHACKLE (UK): Yes. On the other hand, surely in that case it is not the result of n concession, because your binding has not affected the de factor situation at all. Your rate of tariff would be the same as before the concession, and therefore, if there is any influx of imports, it is not due to any concession you have made. THE CHAIRMAN The big point there is that you bind the tariff. On the other hand, you do away with quantitative restrictions, It may be that just because you implement the obligations of this Charter, you will have changed your whole system, and by doing away with quantitative restrictions you have a new law where you will deal with the whole thing in the way of tariffs. Then you are in a difficulty. MR. SHACKLE (UK): In the case where you have done two things, you have reduced a tariff or bound a tariff, and at the sample time abolished a. quantitative restriction, you clearly would have a case under this for restoring the quantitative restriction. THE CHAIRMAN: Or if that would not be practicable to resort to a higher tariff instead of the former quantitative restriction. MR. SHACKLE (UK). One hesitates to admit that under this a country could resort to action more severe, or impose barriers higher in whatever form, than it had imposed before it entered this negotiation. MR. McKINNON (Canada) What I say is somewhat of a point of order, but you frequently refer from the Chair to instructions given to us by the larger Committee, or to exerpts from various statements of the Secretariat. My recollection of the discussion of this Article in the full Committee was that it was very explicitly stated, I thought by Mr. Shackle himslef, that if the concession related to a tariff rate, under this article it might be possible not merely to restore it to the 84. E/PC/T/C.II/PRO/PV/8 old rate, but to a rate as much higher as the member Government wishes to put it. My memory was that it was Mr. Shackle who said that. MR. SHCKLE (UK): I cannot say that I remember having suggested that. My memory may be at fault. MR. McKINNON (Canada): I made a note at the time of four points that were raised. I thought it was clearly stated, by Mr. Shackle, that if the concession is a reduction in the duty rate, the aggrieved member may raise the rate to the old level or higher. MR. SHACKLE (UK): I am afraid I do not remember that. MR. McKINNON (Canada): And in respect of margin, if the margin has been narrowed and as a consequence of the narrowing of that margin those things develop unforceseen, and as a consequence of the narrow- ing of the margin, the margin may be restored. MR. SHACKLE (UK): That is a point I put. MR. McKINNON (Canada): But on the tariff rate there is a definite reference to the fact that it might be put at an even higher rate than the old one. MR. SHICKLE (UK): I. suggest that somebody else must have. made that point. MR. MCKINNON (Canada): It may have been Mr. Hawkins. MR. HAWKINS (USA): I think that is true. I am merely saying what this language provides. What should be provided is for the Committee to decide, but as drawn it would permit that. MR. McKINNON (Canada): The question in the larger Committee was whether or not this language would permit the imposition of the old rate or the restoration of the old rate. MR. HAWKINS (US): I would like to comment in general on this. The whole purpose of this Article is to deal with emergencies. If you have an emergency situation you ought to be able to use any means you can to meet it. ' There are sanctions here, and the severer the measures you take, and the longer you keep them on, the more likely you are to 85. J.4 E/PC/T/C.II/PRO/PV.8 suffer from it on your exports. That is the effort of it, but I do not think a provision of this kind should. be too severely limited. MR. PARANAGUA. (Brazil): I. want to put a question to Mr. Hawkins. The restriction can be quantitative, but it can also be about the time of the importation. For example I know the case of a European country where the importation of cereals is allowed only after a certain date, because they are in a position where the importation of cereals at any time of the year would produce serious injury to the domestic producers of cereals. Untll the domestic production of cereals is finished -- that is to say, unti1 the marketing of the cereals -- the importation of cereals is prohibited, and after that the importation of any quantity is allowed. I can toll the Committee that the country is Switzerland. They have a small production of cereals, and they want to have this guarantee for the domestic production of cereals. If they allowed foreign cereals to arrive in the country, they would destroy the production of the country, if there were not this limitation on the time. I would like Mr. Hawkins to say whether this case is covered, because it is a question of a permanent injury to domestic production. That happens every year, MR. HAWKINS (USA.): I do not think that particular case comes under this article. The case of that kind is a permanent regulation which presumably would bu dealt with in the negotiations. If the country concerned agreed to abolish the practice you speak of, it might get relief under this Section in case of something very unforseen resulting from its having done so, and could take temporary action. That is what is contemplemented here. This is temporary in the sense of an emergency not foreseen at the time the concession is made-- something unexpected which requires tomporary action to meet it, and then a restoration of the status quo ante. MR. PARANAGUA (Brazil): That would mean that the restriction on time would be allowed. 86. J.5 E/PC/T/C.II/PRO/PV/8. MR. HAWKINS (USA): Let me illustrate it. A country reduces a duty or accepts some other obligation in the expection that while it is going to pormit larger importations, that is part of the bargain, but owing to some unforseen circumstance, instead of getting say 20, 30 or 40 per cent more imports, as empected, in some year, it suddenly gets 200 per cent. Some circumstance or factor has entered into into picture temporarily and the result is wholly unforeseen. It may then take action to restrict those imports until that situation is passed. That is the purpose of the article. THE CHAIRMAN: We still have to agree or not agree to the present text of paragraph 1. I understand that these things, higher duty and so on, are even possible under this paragraph as it is now phrased. Do you think that something should be added to it, or can we approve it as it is? MR. SHACKIE (UK): Reading the wording of the paragraph as it stands, members arc free to withdraw the concession or suspend the obligation in whole or in part, or to modify the concession. I do not see anything in those words which imply that you could not merely go back on the concession you had made, but actually apply treatment more severe. I understand that if it is a binding which you have withdrawn, from the moment you have withdrawn your binding you resume your liberty of action, but it does not seem to me that those words contemplate that you could actually go further than withdrawing the concession, or the, obligation which you had entered into. It cames to me a little as a surprise to discover that the paragraph is intended to have this wide connotation. I see the point of the arguments which have been adduced in favour of it, but I feel that we will want to consider the position a little further before we commit ourselves to going to that. lenght. 87. J.6 E/PC/T/C.II/PRO/PV/8. MR. HAWKINS (USA): I think it is only fair to say, so that there is no misunderstanding of hat it mens, that it provides for wide action, modifying the concession to the extent and for such time as may be necessary. MR. ADARKAR (India): Since it is an emergency situation, it has got to be action of that nature, You must allow freedman to raise the duty, if necessary. MR. SHWCKLE (UK) : The logical weakness of that seems to be to make the whole assumption on which the article is based to be this, that it is something you have done in the course of negotiations which leads to an influx of imports. It is truck you might have had an influx of imports even if you had made no concession and had not negotiated at all. We are not concerned with that here. We are only concerned with something you have done in the course of these negotiations that may be hold to lead to the influx of imports. If there is a reasonable justification for going back upon what you have done, it must be on that basis. MR. McKINNON (Canada): On Mr. Shackle's point, supposing there was a free rate, and I then find that because of the binding of that free rate, these things are happening, I am entitled under these words, surely, to withdraw the concession. What would that mean? I Just take it out of the bound list. The goods would still come in frae; unless I am permitted to do more than that there is no use withdrawing the cencession. That is why read into it that a member may do more than restore the old rate of duty, because after all, free is a rate of duty, MR. SHACKLE (UK): I understand the point. I think my Delegation would wish to consider it a little further. It has certainly taken me rather by surprise. I see the force of the arguments that have been used. 88. K fols E/PC/T/C.II/PRO/PV/8 THE CHAIRMAN: Do we consider the language sufficiently clear, that is the point. It took Mr. Shackle by surprise so it may have taken other people by surprise. MR. SHACKLE (United Kingdom): I would like to add that I am prepared provisionally to agree the wording of this while reserving the position of my Delegation till until I have had an opportunity to consult them. There is one point I would like to see taken into consideration, which was which is a question I/mentioned in Committee I - and which I think has been mentioned again here, - namely, that as the result of a reduction or ellmination of tariff preference we may have similar affects to those we are contemplating here, and I feel the scope of this paragraph should be widened so as to take account of that - although I would not wish to suggest anything in the nature of a draft at this moment. MR. ADARKAR (India): Thant was just the point I wished ta mise. In the full committee the Indian Delegate did support the point raised by the United Kingdom Delegate, that the tariff concession should include concessions given in respect of preference. MR. HAWKINS (United States): I think that in fairness it should be pointed out that whilc this language would seem to cover the case it may not quite do so because of the reference to domestic producers. To meet the point raised by Mr. Shackle and the Indian Delegate I think we should look at this wording. Otherwise in every other respect I think it does cover the case. MR. ADARKAR (India): May I explain the point a little further? If the procedure we discussed this afternoon is adopted - namely, instead of negotiating on the basis of margins we negotiate on the basis of the most-favourtd-nation duty, and an effective reduction in margin by that method -then a reduction in the most-favoured nation duty and the follwing reduction in preferential margin would affect the domestic producers. Therefore, it would be necessary to ack for that particular obligation to be waived. K.2 E/PC/T/C.II/PR/PV/8O 14. SHACKLE (United Kingdom): At the same time you may have the converse case, as a result of preference margin baing modified you may have an influx of imports, in which case you would wish to have power to dual with that situation. That is the converse. MR. ADARKAR (India): Yes. THE CHAIRMAN: Has the Rapporteur anything to proposal to makt it quite clear? THE RAPPORTEUR: I think probably the Article will need some recasting to take care of the preference point. I think in the introductory lines the language about too domestic producers will have to be changed in some way to cover the case of preferences. MR. McKINNON (Canada): Would you also cover the case of the duty higher than originally? Is it contemplated that we can introduce that refinement of drafting? THE RPPORTEER: That is alreadyy covered, is not it? MR. McKINNON (Canada): As I read it it is covered, but I understood Mr. Shackle to think it was not. MR. SHACKLE (United Kingdom): I am propared to admit I may have been quite wrong over that. MR. PARANAGUA (Brazil): That means in the casa of the withdrawal of concessions the country will cover its customs autonomy. MR. ALAMILLA (Cuba): The Cubon Delegation had a paper in E/PC/T/C.II/19, dated 28 October, 1946, containing a very long amendment to Article 29. I think that is a very easy point to cover, and the point we are raising there is very clear. Instead of discussing the whole amendment I think it would be better to only explain, the abject of it, and give the Rapporteur the chance, of curing what we believe is missing from this Article. It is very clear what will happen to the member who is suffering and decides by himself to take action, but na care is taken of the member against whom that action is taken and who may be sufforing unjustly from that action. Our amendment tends to give to the member from whom K 3 E/PC/T/C.II/PRO/PV/8 concessions are withheld because he was supposed to be the aggressor the right to bring the matter before the Oganization in order to got a solution of the problem. It is only to give the other party, who may be in turn affected by the measure, the right appeal to the Organization. I do not want to go into the whole thing now. May be the wording is not exactly right. However, I believe a member who is supposed to have created the situation and against whom the emergency action is taken should have the chance of bringing the matter to the Organization immediately in order that no projudice is caused due to the emergency action without the Oreanization having at least had the opportunity of looking into it. MR CHAIRMAN: Is not it covered in paragraph 2? MR. ALABILLA (Cuba): We do not believe it is. It is a latter of working, and drafting. We just submit our proposition to the Rapporteur so that he can reconsider it, discuss it, and explain if there is any point which is not specifically covered in this Article. THE CHAIRMAN: We will ask the Rapporteur to look into that paper, and if he has any remarks no doubt he will make them at the next meeting. We will now adjourn until 10.30 a.m. tomorrow. The meeting rose at 10.40 p.m.

GATT Library

wy653df2371

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Eleventh Meeting of the procedures Sub-Committee of Committee II held in Convocation Hill Church House, Westministre on Thursday, 14th November, 1946 at 10.30 a.m

United Nations Economic and Social Council, November 14, 1946

United Nations. Economic and Social Council

14/11/1946

official documents

E/PC/T/C.II/PRO/W/11 and E/PC/T/C.II/PRO/PV/8-11

https://exhibits.stanford.edu/gatt/catalog/wy653df2371

wy653df2371_90050505.xml

GATT_157

E/PC/T/C.II/PRO/W/11 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTRNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatin Roport of the ELEVENTH MEETING of the PROCEDURES SUB-COMMITTEE of COMMITTEE II hold in CONVOCATION HILL CHURCH HOUSE, WESTMINISTRE on Thursday, 14th November, 1946 at 10.30 a.m. (Netherlands) Prom the shorthand notes of W.B. Gurney, Sons and Funnell 58,Victoria Street ,Westminster S .W.1) Dr. A. B. SPEEKENERINK A.2. E/PC/T/C.II/PRO/PV/11 The CHAIRMAN Gentlemen, I open the meeting. I think that on the last occasion we covered Article 18, but there still remains one amendment which, I think, Delegates might like to study for one moment. That is the amendment beginning "Prior international commitments shall not stand in the way of negotiations". No doubt, Delegates remember it. We reached provisional agreement on it, and I would like to know whether we can now have definite agreement. Mr. ALAMILLA (Cuba): The Cuban Delegation is satisfied with the drafting of this clause. Mr SHACKLE (United Kingdom): The United Kingdom Delegation is in agreement. Mr HAWKINS (U.S.A.) I accept it. Mr McKINNON (Canada): Could we have it read out again? THE CHAIRMAN: It reads as follows: "Prior international commitments shall not stand in the way of negotiations with respect to tariff preferences, it being understood that action resulting frorm such negotiations shall not require the modification of existing international obligations, except by agreement between the contracting parties or, failing that, by termination thereof in accordance with their terms", or "the terms of such obligations" - just as you like. That is the draft as we had it last time. Is that agreeable to everybody? Mr McKINNON (Canada): I think this is the draft that we discussed at such great length at the last meeting. We indicated that we had a definite order of preference in respect of the several drafts which had been submitted, but that we were prepared to go ahead with negotiations on the basis of this draft. THE CHAIRMAN: This is hereby adopted. Now we come to Article 29. Here I would like to ask the Rapporteur to tell us what still has to be dealt with. Mr. ADARKAR (India): Before we commence discussion of Article 29, I hope the Rapporteur will read paragraph 3 of Article 18 so as to make clear the standard by which the position is to be Judged. 2. A 3 E/PC/T/C.II/PRO/PV/11 Mr. HAWKINS (U.S.A.): Is it not in Article 56? Mr ADARKAR (India): Airticle 18. by Mr. HAWKINS (U.S.A ): Article 56 is the Article/which one decides whether a country has made the standard. I think perhaps that would be a better place. Mr ADAKARA (India): By inserting such a definition it would be made clear that it would be the action of the Rogional Group that would decide or set the standard. B.1 E/PC/T/C.II/PRO/PV/11 THE CHAIRMAN: Is not that for the memorandum? THE RAPPORTEUR: I think it was agreed earlier that some provision might be included in Article 56. It would go there rather than in Article 18. MR. ADARKAR (India) : Article 56 will come into operation after the nego- tiations have been completed, while paragraph 3 of article 18 may apply even with regard to the initial negotiations, There ought to be something in the draft to make it clear that paragraph 3 of Article 18 does not apply with regard to the initial negotiations. THE RAPPORTEUR: That would be covered in the procedure memorandum. THE CHAIRMAN: That is what I thought. Mr. ADARKAR (India): If the point in noted so as to avoid confusion, that paragraph 3 of Article 18 should not apply to the initial negotiations, I should be grateful. MR. SHACKLE (United Kingdom): It is a purely formal point, but I should have thought that article 18 (3) could hardly apply to these negotiations, con- sidering that the Organisation cannot be consulted until the original group have come to an agreement. I should have thought that it would be inappli- cable at this stage. THE RAPPORTEUR: That is right; it says that the Article shall operato according to the provisions of Article 56. MR. ADARKAR (India): We are bringing certain portions of the Charter into force in advanoe of the whole Charter. THE CHAIRMAN: I think there is a misunderstanding; we have to take over certain of these principles from this paragraph into the memorandum on procedure for our initial negotiations, but Article 18 and other parts of the Charter can only formally come into operation after we have had a reso- lution in Geneva after the initial negotiations. THE RAPPORTEUR: May I suggest that this procedure memorandum might be accompained by an outline of the draft agreement on tariff s and trade referred to in the Charter? That would indicate that the members of the Preparatory Committee - 4 - B.2 E/PC/T/C.II/PRO/PV/11 have declared that they have among themselves given effect to the provisions of Article 18. MR. ALAMILLA (Cuba) : A similar recommendation was made yesterday in Committee V, that it would be very convenient to give, along with the draft on procedure under paragraph 3, a draft of these agreements in principle in regard to Article 56. That would be considered in January when we meet in New York; because I do not think there would be time to consider it here. If there was time, I would be willing to give all the time necessary to it. MR. ADARKAR (India): The Committee has decided that the memorandum will be so worded, and Article 56 so drafted, as to make it clear that the pro- visions of the kind contemplated in paragraph 3 of Article 18 will not apply with respect to the initial tariff negotiations, THE CHAIRMAN:Has Mr. Hawkins any comments to make on that? MR. HAWKINS (United States): I think that what the Delgate of India suggests is all right; of course, the language should not bo modified so as to prevent a member of the original negotiating group from refusing to nego- tiate or refusing to take substantial action as contemplanted in paragraph 1 of Article 18. I think that is understood. MR. ADARKAR (India): Yes. MR. HAWKINS (United States): Then there is no disagreement. THE CHAIRMAN: Then I think we have got to the point where we can refer to Article 29. THE RAPPORTEUR: The Sub-Committee, in discussing Article 29, agreed pro- visionally on three basic amendments. The first was to broaden pragraph 1 so as to make it clear that concessions with regard to prefrences could be withdrawn under circumstances similar to those which would justfy the withdrawal, of concessions regarding tariffs. That is effected in the draft before you by two amendments: the first is to eliminate the phrase in lines 2 and 3, "including the tariff concessions granted in pursuance of Article 18" and by changing the phrase "under this chapter"' E/PC./T/C.II/PRO./PV/11 B.3 . to "under or in pursuance of thick Chapter". It is then clear that tariffs, tariff preferences and margins relating to State trading would be covered. The second amendment to paragraph 1 is the simple addition of a senteree at the the end saying, "that such action may also be taken in analogous circum- . stances in respect of obligations or concessions regarding preferences". The reason that is in is because in the party part of the paragraph refer- . ence is morely made to domestic producers and to imports in increased quantities as reasons for emergency action in relation to preferences, which may affect a third country and might lead necessarily to increased MR. SHACKLE (United Kingdom): If I might comment on this point - the under- lined sentence at the beginning of paragraph 1 - "in analogous circumstances" . etc. - is not perhaps altogether satisfactory. Perhaps some such words as thee might be preferable: to be inserted in the sixth line after "domestic . producers": "Or in the case of the withdrawal or modification of a preference, the producers in a territory which receives or received such preference" And then go on to "like or similar products." MR. ALAMILLA (Cuba): May I ask Delegates, and also the Rapporteur, to use a li little more of the available energy in speaking a little more loudly, because it is really very difficult for us in this corner to follow the . discussion? C.1 E/PC/T/C.II/PRO/PV/11 . THE CHAIRMAN: What are the comments of the Rapporteur on this? THE RAPPORTEUR; The phrase roads "or in the case of the withdrawal or modification of a preference. " Should not it be, "or in the case of a product which has been made the subject of a concession with respect to a preference"? What you are describing are the conditions which exist before you withdrawn or modify the preference, which justified the withdrawal or modification. MR. SHACKLE (United Kingdom) : I think that is right. I am not sure I understood your point. THE RAPPORTEUR: The situation you are trying to describe here is one which exists before you withdraw or modify the preference. How it should read is,"in the case of a product which has been the subject of a preference", rather than "in the case of the withdrawal or modification of a preference." MR. SHACKLE (United Kingdom): I think that is right. THE CHAIRMAN: If that is agreed we will have this retyped so that Delegates will have the exact wording in front of them. MR. SHACKLE (United Kingdom): To be quito meticulous one should say "has been or is the subject of a preference." If you merely say "has been" it nerely assured the preference has been complete climinated. There is always the possibilities it may have been only modified. THE CHAIRMAN : I have only one question to ask with regard to paragraph 1. or Article 29. We say here that "the Member shall be free to withdraw the concession, or suspend the obligation." That also covers the binding of tariffs and everything , and leaves open what we discussed earlier, namely, the possibility or even higher duty. MR. SHACKLE (United Kingdom): I should like to reserve the action of my Delegation towards that, although at the moment I do not want to object or suggest anything. THE CHAIRMAN: If the present wording covers that possibility, then we have done what we decided in previous discussions. If 1later on you have some reservations we would have to redraft it, because as far as I can see it is now included. 7. C.2 E/PC/T/C.II/PRO/PV/11 MR. SHACKLE (United Kingdom): As regards that , as I said, I do not wish to suggest any modification of the wording. All I wish to do, while . taking noto of the points made is to reserve the position of my Delegation in case they should wish to return to it later. I do not want to suggest any amendment or change in this text at this stage. MR. McKINNON (Canada) : Does Mr. Shackle mean by that that for the present at least he is accepting the Rapporteur's draft? MR. SHACKLE (United Kingdom): Yes subject to what I have said. Perhaps. there is one misapprehension. Perhaps Mr. McKinnon was referring to the underlined sentence at the end. MR. McKINNON (Canada): Yes. MR. SHACKLE (United Kingdom): No, I did not mean to cover that. The point I was speaking to just now was the case where you would put a tariff up to a level actually higher than it had been before the negotiations. THE CHAIRMAN: I understand that. With the addition proposed by Mr. Shackle we can now delete the underlined sentence which the Rapportour put in his draft, because it will now be covered in brackets in the middle of the paragraph. If that is agreed, we will leave that till in has been retyped and turn to paragraph 2 of Article 29. MR. SHACKLE (United Kingdom): May I make a further remark? we have here the words "a product which has been the subject of a preference." I was wondering whether we ought not to say "has been or is", because if you say has been" it implies the preference is defunct and climinated. THE CHAIRMAN: May we discuss that when we see it before us? We will now turn to paragraph 2 of Article 29. THE RAPPORTEUR: The committee agreed that paragraph 2 should be amended to provide more flexibility with regard to the clause relating to consultation. It seemed to be agreed that prior or simultaneous notice should in all cases be given, but that with respect to consultation there should be some looway in critical cases for the action to be taken first and the consulta 8. C.3 E/PC/T/C.II/PRO/PV/11 tion should follow union it immediately. It is believed that the draft as it originally stood pointed short notice. In other words, under the original language of the draft it roads: "Before any Member shall take action pursuant to the provisions of paragraph 1 of this Article, it shall give notice in writing to the Organization as far in advance as may be practicable." It seems to me that would permit of short notice; it could amost be simultanous. Therefore, I did not think that any change was needed in that. With regard to the consultation aspect. a new provisio has been added, as follows: "Provided that in critical and exceptional circumstances such action may be taken provisionally without prior- consultation." Then some changes are necessary in the following sections to assure that consultation will take place in all cases. "If agreement among the interested Members with respect to the action is not reached the Member which proposes to take or continue the action shall, nevertheless, be free to do so. If action is taken or continued the other affected Member shall be free." In the next clause there is slip in the wording. It says "within 60 days after such action is taken." I think that should properly read, "within 60 days after the consultations have been completed to suspend on 60 days' written notice." Thce chance in the last two or three lines there was intended to carry our the idea that any countervailing action taken because of the original action by the offending member should not be disproportionate. That thought is put in here by saying: "The Member may suspend the application to the trade of the Member taking such action of such substantially equivalent obligations or concessions under this Charter, the suspension of which the Organization does not recommend against." THE CHAIRMAN: I have one remark here. Again it is a question of 60 days' written notice to the Organization. In prievious meetings did not we decide that it would be 60 days after the notice had been received by the Organization? 9. D.1. E/PC/T/C.II/PRO/PV/11 SENOR ALAMILLA. (Cuba): The report of the Rapporture, I think, gives the impression that there has been general agreement that we would permit, in certain circumstances, specific action before notification or before consultation. I want to remind the Committee that I am strongly opposed to this suggestion. I am not now taking in the interest of any special party, but in the general interests of the Organization, and I consider it extremely dangerous that unilateral action should be taken by pne nation because the result may be even worse than the damage you are trying to cure. I would mention one instance that occurs to me. For example, one country believes that it is flooded with goods from other countries. It takes immediate action, puts on tariffs, takes off preferences, and so on. What happens? The commerce and trade of the other mtions is disrupted in such a way that several usinesses in those countries may have to go into bandruptcu. Then, the act that counter-action is taken by these other nations against the first one, may cause other firms to go into bankruptcy in those countries. Therefore everybody's trade may be disrupted. That is why we think there should not be permission to take uni- lateral action, but that notice should always be given, that there should be consultation for at least 15, 20 days, or some short period, so that the people of the other countries would know what was going to happen and so could take steps to pre- pare themselves for it. I am thinking principally of the ruin what may result to such countries when unilateral action is taken by another country, and I place this before the Committee so that they may consider how serious the situation could be. THE CHAIRMAN: I agree with the Cuban delegate that we should see this written down before coming to definite conclusions. There was no decision at the last meeting, but I think most of the dele- gates present thought it desirable that we should have a possi- bility, but only in rare circumstances. I would say that in a -10- D.2. E/PC/T/C.II/PRO/PV/11/ case such as that cited by the Cuban delegate, one would have to choose between bankruptcy of the foreign exporters or the bankruptcy, perhaps, of one's own trade and domestic producers. In that case I think it is the whole point of the Charter that each country has a paramount duty to protect the interests of its own citizens. I feel that the words "critical and excep- tional circumstances such action may be taken provisionally without prior consultation" already throw such a heavy obligation on each country that I am not so convinced that this is very dangerous. SENOR ALLAILLA (Cuba): May I answer the Chair? I agree with the Chairman that every nation should protect its own citizens; the only thing I am asking is that notice should be given to the others that protective action is going to be taken. It should not be so sudden as to cause the disruption of the other country. If one does not see this danger 20 days ahead, then it is because one is blind, but every government should be in a position to foresee the circumstances of international trade in order that any measures like this can be taken care of. I agree that such measures why have to be taken; I only ask that notice should be given to other countries and a little time to consider what the problem may be. MR. MCKINNON (Canada): The view of the Canadian delegation has always been that expressed by the Cuban delegate this morning. We have thought it somewhat invidious that a member who saw fit to com- plain need give no notice whatever, but could take action over- night. No matter how we gless it over in words, that is the effect of this amendment. He can take action overnight. At the same time, if he wishes, he initiates consultations. On the other hand, retatiatory action has to provide for a lapse of at least 60 days. Our view all along has been - although we have not pressed it as an amendment - that 30 days notice would not be too harsh a roquirement when there is a 60 days lapse or - 11 - D.3. E/PC/T/C.II/PRO/PV/11 leeway or notice applying in the case of the other party. On the other hand, although we felt quite strongly that that notice should be given, we took a great deal of cognizance of the argument in the full Committee, for it was stressed that those were emergency provisions, that there must be room for emergency action. For that reason we did not press our amendment, but I am very glad it has been raised again this morning by the dele- gate of Cuba, because he has expressed completely our feelings in the matter. E/PC/T/C.II/PRO/PV/11 Mr. SHACKLE (United Kingdom): I would like to make a few remarks on the subject. First of all, the United Kingdom Delegation regrets that it should be necessary to have a clause of this wide character. At the same time, we recognise that it is probably necessary to have something like this. It seems to me that, given that fact, it is difficult to insist that there must always be prior notice. One of the points is that this will work differently according to the geographical situation of different countries, If you have a country which is comparatively remote from the countries which are possible sources of supply, there is a long time lag for dealing with these sudden importations. On the other land, in the case of a country which is very close - for instance, England is close to the Continent - you may get floods coming suddenly, and in those conditions it may be extremely difficult to give prior notice. It is a question of distance and time. There is one thought which has occurred to me, and which is not expressed in this revised draft, and that is that there might be an obligation on a country which acts without giving notice te agree to immediate consultation on request. If countries ask for consultation, that country should be under an obligation to enter into consultation immediately. It might be worth while to insert a clause to this effect in the draft. Mr.McKINNON (Canada): Might I ask Mr. Shackle to repeat the amendment that he suggested in General terms? Mr SHACKLE (United Kingdom): I had not thought it out in exact terms, but the idea would be that, upon the request of any country, the member taking the action would agree to enter into immediately consult- ation. Mr McKINNON (Canada): Although it is not so stated in the draft, I thought that was implied, and that even though action was taken notification would be given and presumably consultation started. However, I am bound to admit that, looking at it again, the draft does not provide for that. 13. E 1 E 2 E/PC/T/C.Il/PRO/PV/11 THE CHAIRMAN: It only says "agreement among the parties". It presumes consultation, but we could make that stronger and delete the words "provided that" and insert instead "only in critical or exceptional cases" to make it more strong. Mr. McKINNON (Canada): Would this meet the point, following your idea of dropping the words "provided that", and let the sentence start: "In critical or exceptional circumstances, action may be taken provisionally without prior consultation, provided, however, that consultation shall immediately be entered into"? Mr ALAMILLA (Cuba): Could it not be stated that merchandise should never be affected by these sudden actions? THE CHAIRMAN: Perhaps I might refer to the last proposal and give an example. In the days before the war we found that several times many ships were on the way to Rolland with textiles from Japan at very low prices, and at that moment we could not allow them to be stored Holland. We could not allow them all at once into the country. I do not say that it is very serious to have one or two ships in, but this is an emergency provision, and I think it is a little difficult. I do not press the point, I am open to any solution which might be suggested and which receives common agreement I think the words immediate consultation". would provide a solution to this problem. Mr SHACKLE (United Kingdom): I think the subject of goods en route has been discussed by the Technical Sub-Committee; at least, it falls within their terms of reference. I had the impression. that in a good many countries it is not legally possible to exempt goods on route, but there is a provision by which contracts which are affected are automatically varied; that is to say, if an additional duty is suddenly put on, then the contract price can be varied so as to enable the importer to pass on the increased duty to his customer. I think in a good many countries, including my own country, it is felt that that is as much as can be done to deal with goods en rout but I think that is a matter which the 14. E 3 E/PC/T/C.II/PRO/PV/11 Technical sub-Committee has been discussing. Mr LECUYER (France) (Interpretation): As Mr.Shackle has, said, this question of merchandise on route has been examined by the Technical Sub-Committee, and it was decided not to maintain the original. text. This means that the increase of the customs duty would not apply to merchandise on route. This was carried by a strong majority, with the opposition of the Canadian Delegation, I think. Mr ALAMILLA (Cuba): .I think this is a point of such consequenoce to every- body that this is one of those cases where consultation should be taken by every Government in order to study this point and have a more definite idea in January. Therefore, I suggest that this point should be left open here, and we should state that some Delegations have one idea and other Delegations have other ideas, and leave it for con- sultation in January. The majority might decide to have a text contrary to our present point of view, and it would be better if we could make such a reservation. Either procedure would be satis- factory to me. THE CHAIRMAN: I should be quite agreeable to that, but I would then propose that we should add to this c lause: "Provided that consult- ation is effeoted immediately following upon the taking of such action". Mr ALAMILLA. (Cuba): Could I ask the Chair if I could be permitted to draft my reservation so that I can introduce it at the meeting? I do not have it now. THE CHAIRMAN: Agreed. Mr McKINNON (Canada): My suggested amendment merely makes consultation mandatory. It does not provide the point which the Delegate from Cuba has been suggesting, and which we strongly favour. It would help us in our further consideration of this matter, even now or later, if we could have a little explanation particularly from the United States Delegate as to the extent of tine allowed to country B in the 15. E 4 E/PC/T/C.II/PRO/PV/11 event of country A taking the first action, either with or without consultation. As I understand it, the draft Article in the United States Draft Charter is based upon a standard Article used by some. countries in the past in trade agreements, particularly, I think, the United States. F.1 I have never been clear just what happens if country A takes summary action against country B. Has country B the right, under the draft article, to give immediately 60 days notice, or does country B have to wait for the expiry of 60 days and then give 60 days notice - in other words, is it 60 or 120 days that must elapse before country B can take remedial action? MR HAWKINS (United States): I cannot recall the exact terms of this provision as we have includod it in bilateral agreements. It is substantially the same as the latest version that we have included in bilateral agreements. I might add, just be way of event, that we have been including clauses similar to this in agreements for a long time, and our experience under then has not been bad. They have almost never been invoked, but they have been there in case the emergency should arise, which gives some assurance to the people concerned. In answer to Mr. McKinnon's question, I think his main point was concerned with the 60 days delay. The purpose of the first 60 days is just to ensure that the thing does not run on indefinitely with the other party not knowing when the axe is going to fall. MR. MCKINNON (Canada): But it can take action within one day? MR. HAWKINS (United States): Yes, any time within 60 days. MR. MCKINNON (Canada): It means, then, that there must be a minimum of 60 days before it can do anything. MR. HAWKINS (United States): Yes, after that sixty days has elapsed the member is free. Mr. MCKINN0N (Canada): Mr. Hawkins has now informed us that there must be a minimum of 60 days before action can be taken by the second party. We have already removed the phrase "such action be taken" and substituted for it the phrase "consultation has been completed". Are we not in danger of making a rather open-ended amendment here? The date of an action being taken is precise and determinable; it is not so easy to determine the date on which negotiations are concluded, because either part, either with the best faith in the world or deliberately, could prolong the proceedings by continuing - 17 - E/PC/T/C.II/PRO/PV/11 F.2 E/PC/T/C.II/PRO/PV/11 the consultations. MR. SHACKLE (United Kingdom): Perhaps we should do well to go back to the original text and say, "after such action is taken", becaue then, it seems to me, pressure is put upon the country which has taken the action to be businesslike about the consultations. THE CHAIRMAN: The Rapporteur has one point to make. THE RAPPORTEUR: Mr. McKinnon raised some question about the second 60 days. The reason for a period of that length is to afford the Organisation an opportunity to recommend against the action that has been taken, but that phrase has now been changed to refer to the "date on which written notice of much suspension is received by the organization", so that pro- bably we could now reduce that period somewhat. MR. ADARKAR (India): I suppose the procedures will be something like this. When an action is taken under this clause, the country affected will have will be the to anticipate what/type of obligations or concessions under this Charter the suspension of which the Organisation will not recommend against, and will have to give 60 days' written notice in respect of such obligations or concessions. Then during the course of consultations the Organisation may either approve the withdrawal of the specific obligations and concessions covered by the notice, or may ask for the deletion of certain obligations or concessions. .Then after the expiry of the period of 60 days only such obligations or concessions as the Organisation does not recommend against will be withdrawn, There has to be some element of provision in the notice. MR. HAWKINS (United States): In the light of what the Delegate of India has said, I would suggest that it would not be desirable to shorten that 60 days' peridd, for the reason that the organisation has now got to look at the equivalence of what is proposed, which is not an easy problem to tackle. I should therefore be quite agreeable to making it the '"date of receipt", but not to shortening the 60 days. We must allow plenty of time. MR. SHACKLE (United Kingdom): May I try to say how I understand this sentence would wor, in order to be corrected if I am wrong? I refer particularly -18 - F.3 to the last three linos, which begin "such substantially equivalent obligations or concessions under the Charter the suspension of which the Organisation does not recommend against." In the first place, am I right in thinking that the words "substantially equivalent" would be at first for the country itself to determine, but that it right be that afterwards the Organisation might be asked to consider whether in fact the action taken was equivalent or exceeded what was the equivalent ? As records the rocommendations made by the Organisation, supposing that by the end of the 60 days the Organisation had made no recommendation, then I take it that the matter would like entirely in the discretion of the country which wished to take action? Am I right in those two assumptions, first that the determination of the substantial equivalent is in the first place the business of the county itself, and second, if after 60 days the Organisation has not made any recommendation, discretion lies with the country? E/PC/T/C.Il/PRO/PV/11 E/PC/T/C.II/PRO/PV/11 MR. LECUYER (Franco) (interpretation) : It seems to me that this is a very delicate and comlex procedure, and we should think it over carefully. There are two time limits here, the first of 60 days which is allowed to the members so that they may take countervailing action; the second or 60 days also which is allowed to the Organization so that it may make recommendations. It seems to me that those two time limits should not concur exactly, because if they do the decision of the Organization may be taken at the very moment when the member is already deprived of his right to take action. Therefore, I think the time limit should be such as to allow tho recommendation of the Organization to be reconciled with the action of the member. THE CHAIRMAN: I do not understand that quite clearly, because the first 60 days is "within 60 days." The day after the other member has taken action you can say to the Organization "I proposal to do" this, that and the other; then the Organization needs 60 days to approve it or to recommend against it, or to try to reconcile the parties. Therefore, I do not think there is any difficulty here. There will never be an overlapping. If the other member wants his counteor measures to take effect very shortly he can just take them within a few days, giving notice to the Organization. MR. McKINNON (Canada): It is obvious now, I think, that this will have to go back to the Rapporteur for redrafting, since at least some of the points we have been raising become, in the final analysis, drafting matters. I suggest it might be more clear if the first word "within" before the phrase "sixty days" was changed to road "not later than. " It would then read: "if such action is taken the other affected Members shall be free, not later than sixty days after such action is taken." I think there is ambiguity about the word "within". MR. ADARKAR (India): I am not sure I understood this part quite correctly. It seems to me that as it stands it makes it necessary that suspension should take effct within 60 days after the action is taken - not that the notice is given. 20. G.2 E/PC/T/C.II/PRO/PV/11 THE CHAIRMAN: No. MR. ADARKAR (India): ". . the other affected Member shall be free, not later than sixty days after such action is taken, to suspend on sixty days' notice." THE CHAIRMAN: It is after that 60 days. THE RAPPORTEUR: I think the rephrasing of that makes it a little clearor: "upon the expiration of sixty days from the date on which written notice of such suspension was received by the Organization." MR. ADARKAR (India): Otherwise the word "on" might not quite convey that meaning. It is "upon the expiration of sixty days." THE CHAIRMAN: Are there any other remarks about the further proposed changes? The words "substantially equivalent" cover what we have discussed and decided before, I think. MR. McKINNON (Canada): There may be one point on that phrase which may not be a point of substance. In the original United States draft Charter the Organization had discretion in an advisory capacity in respect of any obligation or concession under the Chaptor. It Seems to me now -- and it may be a more accident of works -- that the discretion of the Organization with respect to recommending against suspension is limited to those which are substantially equivalent only. In other words, if the action of the offending member - if I may use that phrase - is : such that the Organization might have felt inclined to permit a quite drastic reprisal. That freedom is now romoved from the Organization, as I read this phrase, because it can deal only with substantially equivalent obligations. THE CHAIRMAN: That is indeed the case, because under point 3 of paragraph 1 of this paper you find "countervailing action permitted under the Article should not be disproportionato to the offence." I think that is the point Mr. Shackle raised at our last meeting, and we thought it would be better to mako that change. MR. McKINNON (Canada): But Shackle's amendment, as originally drafted, did not create any ambiguity. It road: G.3 E/PC/T/C.II/PRO/PV/11 "If agreement among interested Members with respect to such action or proposed action is not reached Members adversely affected may, unless the Organization recommends otherwise, suspend the application to the trade of the Member taking such action of concessions of as near as may be equivalent value granted under this Chapter. " There is a slightly different connotation there. It could be very serious. It is taking away the discretion, that is my point. H.1. E/PC/T/C.II/PRO/PV/11 MR. HAWKINS: (U. S. A.) The difference between Mr. Shackle's draft and Mr. Loddy's draft is, I think, morely that Mr. Shackle has draf- ted his in such a way that the way is left open for the Organiz- ation to take cocrcive action, whereas in Mr. Loddy's draft the action is confined to compensatory action. MR. SHACKLE (United Kingdom): I think there are two elements to con- sider here: firstly, the extent of the action - what we call the equivalent value; secondly, the form of the action. In any case the question of equivalent value would be referred to the Organization. Whether you should also leave the Organization the power to recommend what the form should be, I am not sure whether that is necessary or not. We might say simply, "the value or the equivalent", since ther would be recourse to the Organiz- ation in any case. MR. McKINNON (Canada): That might be sufficient. THE CHAIRMAN: I think we have to decide upon that point - whether we want the Organization to do more than a substantial equivalent or not, if there should be any need to do that. I am inclined to leave the Organization as much leaway as possible. The Organiz- ation, after all, according to the Charter is the governing body. For instance, if they decided on a sanction which was merely taking away a concession, even that would be agreeable to me and I think we should leave the Organization power to do that, but we have to be quite clear what we want. MR. HAWKINS (U.S.A.): I think the question really comes down to this: do we want to authorise the Organization to sanction contravening action which goes beyond the point of compensation by the country: which evoked the escape clause? I think there is this to be said for leaving that discretion with the Organization: as long as there is a possibility that if this ascape clause might be misused, the action taken against it by other members could be actually coercive, there will be more restraint on the use of the escape clause. If that is what we want - and it seems to me desirable - - 23 - H.2. E/PC/T/C.II/PRO/PV/11 then we would leave the Organization full discretion to authorise whatever it cecides in the light of the circumstances as they appear at the time. MR. SHACKLE (United Kingdom): In view of what Mr. Hawkins has just said, I am prepared to withdraw my amendment. MR. ADAKAR (India): The amendment suggested by Mr. Shackle has a certain amount of logic in it and would servo some purpose, but it would make a position which is a little unfair. It is true that escape clauses should not be usod too freely but, at the same time, it is Iegitimate to use escape clauses and in such cases where the use is legitimate and is fully justi- fied, it would be uunfortunate if the countries affected were not empowered to take whatever action they agree upon. There is a certain element of unfairness about that. Therefore I think the amendment should be allowed to stand with a necessary modification to ensure that a decision as to whether the decisions in question are or are not equivalent in effect to the action which has given rise to the problem should be left in the power of the Organization. For example, we might substitute for the words "such substantially against" the following words: "obligations or concessions under this Charter the suspension of which the Organization does not recommend against and which are regarded by the Organisation as substantially equivalent in effect to the original action." THE CHAIRMAN: Before that is translated, I am in favour of the first part of the remarks of the Indian delegate, but would like to see two things. First, to put in that as a rule it should be a substantial equivalent to leave the. Organization the right to go further if they found that it had been a real abuse of the escape clause. I think that second possibility -24 - H.3. E/PC/T/C.II/PRO/PV/11 is killed by the way in which the Indian delegate has framed his amendment. MR. ADAKAR IIndia): Perhaps. MR. HAWKINS (U.S.A.): After listening to the discussion, I fevour the original American draft on this point on the ground that it puts the maximum restraint upon the use of the exception. In other words, the way is left open for the Organization to authorise punitive action in flagrant cases. THE CHAIRMAN: The original draft in the Charter do you known? MR. HAWKINS (U.S.A.) : Yes. THE CHAIRMAN: The delegate of Chile. MR. VIDELLA (Chile): The more we discuss this matter, the more I am in agreement with the Cuban delegate. If you will allow me, Mr. Chairman, I will call your attention to the necessary for taking into account, when we are drafting the Article under discussion, the Provision or letter (c) of No. 2 of Article 19. which roads: "any Member imposing restrictions on the importation of any product pursuant to this subparagraph shall give public notice of the total quantity or value of the product permitted to be imported during a specified future period and of any change in such quantity or value." I notice that in the Rapporteur's letter (b) of w.54 this paragraph is deleted, though the Secretary said it was not deleted but left out only because it does not constitute an escape clause. If we keep this paragraph here, I think we must consider it when we are drafting Article 29 in order to have the same procedure, and in that case I should propose to delete the words added by the Rapporteur in Article 29 - "provided that in critical and exceptional circumstances such action may be taken provisionally without prior consultation." I follows. - 25 - E/PC/T/C.II/PRO/PV/11 THE CHAIRMAN: I think the paper to which the Childcan Delegate referred deals with the Escape Clauses, which still have to be studied. I feel that we ought to bring an and to this discussion, We have spent the whole morning on Article 29, so I would like to ask the Rapporteur to draft this to the best of his ability, with the first amendment in it, with which I think several Delegates were in agreement. However, we have Canada, Chile and Cuba. against it. I would like to hear whether France is a-ainst or for the amendment to the effect that in exceptional cases there should be no prior notice. I would also like to hear whether the United Kingdom, India and the United States are in favour of such a clause. Then I shall be able to see to what extent we shall have to go on with this point. I am interested in this, but not so vitally. I am here just as the Chairman, and not for the Netherlands. Mr McKINNON (Canada): On a point of order, before we go into the substance of the discussion. Should we not be clear as to what the Delegate from Chile has in mind? If I interpret him correctly, he is attempting to argue for parallel provisions in Article 19 (e) and 29. Mr VIDELA (Chile): Yes. Mr McKINNON (Canada): His motion is to strike out the provision for summary action in Article 29, because inferentially there is provision for notice in Article 19? Mr VIDELA (Chile): Yes. Mr MeKINNON (Canada): But as I read Article 19, there is no provision for prior notice. The action is taken summarily and then the member taking it merely gives public notice as to what he has dont. It is not prior notification. I think we should clear up that point first before we discuss the question further. Mr VIDELLA (Chile): If I could give an illustration, I think I can clear up --- THE CHAIRMAN: Excuse me. As far as I know, Article 19 has not been adopted up to now. Is it wise to go on? - because we might discuss a matter which is not here. 26. I. 1 I.2 Mr VIDELA (Chile): It has not been adopted? THE CHAIRMAN: No. Mr VIDELA (Chile): If I refer to this article here, you say it is not adopted? THIS CHAIRMAN: That is right. Mr. VIDELA (Chile): When I wish to refer to the Article, I am told that it is not adopted. I do not like this procedure, becaue I attach great importance on this business of import restrictions of agricultural products. As an illustration, I might refer to tomatoes. I do not agree with the Canadian Delegation on interpretation because it says here : "Any member imposing restrictions on the importation of any product", etc., "shall give public notice of the total quantity or value of the product permitted to be imported during a specified future period..." Mr McKINN0N:(Canada): After he has imposed the restrictions, Mr VIDELA (Chile): No, before. You must write to the exporting, countries. If it is afterwards, I attach even more importance to the proposal of the Cuban Delegate, because we are goin to oxport agri- cultural products from 30 days distance from England, for instance. We are going to send apples, and when they arrive here we will be told, "No, we cannot acept these apples because we have imposed a restriction, as we are permitted to do under the Charter," I think it is a most unfair proposition. I think the illustration I have driven clears up the matter very well. If the Canadian Delegate gives the correct interpretation, we ought to have the same proposal of the Cuban Delegate in Article 19. Mr McKINNON (Canada): I merely wish to say that my interpretation of Article 19. 2. e. permits the action to be taken, and then notice is to be given as to the quantity. I think we could ask Mr. Hawkins or any other Delegate whether my interpretation of Article 19 2. is right, or that of the Chilean Delegate. 27. L.3 E/PC/T/C.II/PRO/PV/11 THE chaIRMAN: Article 19 is still under discussion in the Committee on Quantitative Restrictions, and that is one of the difficulties that you find here; you deal with certain clauses without knowing what other Committees have done. On the other hand, we are expected to end our work at the end of this week or carly next week, so wc shall have to go on in one way or another. It is now 20 minutes to 1. I have an engage- ment which I missed last time because I stayed here too long. I must be there at 1 o'clock. Therefore, I propose that we resume our dis- cussions this afternoon, preferably I think at 2.30 or 2.45. Is that convenient to the Canadian Delegate? Mr. McKINNON (Canada): I have an engagement in the City, but I will try to be here at a quarter to 3. Mr VIDELA (Chilc): I would only like to say that I support the reservations made by the Cuban Delegation in Article 29, and if the interpretationof the Canadian Delegate is correct I wish to make an amendment in Article. 19. THE CHAIRMAN: That is quite understood. Now if there is time before we meet this afternoon I would like this article to be redrafted. as a result of our discussions, and then we will try to reach a conclusion on that matter, because we must cover Article 30 this afternoon. We must go on until we have covered it. I warm you all beforehand. The Meeting is now adjourned. (The Meeting rose at 12.4.3 p.m. For Verbatim Report of afternoon session, sec E/PC/T/C.II/PRO/PV/11, Part 2.) E/PC/T/C.II/PRO/OV/11 (PART II) UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT of the ELEVENTH MEETING of the PROCEDURES SUB-COMMITTEE COMMITTEE II hold in CONVOCATION HALL CHURCH HOUSE, WESTMINSTER on Thursday, 14th November, 1946 From the shorthand notes of W.B. Gurney, Sons and Funnell, 58, Victoria Street, Westminster, S.W.1. A. 1. E/PC/T/C.II/PRO./PV/11 PART 2 THE CHAIRMAN: Gentlemen, the meeting is open. I think, as Mr Leddy is not yet in, we perhaps might discuss or at any rate round through now the first paragraph of Article 20, of which you receivced the final revised draft at the one of this morning's acting. It reads as follows: "If, as a result of unforeseen developments and of the affect of the obligations incurred under this Chapter, in- cluding the tariff concessions granted pursuant to Article 18, any pro- duct is being imported into the territory of any Member in such increased quantities and under such conditions as to cause or thresten to cause serious injury to domestic producers of like or similar products," and then there are some words in brackets, "(or in the case of a product which has been made the subject of a concession with respect to the preference, to producers in a territory which receives or received such preference), the Member shall to free to withdraw the concession, or suspend the obligation, in respect of such product, in whole or in part, or to modify the concession to the extent and for such time as may be necessary to prevent such injury." MR SHACKLE (UK): Mr Chairman, I am sorry to return to this, but with regard to that little part in brackets, that is a point I did mention this morning , and were we say "or in the case of a product which has been made the subject of a concession, " I would rather like to say whichh is or has been, " the reason being that if you simply say "has been" that applies only to the case of a completely eliminated preference, whereas there may be soma which remain though modified. I would rather like, therefore, to say, "which is or has been." It is a tiny point, but it is perhaps worth taking up. THE CHAIRMAN: I do not think that this addition makes much sense, because we speak of a concession; we do not speak of a reduction or an elimination. MR SHACKLE (UX): Does not that cover both: a concession may be either a reduction or an climination. 29. A.2 E/PC/T/C.II/PRO/PV/11 THE CHAIRMAN But how can it be? It has been made the subject of a concession always. MR SHACKLE (UK): Yes; but the concession was one that result either in elimination or in modification, so that you have the two cases still left. THE CHAIRMAN: Yes; I think it still covers it. MR HAWKINS (USA): The phrase "the subject of a concession with respect to the preference" was intended to cover whatever was done; that was the purpose of the thing. MR SHACKLE (UK): The word concession" does not now appear in the carly part of the text, because it refers to "the affect of the obligations incurred," and then the word "including the tariff concessions" have gone out, have they not? MR McKINNON (Canada): Yes, that is out. THE CHAIRMAN: I think we must read this Article in conjunction with the former Article. MR SHACKLE (UK): It is purely drafting; I do not think that there is any difference of substance. THE CHAIRMAN: Do you agree that we leave it like this; we can always return to it. MR SHACKLE (UK) : Just leave "which has been"? THE CHAIRMAN: Yes. MR SHAKCKLE (UK): I am not quite sure how it roads now. THE CHAIRMAN: In brackets, "(or in the case of a product which has been made the subject of a concession with respect to the preference" and so on. MR SHACKLE (UK): I see. THE CHAIRMAN: I think it must cover it. MR McKINNON (Canada): And not put in "is or"? MR SHACKLE (UK): No; but I think if you add the words, "a concession with respect to" - I had not got this - it does cover both and the point then does not arise. B.fols. 30. B1 E/PC/T/C.II/PRO./PV/11 THE CHAIRMAN:Can we, then, adopt this new draft? (Adopted) Then we turn to our Rapporteur again for the latest news. THE RAPPORTEUR: The latest news is that there is being re-drafted the new draft which has just been approved! Another draft of Article 29 is being typed out now and will be along in about ten minutes. MR. CHAIRMAN I think, gentlemen, we first turn to Article 30, "Consultation, Nullification or Impairment". THE RAPPORTEUR: Two suggestions were made with regard to Article; 30 in the earlier discussions. One was that the Article should be broadened to permit an importing county to take action to re-adjust competitive con- ditions between two supplying countries upon the recommendation of the Organisation. Among other things, that sort of a clause would permit action of the kind described by the delegate of Cuba in connection with sub-standard labour conditions, where the exploitation of labour took place. The second suggestion was that the Article should be broadened to permit action, to permit a release from the obligations under Chapter IV in the event of failure to carry out obligations in the other chapters of the Charter. The new draft, I think, would do that. The first sentence has now been made a separate paragraph. There is no other change. It provides merely for consultation regarding all matters relating, to Chapter IV MR ALAMILLA (Cuba): There is a typographical error here. I think "Chapter I" should be "Chapter III". THE RAPPORTEUR: Yes, that is so. Now, coming to paragraph 2, in the original draft provision was made that any measure adopted by any member, whether or not it conflicted with the terms of chapter IV, could be the occasion of a complaint by any member. Under this draft the adoption of a measure by a member could be the subject of a complaint, or the development of a situation could be the subject of a complaint, if it had the effect of nullifying or impairing an abject of the charter, and not merely an object of chapter IV. In other words, for example, in chapter III, under that employment chapter there is a provision that members may need to safeguard their economies against deflationary pressures arising from abroad. If such a situation 31 B2/C1 E/PC/T/C.II/PRO/PV/11 should arise under the revised draft of Article 30 the member could raise the question with the Organisation as to whether in the circumstances he should be free to take some remedial action. It is no longeron a basis of simply one member complaining that another member has taken action. The Organisation my make recommendations to one or two or three members - to any of the members concerned - and make such recommendations as may be provided. Correspondingly, if a member does take remedial action, other affected members would then be free to withdraw from the Organisation in accordance with the usual notice procedure. The notice procedure here, of course, should be changed to correspond with the decisions reached regarding Article 29, In other words, the draft as it now stands, I think, will cover the situation envisaged by the Cuban delegate as well as the situation envisaged in the draft Article 29A submitted by the delegate from Australia. THE CHAIRMAN: Before we start the discussion, I would like to give the programme I suggest we follow. As paragraph 1 is now a separate paragraph -- that is, the first part of the former Article 30 -- we should limit our discussions to the new paragraph 1, Then we will discuss paragraph 2. After that, we will have to consider the additional escape Clause proposed by Mr. Coombs. Then perhaps the question may arise whether paragraph 2, as it is worded now, referring to the whole Charter, has its proper place under Section G. I am not quite sure about that. Perhaps we could leave that to the Drafting Committee. in New York, and simply settle now the question of the paragraph as it is. I open the discussion on paragraph 1. I would ask the Rapporteur a question here, Yesterday we had our meeting with the Technical Sub-Committee, and then it was proposed and adopted -- I have not the exact wording with me, but this is the effect of it -- that we should get an addition to the first sentence of Article 32 in which it was, stated that none of these further general exceptions could be used in a . wy which woulà be indirect protection. That vvas a very important 32 C. 2 E/PC/T/C.II/PRO/PV/11. thing which the members of the Technical Sub-Committee wanted also to be written into Article 32, in the first line. I ask the Rapporteur if that is sufficient, or should we have a reference to that in Article 30 as well. THE RAPPORTEUR: I think that the paragraph as now drafted would be adequate. The addition to Articie 32 was that the general exceptions In Chapter IV should not be used in a way to afford indirect protection or as a means of arbitrary discrimination. Paragraph 1 of Article 30 provides for consultation regarding all ratters affecting the operation of this Chapter, and the enumeration of certain types of controls, customs formalities, quantitative and exchange regulations, sanitary laws, and so forth, is not intended to exclude any other question affecting the operation of the Chapter. Unless it is felt that some specific mention need be made of the question of indirect protection, I think it is covered here. If there were a case of sanitary regulations or other customs formalities being used for the purposes of indirect protection, paragraph 1 would provide an opportunity for remedial action. THE CHAIRMAN: I think we can leave that point, and if need be the Drafting Committee in New York can always see whether it is in the proper place. We do not need to trouble ourselves with that here. I would ask whether members agree to paragraph 1. If there are no remarks, the Article is adopted. MR. ALAMILLA (Cuba); I was going to suggest that instead of following the procedure you have suggested, Mr. Chairman, of taking the escape clauses now, we should try to approve paragraph 2, which, in my opinion, would not be so difficult to approve in its present wording. THE CHAIRMAN: That was my idea. The discussion is now open on paragaph 2. C.3 E/PC/T/C.II/PRO/PV 11. MR. ALAMLLIA (Cuba): I would like to congratulate the Rapporteur on the work he has done on paragraph 2. I believe that paragraph 2 as now worded offers a possibility to every country which is a member of the Organisation and which my suffer from the application in any form of the Charter -- that is, the misuse of aany of the measures provided in the Charter -- to ask for consultation to be followed, so that everybody will know all about it, and then to leave it to the Organisation to find out about the measures that have been taken add how they should be remedied. I do not believe anybody should be against that. It is a matter of open consultation and of giving every member a chance to say his word, and to see whether a remedy should or should not be applied. Believe that the point which I regarded as having been missing before has now been covered that is, that such a case may arise not between two members, but between two members and a third, or between various members and severe third members. As the paragraph is now drafted, all would come together and try to understand one another, and if they could not borne to an understanding, the Organisation would deal with the whole natter and come to a decision, and if the decision was not acceptable, the member would have the right to go out of the Organisation. It is a right which is free and equal to everybody. There is a right, which I think should give complete satisfaction, for any member to complain, to be heard, and to have a decision from the Organisation. MR. McKINNON (Canada): If I understood the Rapporteur correctly when he introduced the second paragraph, he indicated that because of the change in the wording and the very much enlarged coverage given in the new draft it probably would, not be necessary to consider at all the addition as Article 29 (a) of the amendment suggested by the Australian Delegation arising out of the discussions in Comnittee I. 34. C.4. E/PC/T/C.II/PRO/PV/11 THE RAPPORTEUR: That is correct. MR. McKINNON (Canada): In other words, that the re-wording of what is now paragraph 2 of Article 30 would cover all that the present draft covers, plus the substance of the Australian proposal. It seems to we that the Australian proposal, since it arises out of the activities of the Committee on Employment, has certain safeguards that are not included if we simply embalm it in substance in Article 30, The Australian draft, as Mr. Coombs brought it in, provided that the Organisation, on receiving the complaint, would consult the Economic and Social Council, as well as the appropriate international agencies, concerning whether the economy of the member is being seriously affected by a decline in effective deman, and whether, having regard to the member's obligations to which it is a party, the member has adequate remedial action open to it. Only after the Organisation had consulted the Economic and Social Council, under Mr. Coombs' draft, had it the authority to indicate to the complaining member what action he might be free to take, I can see merit, in what was undoubtedly in the Rapporteur's mind, in getting rid of yet another escape clause by including it in the existing paragraph 30, but if the inclusion means that we abandon any of the safeguards that were provided in the Australian draft of Article. 29. (a), then I doubt the wisdom of doing it. In fact, as I read the Rapporteur's explanation of the new Article 30, in which the word"Charter"is substituted for the word "Chapter", it is arguable whether or not the reworded Article is not so broad that we might need even to add Article 29. I think a good argument could be made on that point. I would like to ask particularly for the views of other members of the Committee on the question of the abandon- ment of the safeguard provisions that were in the suggested Article 29 (a) relative to reference to the Economic and Social Council. 35. D fols. D.1. E/PC/T/C.II/PRO/PV/11- Part 2. MR. SHACKLE (United Kingdom): As far as the Economic and Social Council and other interested international agencies are con- cerned, could we not bring them 1 in on page 2, 5 linos down, after the words "after investigation" by adding some such words as: "and if necessary consultation with the Conomic and Social Council and other appropriate international agencies". MR. MCKINNON (Canada): I think that would. meet my point. THE CHAIRMAN: I have asked Dr. Coombs to come here but I understand from the Australian representative who is present that this would be acceptable to Australia in the now wording of Mr. Leddy's, so that perhaps we might cover the whole of Article 29a with this new draft. There is only one thing in my mind, and that is the remark Mr. McKinnon made about the whole of Article 29. I wonder whether, as this is a general clause, we should not add "notwithstanding the provisions in previous Articles, or something like that, otherwise the one tends to wipe out the other. THE RAPPORTEUR: There is an essential differences between Articles 29 and 30. Article 29 permits a country to act without the approval of the Organization; under Article 30 that cannot be done. MR. McKINNON (Canada): That is not certain yet. we are not through with Article 29. THE RAPPIRTEUR: I do not think anyone has suggested a change in that particular feature of Article 29. MR. McKINNON (Canada): No, in that is given an opportunity of action without notice. THE RAPPORTEUR: No, I meant under Article 29 a country may, even though having consulted prior to the action and given proper notice, 'nevertheless proceed with the action. Under Article 30 a member may take only such action as the Organization specifies. D.2. E/PC/T/C.II/PRO/PV/11 MR.LECUTER (France) (interpretation): It is rather difficult for me to follow the discussion in English, but as an interpretation may waste time and prevent other delegates from replying immediately to observations, comments or declarations, would you allow the interpretor to sit next to me and interprect immediately to me? SENOR ALAMILLA (Cuba) Mr. we hear again the exact words suggested by theo United Kingdom delegate? THE CHAIRMAN: May I explain to Do. Coombs, who has just arrived, that we are discussing the now drft put foward by Mr. Leddy to paragraph 2 of Article 30. The idea is that with this draft we should take care of the Cuban amendment, and also of the pro- posal of thc iLustralian delegation with regariid to oreergoncy action, as this is so broad that it should covor that case also. I understood fror. the lAustralian cl.legation 13foro you. arrived, Dr. Cooe.ebs, that they arc in agreement with it, but as you arc here, I eould also like te have your viows before vie proc.od further. DR. C0OMBS (Australia): A w¢ arce to it, wc agrec te it.1 M. IECUMR (France) (Intèrpretation): I have no objection in principle te the mrcondment. of tho lustralian delegation boirng covered in the tEext of Article 30, but I must aqrain put forvordl the dilelir.a which I raised this raorning. I arn afraid. that if the Or,,aniz- ation.has 60 days in which te Ôpen its investigation anrd to consult the Econoraic and Social Council, thon tho timolimit of 60 days which is alloived to a memberr te take counter measures may have lalDsed bofore-the Oraanization has taken the adequate treasures. Therefore I think the ti.c iiioiit shouli.be modified, in some way. .R. SHACKLE (United Kïngdom): As I reaËl the re-deafteoc parcgraph, tho 60 day period or periods only be,,insto run as from the date on which action id taken by a member in pursuance of a finding already taken by the Organization, and the time taken by the Organization to make its finding is not limited at all, I think. - 37 - D.3 E/PC/T/C.II/PRO/PV/11 Tho 60 days only only being to run after a member has taken action on a recommendation made by the Organisation. Am I not right in thinking that? It occurred to me that possibly we might make some change, say, "not later than 60 days" instead of "within 60 days", if that makes the matter clearer. THE CHAIRMAN: You would also have to change the last semtemce. MR. SHACKLE (United Kingdom): Yes. DR. COOMMBS (Australia): I would like to refer to one point before we pass from Article 29n. You will recall that when we put this forward, we emphasised the point that we were anxious to oxtab- lish very clear association between the obligatons accepted by countries under the part of the Charter d1calinc wit.ac:loyimiont and l eif octivo. domand ancl thu obligations aoceptod inc.elr the ...co'm.Mercial policy. I crui not surc vihethcr the Coi.ul.tittec is awaro, but in the Chaptcr dealing with eMloanont, thore is a provision which roads as f'ollarws: "The OrCanization shall hava crcard in thc .exorcise of its functions as dctnud- in .the-" other articles of this Chapter, ta tho noted . of' iaileitbcrs to takl actior.vi htho Provisions of the International TradOrganization, to. safeguard thcir econonies ar.;ainst deflationary, prcssàue in thc avent ofa a serious or abrupt clecline in the effective. clenanrI of other countries." We were anxious that that statement, that. the Organization should have .regard ta. that .neèd, should bo balanced by a corrcosponding power in the alpropriate latèr Articles of the Charter which wQuld. enablç the Organization. ta take those, f actors into' account in the exorcise of relevant powers. I am satisfied, tentatively at any rate, on examination of Article 30, that it gives the Organization the necessary authority to suspend specified - 38- D.4. E/PC/T/C.II/PRO/PV/11 obligations or concessions under the Charter, and in deciding whether so to do to take into account the matters referred to in hat Article which l read to you from the Employment section. We are therefore quito happy to accept the redraft which has been put forward. THE CHAIRMAN: Before you arrived, Dr. Coombs, Mr. Shackle proposed that we should put in a reference to the Economic and Social Council and the appropriate specialist international agencies. MR.McKINNON: (Canada) :May we have Mr. Shackle's draft? MR. SHACKLE (United Kingdom): I will read it out slowly. I suggest that this should be added on page 2, 5th line, after the under- lined words, and after investigation": "and have necessary consultation with the Economic and Social Council and any other appropriate international agencies." I thought of it on the spur of th moment and do not attach any special importance to the way it is worded. THE CHAIRMAN: I think the word "speziolist" should a7ppoar before "agencies". Is that agreeable? MR. SHMM1S (United ICin.cdora): Bofore we leavo that, I have one small question. It is alraost a draltiri- point, but perhaps has a little substance in it, It comes in the sixth line from the end on plage 2 where the word "the application b the other mertiber of" have been put into braclcots,indicating that they are marked down for deletion. I wai not sure whother, if we delete thera, we get quito the right affect, bucause it will thon read: "the Organization may authorise a z.iemibor or members to suspend such specified obligations" and so on. That vrould sceem to suggest coa.rplete suspension. In othor words, th omparticular obligations no longer apply bctwocn any riombers at all. 1What . we are aiming at here is that you may have certain cases in which some members way assume certain obligations in regard - 39 - D.5. E/PC/T/C.II/PRO/PV/11 to particular other members. That is rather in the nature of a general suspension. Therefore I am wondering whether we do not need to keep something like those words in brackets, possibly amended a little, so as to read "the application to certain or all other members of such specified obligations". Do I make my point clear? MR. COOMBS (Australia): You do not think it is covered by the word. specified"? MR. SHACKLE (United Kingdom): Specification to my mind would have meant the particular obligations which are susponded. If you say nothing to the contrary, it would seem to mean a general suspension as between all mou.ibers. If thorc is to be a partial suspension so that the provisions ara suspenacd as between particular members but not all mombers, I fool that sote words like tho wards in brackets T;may noed to rein. THE RAPPORTEUR: I think it is already covered, but that would certainly make it clear. Perhaps "the application to any other member or members"? E.1. E/PC/T/C.II/PRO./PV/11 MR ALAMILLA (Cuba): I think also when I proposed my former amendment it covered the possibility that these specific obligations or concessions could be taken out in whole or in part.I think that it would be a good thing to koep this in - such obligations or concessions in whole or in part .I think that would be adequate. THE RAPPORTEUR: I think the amendment suggested by Mr Shackle is somewhat clearer than that. MR ALAMILLA (Cuba): If my point is covered, I have complete confidence in you. I just put it before the meeting. THE CHAIRMAN: Again, I think we may all join the Cuban delegate in his congratulations to the Rapporteur on the way he has covered all those vory difficult points. DR COOMS (Australia): Vcry skilful. cri- THE R.APPORTEUR+: I.do not lilk to. o conrratulated for broaaxnc thc ¢Scapo clauses THE aEULIEMN: Thon wc have Adoptod. .,rticle'30, and ;c now corn back tu'- .article 29, of vihich the novw drrSft has just coma in Éd %tich vvill now be distributed. I think the first pr.rrrri.ih has elrcady beon adopted; so that it comes down now to the second poaragrra:h of i-rticlek 29, vihich perhaps we miht .nov rcad. (Tho Intcrfprotor round now dral!t ` ti 2) ilhen wc vrere discussing this nattor this morning there vacs di cifferocce of opinion, because the dologatos of Cuba, Chilc, and, to a certain extent, of Canada, vore against thoso essa;p clauses in this fôrm. UR MoKINNON (Canad&): ;ASainst it in tho f orm in vdiich it was this' mrning. THE OEAIRMAN: Thon the dologates of Cuba- nid Chiloc arc thd only tN7o delegates who are against it. They said that prior notice should always be given, while other delegates, aÈ far as -I found out this morning, thought that a clause like this should not bc necessar. We have now to sec vghether, in this nee1draft form this clause roprosonts what wQ discussed this morning. -Thn I will isk the Cuban and Chilcar dcle,éatos, 'f thcy still. dissent, to say what they want to say and we will take note of their remarks. My I just ask whether this clause as drafted now is agreeable to the sub-Commitee? E. 2 E/PC/T/C.II/PRO./PV/11 MR McKINNON (Canada): I think it meets the point that I raised this morning, that the draft that was then before us was restrictive on the Organis- ation in that it was taking away some of its discretion. I think the now draft restores tho discretion in two stops, so to speak, but I am still rather of the opinion that the original Article or sentence in the American draft Charter is still the best. However, the delegate from India seemed to think that some such wording as this might make more clear, first, that the Organization had full powers, but, secondlys might modify the action, to put it in somewhat equivalent terms, to the alleged injury. I have always interpreted the. American draft as meaning that the Organization had corrilàto discretion, but.lirobaibly ivould in most cases malc an adjustmont noro cquivcilcnt to the injury that Lad been done. My only objection to thc -rosont wording, is that it imnvolvss by a rather clumsy construction tho achieveont of exactly vwhat I think thc original draf t covered. THE CHLITMMN; I think that Mr Hawzkins takes the se an view? MR HAYKINS (USA): Yes; this Nvould be acceptable, but tho ori.ginal draft imould be preferable. However, we would trike either. MR ADfAMfl (India): Mr Chair.-n, I think the prosont draft convoys the rieaning tliht Uw had in r.di this rorrning uuch noro adequately thon this riorning's draft. The reason why the provision in the original ,\riericen Char'tor ie not acceptable ie this, that if tho procccdurc as outlined. in this article ij followed, tho odfected r.àoDber will have to soy that ho took the tyjpc of action that ho anticiiatcd was likoly te bc a-p'provodc by the Organization; and. in =.clcing that case it is dosir.able that they should have some guidance and they should bear in rx:ind that if the counter-action in resprect of viichh the country is -oing to aivo notice is not proportionate to the. injuzy it hos sufferod, thon it may not receive the approval of the Organization. There is a possibility that if the original provision is allowed to stand the affected member may give notice and in that notice it may seek to cover action which is much more drastic than is necessary to meet the requirements of the case. 42. E/PC/T/C.II/PRO./PV/11 Surely that action will be subject to the approval of the Organization, but the notice will be a public notice. It will be notice to the Organization, but surely it will be also notice to the countries concerned, and it will receive wide publicity. A public notice of that sort, unless and until it takes this principle into account, may have an adverse affect on the relations between the various members of the Organization and to a greater oxtent than is necessary. And so, form that point of view, Sir, it is desirable that the affeted member should know what type of action is likely to receive the approval of the Organization; but in special circumstances it may be justifiable for the Oraanization to note out specially vigilant treatment. That is adequately covered by the now sentence which the Rapporteur has intro- duced into the draft, nearly, tho last sentence; sa that tho drar-t as it stands would be quitc acouptablaî Sir. UR SH;.CKU (UIC): This nQw tCxt is I think acceptable to m. Thora is ane point which hasï just .struck rno -out it on a hasty reading, ani that is that wc talk at tho bottzz ofet pnxe 2 about iixty dazr àfter such action is takon and.at an carlior star re talk aIbut action bcinrg taken or continued. What about the case of continuing action, and, whcrc docs your deadline eome in theo? THE IV??2PEUR:That vas the reason for the original I)roposition, that it should be sixty doys .Cter the completion of. thc consultation, but it was pointed, out that there would be no firm dUte for that, and that if you go lback to the date of thc taliM.g cf the action the pressure is un the country which takes th¢, action to consult, since the other country ivill, km if it- sees the doealinc running oeut, tend to be: forced into action te protect its pdsitiori. So that the country taking tho action will then be inclined to consult more quickly than it right otherwise be. MR SHACKLE(UK): Thank you. I am sorry to have raised an unnecessary point. THE CHAIRMAN: Then I think I say say that now the delegates of the United. States, Canada, India, the United Kingdom and of France feel able to accept this new draft, and it is also acceptable to me, as Chairman; so that 43. E.3 E/PC/T/C.II/PRO./PV/11 now give the delegates of Cuba and Chile an iooirtunity to present their points of view. MR VEDELA (Chile): I gave you my viewpoint this morning, Mr.Chairman. MR ALAMILLA (Cuba): Mr Chairman, I would like to translate, more or less literally, some notes I have written down here, and afterwards I will hand them to the Sccretary so that he can make a better translation. merely want you to have the principle of the idea that I have in mind. The Cuban Delegation establishes a double reserve in relation to the draft of Article 29: in that first case, the Cuban delegation maintains that a clear and riged procedure should be laid down for the nation or nations which might siffer as a consequence of the emergency action taken by any other Members in accordance with Article 29, so that they would be able to bring the matter to the notice of the Or-anization vfith r' vicw to the avoidanc. of thc easures that moy be talcen or the Ircvention of thoir continuance, crd.in. every' çasc to permit those mernbers tu tako tlle necessary- counter-moasureà or reprisals in accordaa-ce withl Ithc ,ineciplos of the measures that have been taken, without just cause or in such a form that a large measure of damage and injury which might otherwise be inflicted is avoided. E. 4 F1 E//PC/T/C.II/PRO/PV/11 These requests have been made by the Cuban delegation in line with the proposed charter of the United States, which in every case demands provious notice and previous consultation to take these emergency measures. Now that the possibility is contemplated of permitting that in exceptional and critical cases the emergency measures could be taken without previous consultation, be it with previous knowledge or not, this measure of protection at which the Cuban delegation was aiming is more indispensible and more necessary. In the second place, the delegation of Cuba maintains that the possibility of permitting unilateral emergency action, even if it is in cases of critical and exceptional circumstances, is dangerous, and that in every case previously knowledge as soon as possible and previous consultation, even if it moy be for a short period, should precode the enorgoncy mi.asure, and those measures should not at any tLic bc applied to norchandise. . On theso points the delegation of Cuba raakes a odrrespondirg request that they may be disousscd again in the next prcparatory meeting that is going to bo hold before the negotiations, Ma VIDELL (Chil): Mr Chairman, I fully agree with the deole.ra.tion of' the Cuban dologation, especially as referring to countries exporting agriculturally jnroducts, and I min przymred to make tho saine declaration when a discussion of' .rtiolo 19.2 .e arises in the special conmittoe. TB aHLIEi;N: Thank you. I think, gentlemen, that we have oovered iLrtiole 29 es far as vwe can go, and so wo should novw include it in our report to the main Comauitte Il.. Before we finally lave this, 'I understand Dr Coomnbs would like to say something about the first paragraph. EBR COOWIS (Ltistraîia): I do not want to re-open this question but I think it dosirable that I should mention one doubt that vie have about the first paragraphof Lrticlo 29, se that the delegates could perhaps give the matter some thought. It relates to the question of an industry.adversely affected by'a reduction in preference. The proposal here is quite satisfactory as far as we are concerned, on the assumption that the type of action which would be most desirable to assist an industry or the people in an industry likely to suffer serious injury as a result of unforeseen circumstances was in fact a restoration tamporarily of the preferential margin, or part of it. 45. F2 E/PC/T/C.II/PRO/PV/11 This is a matter to which wo have given a good deal of thought, because it is perhaps one of the problems we may ourselves have to face, but it has seemed to us that the type of action which we will wait to take in that case perhaps would not be a restoration of the preference because the commodities we would be concerned wish are agricultural products, and a certain area of land has been devoted to these industres and the elimination or roduction of the preference may involve a change in the character of the production, and what may be required in these emergency circumstances, therefore, moy bc some scheme which links on the-one hand. dUversion of the land to other purposes, wvth:,sone tecmporary assistance to. enable producers.teO cctry. through thenocossaryy changes. -We have somo doubts as to whether inna case'like that it would be desirable te restore any prnrt oe the proetrence which we had onceiagreed to' abandon, and turthormore we feel that ivhatever action is talcen te assist. the producer *should in sOeM wuy be nade.conditional upon the producer carrying out the changes in the nature of, his production which are necessary. to moet the changed circunstc.ies; and we have a feeling that thrit ry..best perbapsabe accomplished by a combination oe rce-direction on -the production aide perhaps with saome inmn of subsidy. It mry be an expert subsidy. or it rnay bo-a general. subsidy, but we tful1. recognize that in a caso like this the circumstances would be exceptional and that the action proposed ought to bu agrecd to by a11 t.he. parties concerned, and we vrnted to put forward for your consideration tha# perhaps in addition tO V*ht is proposed, here about the possibility. et the country which originallY granted the preference restoring it .in part ten.porarily to meet these circunstances we might provideo something of this sort: That if as a result of unforeseen circumstances and c? the effect of a reduction of preference brought about under ALrticle 18 the expert of a product is s* reduced aS to cause or threaten serious injuries to producers of that product, a country which previously received the pre'Yerence may request the Organisation te arrange and participate in 4isoussions with the country granting the preference and the country substantÏalay affec.tod by the rçduction of the prefIerenoe (thai is,' those who benefit frem it) with a view t reachin an a 8recOnt on meanurea to bc taken within thu countrfiy concerned so far as these nsuy conflict with obligations under the Charter dtosigrned teo mitigtate or prevent in&ury, to 46. F3 E/PC/T/C.II/PRO/PV/11 . producers. The Organisation may, in accordance with any agreement so reached, suspend the obligations of the member either in whole or in part undertaken under Article 5 (I think it. is) of this Chapter. Now, the points to which I would like to draw your attention are that what is proposed here is that in circumstances of this kind there shoitd be consultation botwoon tho threc parties concerned - the country with has lent tho preference, the country which previously granted the proforenoe, and the country which haas presumnab.y nskod for the preference to be roducod, because they would benefit fro.i that; and that if in. those circunstanoes the three parties agroe that the boost wry to hancjle the problem of the possible injury to the producers con- ccrned is ono which involves a temporaly abrogation or a temporary suspension of the obligations relating to subsidies, the Organisation would be authorised to approve that., iai Ir.-emS, (MS) : ilr:Chairman, I think in principle that is all right. The idea of consultation aciong the parties conourned to deal with a hardship case like that under the auspices of the Organisation is entirely compatible with everything we arc trying to create the Organisation to do. I would suggest onc point which mly be a little tochnicnl. There might be more than three parties, because your substitute product might come from a country other than that which asked for tho removal of .th proforence. D1t. COOMBS (.i.utralia): Yoe. You ould put it in the plural so as to cover that. The words I read out were only a rough draft, but if the general idea seems acceptable I suggest we hand it over to the rapporteur, and he can do what he cari with it thcnm 1HE RiLIPOZTERUR; Would that be a substitute for what i8 in paragraph 1 regarding preforonco? DR COOMB;. (:.ustralIa): No, I should not think it would be a substitute, because it applies only to certain agricultural products. It seems to me, speaking offhand, that the action you havo proposed in.29(1), the part underlined, is generally thé mount appropriate form of action, but it probably would not be appropriate in soma of the industries which we know are likely to .be affected by this modification of preference. Mt ILWKczS (u&a)' This would be an additional paragraph? DR COOMBS (i;.ustralia): Yes, it would not affect 29(1) as it stands at al. 47. G.1. E/PC/T/C.II/PRO/PV/11 THE CHAIRMAN: If it is agreeable to the Rapporteur and the Committee, I think we might ask the Rapporteur to look into the draft which Mr. CCoombs, has put forward, and then see at another meeting whether it should be inclu~pd in Article 30. ;WYith reward to Article 29, there is.,onEl point to be dcalt ,ith, since all) the -ther points have been disoussed. . VIILA (Chile):. la. this li;.Lite& only to preferences? yhby docs it not apply to the general scopc of Article 29? THE CHâIüSI'AN: I think wme u.Libht aslk the Rapporteur to look into that. Before leaving Articlo 29, I want to ..iake one-correction in the short state.àent i.ade by the Cuban Dele1ate. H. spoke about souethinjg bcing looked into aLain in N;. York. I think ho meant in Geneva. The Draftinî, Co..;iaittee will not be able 'to reach decisions on' that question, but vrill only bo able to state. clearly the different view- points. They vrill no.t have the job of reconciling two differin& points of view on a matter of principle. They vwill. only be able to deal with i.atters of drafting. ,iR. AII (Cuba): I thought we viere ,oin%, to have a meetipg in New York in January. In any case, when we negotiate we will have to have this thing, in .iind.c iR. CaMBS (Australia) I presurae that the Drafting Cot:iittee in Ne York ivould prepare, on the basis of the Cuban note, an alternative draft to that which is at present eLibodied. IMHE CHAIRMMAN: I -think we. have novw covered Articles 29 ana 30. I wiant to put a last question -- whether the broad formula in the last part of Article30 .shoud not have its proper place uncler Section G. I suggest that that should be. lef t to the Draftins Comîttee, when they have the oiwle thing before thc.L, to atudy in.New Yori. àiR. ÀLUa1LA (Cuba): 1 would only ask. that thé alternative draf t in our proposu1 should be brought before then. 48. G.2 E/PC/T/C.II/PRO/PV/11 THE CHAIRMAN: We will return to article 29 only when we get the draft of the Rapporteur concerning Mr. Coombs ' proposal. We still have before us Airticle 33. I would like to have Mr. Coombs' guidance on Articles 56, 55, and also 50 with regard to the whole mechanism of settlei.aent of disputes and the whole question of escape clauses. I do not thinlc there v4Ill be tii:ie to deal, with that in detail, and therefore, I viould l .ke to have iir, Cooïiubs ruin; on that latterr, lihcn vie discutscd thëse escape clauses, especially vrLth reward to article 8, ve always found that ulti..ntely Article 55 (2) would be a very iL.portant jftiÏoe, because in that it iB stated that the CrLanisation could, by a vowte of twc-thirds, and sB on, determine criteria and set up procedures, for ivaivinq, in exceptional circu.istances, obligations o -Me.ibers, etc. It is a general escape clause, and it refers only to Chapter IV of the Charter, \te .ay perhaps need it for other Chapters of the Charter. Perhaps it vw6ud be a question for Coi.d.ttee Vy anda ie had the idea of discussin&, it with Coz:ciittee V, but now, . I suppose, we shall, have to leave it, MR. COOiS (Australia): It has been su"ested that thére should be an exaLlination of the escape clauses collectively. I bake that to rMean that each Coi.iLittee can quite clearly deal with the escape clauses which relate to its ownr subject matterr, but if it coies up against one proposed escape clause which it.believes it Lipossibîle to ialkC a judaent about, unless it knows what other escape clauses exist in other parts of the Charter, then it would be wise to defer the consideration of those particular ones until we look at the escf.pe clauses ail together, For instance, where it might be argued against a proposed escape clause that the situation is adequately covered by the escape clause in Article 55 (2), that one might be left. On the other hand, if it is agreed that an escape clause in relation to tariff or 49. G.3 preferences is clearly. necessary in the light of the subject matter, then it seems to me it is quite correctb to go ahed with that. We have had,the secretariat take out a si,,aru -- if. so voluminous a document can be called a summary --of the .various escape clauses in.the Charter, and it .seems to me that that ought te be considered by. a meeting; at which certainly the people associated with quantitative restrictions are present also. THE CHAIRMAN: Would, it not be better that at the end of this week when, as we hope, ::the Sub-Committees will have finished their work, there should be meeting, in the first instance, with the Rapporteurs. They.know the, whole of the..subject matter, and they could go into it much quicker' than we could do. if we could have all the Committees together. . Perhaps 'jr. Cooiab s could arrange that Leeting with the Rapporteurs, and then afternards give us his opinion as to whether we should a6ain resume discussion on certain points, or nrt. àR. VIDELh- (Chile):. I should like to ref'r to soae emissions under Section .0 of' document W.54', which I should like to have taken into account. THE CH&IWiANh: .Wat I have just proposed is that we should. not discuss this waatter in the.Sub-Coriu.ittce any miore, but should try to finish eur xwrk. on Article 33. We would.then wait for news from iir. Cooiabs as to whether we should go into certain of the se escape classes again, after the whole-position has been discussed. with the Rapporteurs of other Co-.iittees, MR. VIDELA (Chile): I only wQnted to give the Rapporteur some omissions I had found in document W,54 in connection with the escape clauses. R. 0OMMS (Australia): In connection vith that matter, the Joint ComrLttee on Industrial Develop.ent is, now approaching finaliity in its work, I thinkà ana it is.considerig at theo present ti±a its messages te 50. E/PC/T/C.II/PRO/PV/11 G.4 Committee II relating to maodifications in the commercial policy proposals which, in the view of that Committee, should be made in order to provide for certain matters arising out of industrial Development. I think that might covor the point mentioned by Mr. Videla.. MR. VIDELA (Chile): Another point to which I wish to refer is that in connection with Article 19, (e), I submitted an amendment. THE CHAIRMAN: That is not a matter for this Sub-Commitee. It is a matter for the whole of Committee II. MR. VIDELA (Chile): In the. clause permitting restrictions on agricultural products, I want to point out there is an omission here of reference to a specific proposal of 'the Chilean Delegation. DR. COOMBS (Australïa): That has been dealt with by tho Quantitative E/PC/T/C.II/PRO/PV/11 H.1 Restrictions Sub-Committee MR. VIDELA (Chile): But - DR. COOMBS (Australia): I see. M. VIDEI (Chile): This point was made on the escape clause. THE CHAIRMAN: But we have no responsibility at .all for this paper. The Saciretary of Main Cormmittee 2 has, but not us. Shall we deal with Article 33 and try to finish our discussion this afternoon so that we shall have Saturday to discuss the memorandum on the procedure of tariff negotiations which our Rapporteur is preparing and which will not be ready before Saturday morning? It is 4.30. Would members like sore tea before wc start on Article 33, or shall wc go on? MR.McKINNON (Canada): I suggest we go on. M. ALMMILLA. (Cuba): I would like to raise one point of clarification. Dr. Coombs has said that we arc to roccivo serio riaosage fromi tho Joint Committee. Does that mean on Saturday we shall deal with those matters which have been postponed? THB CHAIEMAN: I think we shall have to 1have that uitil next woek. We have to finish first the mamoranduri on the ireced.ure of Tariff Negotiations. MR. ALAMILLA (Cuba): What Arc we to roccive news about? TIM CHAIRMAN: Dr. Coombs will l;now. UR. JLAMILLA (Cuba): 'iAe wc to receive sor.oc directions from the Joint CoMMittac? DR. COOMBS: Uifortunately the Joint Conmitteo is still in the process et cleciding, but I should think that you will receive soiiuothing troam them ahlridst immodiatoly anc!. will bc able to ccal) with it certainly before Saturday. MR. ALAMILLA (CuWa): Wc have raaLdo sorac rosorvation on that specifi. point and we would liko at last a part of the session to deal with it, becaur. I believe it has a very important bearing on - 52 - H. 2 E/PC/T/C.II/PRO/PV/11 . the matter with which we are dealing here, in several ways. THE CHAIRMAN: I am quite prepared to discuss that, but only after the memorandum... ALAMILLAA. (Cuba) I onlw Oanto take sure that we shall ha v a vo chance trecord our view.vW. CHAIRMAN: We have before us now Article 33, and in ouir previouisvios discusswe agreed that there shall be a new paragraph 3iara 3 tdded to reading as follows:f .olls: bers realise that there mayhere rmy, in nal ctional oicesmstencos, bc justification for eew preforentngements xe'ori¢sroquiring an excoptien te thc Provision of Chapter 4, and this exceptioneshallect sobjlet ta approval by thu Organization pursuant to paratxwijh 2 of iirtioal 55." I think rnemberà have al1 roceivcd. that. I viould lilce to start first with pra t:v ih 1, se purh 's you will hav, it b'eforc you. I wouldc lil: ta nsk, on this piaragraph, vhat is alacunt by "under thL. juri.sdiction ci any Momber"? Docs it mean they have a technical sovorcirnty? MR, HPLWKINS (Ul. S. .): I should. thinly: it 7uld include. any territory, under the authority, vwhothar technical sovoroignty or not. TI CHE AAN: It is covered by Ixticle 78 (4) is it net? MR. PARANAGUA (Brazil): I do not think paragraph 1 is quite clear in conjunction with paragrajih 4 of wxrticlc 78 which says that all territories under a rnober country rmuat bh members of the Organization, anid hore it says thcy shall bc considered as . separate Mccber countries vehorc thora arc two or more customs territories undor the jurisdiction of any Mlonbor for thc purposes of the Charter. YFW haci another amiondment froan the United Kinrdcom clelegate about thewithdrawal qf territories. What would happen in the case of Southcrn iUhodasia. If the - 53 - products of Souther. Rhodesia are brought here,. would they be E/PC/T/C.II/PRO/PV/II H.3 entitled to tariff reductions because the United Kingdom is a member of the Oranization? I would like that made clear. MR. ALAMILLA(Cuba): I would. point out that paragraph 4. of Article 78 has been rodrafted, so if wo are going to discuss it, we should have the alteration so that we know what we are talking about. THE CHAIrMaN: Can the Socretary produco a rodraft? TEE SECRETARY: I can, but it will take some time. MR. HAWKINS (U. S.): Does the delegate of Cuba know what they did to it? MR. PARANAGUA (Brazil.): It was with rcgard to the wIthdrawl of certain territory. MR. ALAMILLA (Cuba): It was a motion of the United Kingdom delegation, so they should have a redraft. MR. SHACKLE (United Kingdom): I am afraid I cannot enlighten you wïth regard to what has happened in CoremSttee 5, but tho point as I understand it is thàt within tho British Coloial Erpiro there are certain territories which have autonomy in customs matters, and I.think the point is that if a territory has autono y in custons natters, it should,so to speak,have the right to say vihether it should bc brought into this or whether it should not. That, I believe, is tho point unacr Article 78. I do not think it affects this piresnt paragraph of Article 33, which, if I understand arisht, simply says that if in tact a territory has a separate custor.ms syster.x that shall count as a separate member, at any rate for tho purpose of' thc Charter. I do not think thera is any confusion betweon the tvo. MR. PJRANAGUJ (Brazil): That imeans in the case of a withdrawal the territory would be treated as a non-mrncber? M NR. SHACKLE (United Kingdon)r.) I cannot express an opinion on matters disoussod in Couoiittee 5, burton tho tact of it, that, might perhaps be so. -54- THE CHAIRMAN: But there is no needus to concern ourselves with E/PC/T/C.II/PRO/PV/II H.4 that. We ar not discussion here the question of' withdrawal but what ls there. It ïs stated here that if there are two or more customsis terrItbries under tho juriediction of any liM:.lber each customs territory shall. be considered a separate territory. is "under the Jurisdiction" clear enough? MR. SHACKIE (United Kingdom)': As to that point, I would' suggest that we, want tho widest possible word here If we have anything more limitative than "Jurisdiction", wshe all not get effect we want. 'that we really want tu say is that if any particular member has, so to speak, the authority over a number of different custoins territories to tell thoi i vrhat thiry shall C.o in- custorie natters, thon by virtue of the tact that they are separate customs systens and territories, thcy shall be considered as separate members. Sa that you want the vwidest possible word and 1 should have thought that "jurisdiction" is as 'wide a word as one cuuld find. TIHE OJLRt/VN: I ar. inclined to agrec. I raised this point only because I was not quitc clear. With that clarification, can vie thon agroc to paragraph 1.? /do;,tod. Par.niraph 2. Does Pararraph 2 (a) give rise to any cor.mnnts? MR. PLRMNAGAil (Brazil): Docs that iaean that the frontier traffic is an exception? MR. HwN1CiNs (U.S. .): Yus, that is an oxcuption. IMR. ISDRKAR (India): May I coxplain how vre understand it? It says here: "2. The provisions of Chapter IV shall not be construed to prevent (a) advantages accorde.od lby any ;Iei.aber country to adJacent countries in order to facilitate frontier traffic". That means, survey, that the Lrantinrr of such advantages will bo permitted but such advantages vwill not l)e treated as an axomption froid the provisions of tha rost of' tho Chapter to ,this extent, that evon such cdvantsv;s oould be brouZht within - 55 - H. 5. E/PC/T/C. Il/PRO/PV/11 thc scope of negotirtions if necessary. That was the under- standing with regard to paragraph 2(a). With. regard 'to para- graph 3, we understand it to mean that oven new preferences could. be made. the subject of negotiations at a. later statge if necessary. MR. HAWKINS (U.S.): Paragraph 2(a) really relates :to' a technical matter. It is intended ta take care only of 'the Canal Zone and such. situations where a frontier runs through the middle cf a i.Cty. If you applied the Most' Favoured Nation clause strictly, you could net givo wUIy bonofits ta the two halves ci the city, eni it is usually dc'fincd in ccrnercial treaties as not boinri wider than ks. 15. That is the type of. clause in vicw here. Tho type thc Indian delcgato is 'raerrinG to is under thc nerw paragraph. MR. ADAREAR (India): But as i.t is applicable ta that also, it might be given the wider r.caning. Tho open portion would bo comwon te all three sections. Or should it bc in a separate paragraph? leR. llkÇR.,INS (U, S, -): It is a rmtuch broader exception. This is ta permit any kind of action whatsoever within narravi frontier zone. THE CHIUM.10: Can we aZree to paragraph 2(a)? Adorted. ?arairaph 2(b). Here I have ono question ta raise with regard to the last part of< the sub-paragraph. The Nethoriands Government has had.an exchange of letters with the A.ierican Goveriiacnt with regard ta the question I have already raise in the sain conrittee, and parh.,ri)s I r.ay read part of that letter to the Committee?. jWc..thought the wording was not guite clcar. This is the relovant-part: * "It is undorstood, m.orcovor, that modifi- cations in thc NcthorlAnds cuptons tariff, on tho basis of the Custo'ms Agreor. en if. September 5,.1944 batwcen the Govcrnnents -56- H.6. E/PC/T/C.II/PRO/PV/11 "of the Netharlands, Belgium and Luxrm.bourg, would not .be considered now measures, since a result of this Customs Agreement will be a reduction of the General level of tariff rates for the 3 countries taken. as a whole. Our two Govarnnoints shall afford each other an adequate opportunity for consultation regarding proposed measures falling within tho scope of this paragraph." We thought the draft vwas not quite cloar, but if tho Rapporteur will say that it ieans just the s 'a, I w quite a-rocable to accaping it. tM. HAKIXINS (U.SIL.): To dispose of that, I thinlc it is cloarly in harmony with this. THS CHA'IM.N: Shall we, then, adopt ArtV/lc 2(b)? .'LdoPtad, Parph. Wc discussed this in a previous rmecting, but I vwill road this new paraLrraph 3, as follov;s:- "Tho Ilefrbors rocognizo that thora r.iay, in exceptional airowistances, Lb justiP4cation for new profçrential. arrangements requiring an exception to thc provisions of Chapter 4. .Lny such cxcaption shall be subJect to approval J y the Orrxanization pursuant ta }karagraph 2 of 1u:ticle 55." Can'wo forraally approve of its inclusion harc? I follows. - 57 - I.1 E/PC/T/C.II/PRO.PV/11 MR LECUYER (France) (Interrptation): Mr Charman, have no objection to the adoption of this clause, but I would like .to know that it meets exactly the points of' view which were expressed in the General Committee,ormiitac, Nwlhiamounted wunounta to this, thatpreferential tyreatymenteatreot ehould bc establiordere to r1crete achicvcms custoi; enion. Soveral d.lo nations raised that point.emsIthatorn thLL customs ueions ara por- ITissibarticle ixrticl 33, buimp;lio indnpea in thc text of the Charter tformation.ramnewn of aiv customswunionsevouposed and sod aondewould ba nable.ionrl)lo Perhaps theposal proosawewareh vi .rc now dgscussin_ mi"ht bc used in ordar to form such customs unions, but that is not clcaz-, and j weuld have toahavc it discusoewhether vehothe this new proposal covers the caOe prosontod by various delctations .or not. In othor words, uiider tho roviscd. cUoit, would it bc possible to haove now -,roafurntial arr.aniemonts which arc a stop tovwards tho fonmation of ncw customs unions or n't? MR HXNiiKINS (US;A): Mr Chirmrnan, thc gcnorol intent is not to discouraDc but to oncourara customs' unions, that is complete custonis unions. Tho second question raised, is as to .7hothor undor thid noiv language tho question might be brought u;j of proceoding in thc direction of a now custom union by gràdclu sta.os. I think tha answer is in the affirm- ativo. That kind of. proposal could be brouet upi under this languge and the Orronization vould cznsidor it. I should think it might. very well bc that if Xhere worc dof'initoly schcdul¢d steprs leading. towo.rds tho formation cf' custolils unions the Oreanization viould probably be stronGly inclined to f avour it. THE E.IRM;]N:. You will notice thc weorcinp of subiararaph 2 (b), and I think that that is an answer to tho question oP hl Lacuyer. You can ,o on with the customs unions. Tho only point is that you cannot offeot a customs union just ocwrnitht; it is a question o' ycars, and you start -by having a common tariff system; you hLvav to reconcile the differences of the trio tariff' systems ana Got onc common system.. Then the next stop rmuat be that you hahll have no duties between the two members of tho customs 58. I.2 E/PC/T/C. II/PRO./PV/11 union. The third step is more or less to reconcile the different economic policies of the. countries, and. that is a question which, as vie know from our experience in those discussions, ontails a great deal cf vey hard work, and it is something that you can only achieve vory gradually. Now I think that hore we come to tho point raised by. Mr Lecuyer, which is that we are covered, in thc first instance, by the wording of the new paragraphs 3 and 4, or in it covered already by 2 (b)? MR HAWKINS (USA): Mr Chairrman, I think that the creation of any new customs union is coverod by paragraph 2 (b) as it is - that is nutonatie. Once a customs union is croe. full customs union, it is immediately exoept from à1l the most-fovourod-nntion obli-ntions, Dut naoi tho furthor question that vfas raised was: h tt'oabout n r)rferentiol arraon- ment leading up by dofinito steps tovarxds a customs union? Thlnt wouldd nbt automatically bd agrood to, but it could bui bruuet uir under this now provision; and, ns I 3caid, just erprcisine n personal opinion, if that wore intended ns a definite series of steps tovnrds a oustons union, I should think the.0rr:.nization mii;ht very vweoll fa;voux it. Dut, of course, it is for thQ Organization to decide. THE CMMWMN: PRrhps I mniZht nak one othor question, bocnuso it is vory important for us. As such, we hanve not r. comxplote customs union betiron the 'Netherlands and Belgium at the moment, but thore in a dfinite agreement 'and it is nov; beings worked out stop by stop. Is that no=r covered/by the revised droat of paragraph 2 (o) of 4rtiole 8, vhich you remeriber is dealing with nny existing proforencos, or is it tôobo considorod, as a. customs union? I think thero is snom doubt bout it at tho moment. UR VIDELA (Chile): Do not mention nr claus} .' UR HXCMINS (USA): Theora may bo tochnicallJy so1m doubt, but I think thàt there is probably nor dispute here an to the intent. You, Mr Chmïun, have taken the decision to establish -a. customs union and you virtua11y have it TH CHAIMN: Yos. ye 59. I.3 E/PC/T/C.II/PRO/PV/11 MR HAWKINS (USA): I should not think there would . be anything here that .vould. prevent your Icaii" .î a fow rbnrme-ts of your provious system while you ,arc brïnMing your custor.is union into affect. !.gaybe it is possible that there should be some provision to covor it, but I d1 not think thora would bc nny dispiuta on t'h dosirability of .oovoring it. THE CHAtICi.N: Do vr hava to provide for it lhro or not?. That is, the only point I wànt to raisc. MR WWKINS (USh): I a m thinldnG of it f ron a tachnie .l point of viove, and that the provisions of Lrticla 8 (3) nig[;ht briùrgo tho galp. THE CEAIRMAi: Yës. - MRILI HEINS (USI;): You vora ùaot ,oing .to incroa.s this; you ara àoifnl to tako away thc oncs that arc thoro; so thLt I do not th.ic anybody could involc this Charter agrd.st the remnants of your plrvioàs systor. MR LECUJER (France) (Interprat,.tion): rtr Chairman, I think that the 'indications that'havo becn gven by Mr Uawkins .are very procise and ta the point. I believe that in the case of the customs union bltvtcn Belgium, the Nethorlands and Luxeaboura it is 'uitc posoiblo ta rofer to ;-aragraoh 2 (b) Of this article, and c.lthou;h this customs union perhaps is not quite complete it really exists do facto, and there arc only some details vwhich arc naccssary in ordor ta achiavo this custoars union. Lis I sa3y, it really exist. The second question which I raised might pcrhaw"s be mentioned in para«era7ph 3 of lLrtialo 33. This means that some preferential'oarran=ciïàcnts mray ba considorad as stops leading towards the -,roation cf a customs union; inpybe it is sufficient only to mzontion that in the minutes of.tho ,prococdi.ss, but I really do not think that it wouIl ba sufficîent bocause, after sou, timo, all thseo discussions will bo forgotton. I thorororc wvou1& prof or to se a alausa inserted in article 33 paragrajih 3. .to the affect that it is possible to sot u=y a customs union by stajos..undor tha sulprvision1 of course, of tho OrWanization. TDE C uN:IMA: I think aur Rapportour' has another brainwavolf THE RAPPORTEURr I am inclinod to suggest that 2 (b) might ba somewhavt 60. I.4 EPC/T/C.II/PRO. /PV/11 amended to read, -"the formation of a. union for customs purposes," which would cover the transitional period necessary to the formationion ofgernime customs oms union, buo w3uld noerely cover the granging z ofpreferences. without anyreal plian for a customs union. RULECUYER Franceo): No obeoction. HE CHAIRMANN: Teorefoeowe will say. "teo formation of a union for customs purposes." MRSHACKLEM (KC):MUr Chirmana, theec is a certainmerit in leaving a question of this kind to be dealt with under the new paragraph 3, be- cause it strikes me that the Organization might very well want to look at the facts of a particular case befor expressing an opinion; and if ono simply soys that it might be cxtondcd. ovor an indefinite lm.riod of ti.no and be. a very slovw process. whereas if you aolow the Oronnization to considor. tho matter ùndur the paragro;h 3 it Nvill, bc olon to it to attach tine conditions ncd so on which r.iiht conocivobly be desirable. TUE. RPPORTEUR: Onc. point I think is that the cluâstion of vihat is rma nt . by a customs union or the formation of o custom union vould bc subject to chalono in the. Organization, mAnd an interprottaticn or rulinC cuuld bc obtaiinod under 1.rticlc 76; se that if thoro vwre 'som rule about vwhether the aclvoantogos bcing cxchangod botwoen tmu countries vero in pursuance of a gonuino custom union, you woulcl havc the opportunity to obtain ,a rulinM f ron the Organization. THE ,LMA:. I think paragraph 3 would covor your point. MU SHACMZ (UK): Ycs. Thhat is what I vras s.ying; it strikes ma it xriuld, but I flts rather doubtful about covering it by ovr gencroal forms of words, because that might land the Organizoaton in an .ttolt te àssoss the intention cf the parties, which is a.lwoys o. vory difficult thing te ostablish, and they might say: "VWe maenn to mrco this oa customs union smac dayr" but that d.ay iyiCht bo indefinitely dcferrod. I havTe a little feeling that thera is soeæ rn.rt in lca.ving the n.bttor te be delit with undor new poragrapih 3 because tho Organization could tlhon attach reasonable conditions about the time within vrhich thc preocas should bc corrcploted, and, so on. 61. I.5 E/PC/T/C.I/PRO.PV/11 THE CHAIRMAN: Both are agreeable to me. I ask for the rapporteur's guidanceco rero. . .THE RAOPPRTEUR;eWoll, ycur pointsi3 that eho addition of the sgesosted phrase tparagraphap 2 (bwouldil seem toermitmsomething less that a a customs uniow vithousufficient safeguards.. MR HACKLEO (UK): I thikl that itwould allow a r sort ofholfway houses situation to go onalmostt indefinitely,whereasa underparagraphp 3 you MgGht attach conditions hich would prevent that indefinite prolon- gation. Wewill say, in effectt, that the process mustbhocompletedo within areasoable time . MR LECUYE ( Franco) (Inter-pretation): Mr Chairman, I think that tho o6jectionvthich has juSt been made by the United Kingdom delegate is oe a rather formml .charwitor. Wlh,;toevcr bc thc vzording woa adopt, andc whether wo insert this phrase in paragraph 3 of Article 33 or in paranr;h 2 (b), it wv-ll always be noccssary for the Organization to supervise the for- mation of custozils unions, to receive information, and teoey that the Or ization nii sueh and such a custons union or does not admit another custozns union. J1 E/PC/T/C.II/PRO/PV/11V/11 ehereffrom a nt a, practical point oe viow tho point is covered. ;. far as the text is concerwedmve Èight insert it in 2(b) or in 3. In 3 it is really not the adequatecplaoe becawse ue provide for "exceptional circum- stancs"e ehorofore it woued ecesseessary to modify paragraph 3 and'to say "in the case of the creation of. a customs union or in exceptional oircumaeancos the members recoeniso", and so on. CHAIRMAN1MLNs I çtilI.feel that simply with regard to all the safeguards we have in the charter we should bear in mïnd the: new wording of article 30, and I think .it would be best to cover lt in tbe ry. proposed by the Rapporteur for the formation of aouniôn for oustons purposes. I think that would be more logical than to put it in the charunderndpr 3, and especially also paragraph 3 of the charter.eitsolf as it reads now is that they shall consult the Organisation and make available information, and so on. I think that would be an adQquate. safeguard. MR HLOKCE (TJ.K:)l do nct wish to press my'point. THE C L.N: Thon, gentlemen, can vie adopt 2(b) ag4in as chângpd by. thé Rapporteur? (L'dopted..): Then we- Have the new paragraph 3. I think.it had better be paragraph 4 here; or should we change the old paragraph 3. accordingly also te cover the new paragraph 3? UR Hi.ViKINS (US.): No, I think it is a separate subject. THE CH.IR&.LN: So that we keep the old 3 and we agree to adopt that? (Ldopted)f Then we get the new paragraph 4, being the addition mentioned. in this paper under 3. here, and which wil1 rend 4 now. Is the draft now accepted? UR SHMCKLE (U.K.j: Vie arc speocing noY, Sir, to tha paragraph numbered 4 in the print, are we not?. TUE. HUlJt&iN: Yes. MR SHt;CKLE (U.K): There.is.a point I mentioned on thi. in the main Comflittee relating to the last wordl, which read, 8so that ai1i tariffs and other restrictive regulations of corimerce as between territories of members Of the union are substantially eliminated and thc same tariffs and other regulatiOns of commerce are applied by each of the members of the union te the trade or. territories not included in the union". I suggested in Committee II that J2 E/PC/T/C.II/PRO/PV/11 that qualifying word "substantlly' which at present applies only to the as it were barrier between the two component parts of the customs union should also perhaps qualify the words which follow, " the same tariffs and other regulations": in other words, that just as it would be suffcient if there were a substantial elimination of the internal barrier, so it would also, be sufficient if there were substantial uniformity of the external tariff. The reason I raise it is that there arc,' I believe, quite. - number of cases of territories where you have slight differences in just parts' of the; tariff' that is to say, you may have revenue duties,; for example, . which are different while protective duties are the same. I think there are a riuber f cases. whero one has that sort of situation. It therefore-seema te me that if one introduced the qualification "substanàtiair-f' in the latter part of the sentence it mVy be that the kind of point raised by Lustralia about Papua. might be covered in that wey. I think there' is somrne logic, if one :compares the first senLtence of this paraLeraph vrith the"las't part,. kt would secmu te follow, after looking nt it, that if' the separated territory is onc which bas' a separate tariff for a substLaht:al part of Ïlbs .tradç, then .the customs,.pion need not be absolutely completely' uforn but it should havea substantial unif'onTaity . 'Iflfl CII;ZllML^N:. You refor novr te 2(b) again? MR SlU.S0KLE: No; to the last words of paragraph 4. ' *I~ CI LItSI .I think we are just discussing now the new paragraph 4.. bS SHiLCKLE.: I bog your pardon; I thought it wras the, old paragraph 4. MR SiLWKINS .(USL): .Culd not we dispose of the point now that'it has boen raised? THE C}L'I1lN: Yes. ' MR HLP'KINS: I think it is logical that that amnend&iéntshou1d bc made. MX SI-LCKLE: It would involve, I think, tho addition of the word "substantiallY" - befo'e.the. words "the same tariff"'*. T.'RHE QH.IR1LI: Gentlemen, I Would first lice toctak 'the vew paragraph 4.. Is that agreed? (L.4opted.) *Now <e have 5, which is the former 4., whcrc.we have an addition proposed by Mr, Shacklc. Is' that also agreed? (Ldepted.) Then there is one question still te ask hore: 'whether we have now 64. J2 E/PC/T/C.Il/PRO/PV/11 covored all those difficult points of India and Kashmir and Southorm Rhodesia and certain islands and so on. im SiiI;CKLE (U.K.) .s nearly as onc can without knowing all the particular circumstances, I should have thought. MR ADAKAR(India): It is rather difficult formal to visualise how this will work in the casa cf India and the various Indian states which do claim separate custoras tariffs - Kashair, for instance. These cases are, of course, becoming foter and fewer in number; T'he Government of India do enter into -reciprocal arrangements with these variouis areas and by a slow process the separate tariffs are be ng, eliminated. I cannot sec at this stage whether any specific amendment in this Article is required to over such cases. That is a point which, as far as we are concerned, I am afraid must bc left for later consideration. THE CHAIRMAN: Have the ;Lustralian delegation any observations te maka on this? M1 MORTON (i.ustralia): We propose tho addition of a neri paragraph (c). (Text handed in.) THE, CGILII«i: lie wïll have to have it typed but' perhaps I inay rcad it out now so that it can ie cUscussed. It is as follows:- "That a new proviso be addad to paragraph 2 of ..'rticle 33, the provise to read - (c) the maintenance of special tariff and other arrangements betwaan the principal customs territory of a imcibcr country and its subsidi±ay customs territories whore it is established to tha satisfaction of the Organisation that special arrange- ments result on the wvhole in lovmr barriers to international trade than vould be the casa if the subsidiary customs torritories were incorporatod into the principal custom s territory of the member county to form a customs union between tha member country bnd its. constituent territories." I think wu shall have to read that very carefully. 65. E/PC/T/C.II/PRO/PV/11 MR. MORTON (Australia) Are you familiar with the situation of Australian Papua from previous documents? If not, I iil1 explain it, Australia has contiguous island territories, Papua and New Guinea, which are purely agricultural'in their nature.' They have no secondary industries of any type. kiining is cGne of their main standbys, and there are a fcw .tropical productsefroïi there. The white population is very sia.ll soe fow thousands in number and they have a separate tarif f of their own, as, distinct fro4i the Auztralian tarif? o which the rates are very a.iuch lower th1n the. Auattalian tarif?. Their tariff? is a siighht revenue producing instrwtent vdhich btings in enough revenue to i.nintain the civil administration of the place. If we were tb incorporate New Guinea :into a customs union with AtUstralia, it Lteans that those few white inhabitants o ;New Guinea.. vrould be oo.pelled to pay a fairly high duty on quitea mwüber of products which they now enjoy the free entry of. They are very seimll revenue producing tariffs. The f6ct that tho entry is free into the islands rather than that it should be ïrLde subject to high duties will, as you will perceive, tend te encourage Lind pror.mote a flow of inMernational trade whereas if we .ade theLi subject to a hi&h tariff, as would be the case if we forined a union with them, they would be .less inclined to purchase overseas. They would purchase solely within the Corn.ionealth. But having, the benefit, as they have, of a lower tariff at present, they naturally tend to ilport more foreiLn products than they would if they were a iaeinber of the Union. !. HIUKINS (USA): I understand there is free trade between Austalia and these territories. MiR. àiORTON (Australia): We accept thoir produce free of tariff , but they have a separate =Lport tariff of their own which is a lower tatiff than the tariff applicable to imports into Australia. 66. K.2 E/PC/C.II/PRO/PV/11 im. MoKINNON (Canada): But which has a prefurential clouent? Do your products enterin& thoir country get a leiwer rate than products frà n another source? . bR. MORTON J(Australia) The Lajoriàty or goods âre free frorm Australian tariesf . TR CHMIMMN: It is a kind of custoIis union. OERT0N (Austia1ia): It is an arranze.Lent. If WC were te ueke a oustormsurnion, we would subject'the..a to our hi&h tariff, TH1 CHILRMtA1N: For certain products you have frec entrance into ihese territories, whereas other countries have to pay duties. IR. MORTON (Australiq): No. They have just a ,slight revenue- producing tariff. They are not bi ig.porters. There are only a few thousand white population there. COO.BS. (hustralia): There are certain classes ot cowià.odities which have jauties on themi footmear, for instance. They are protected in Australia. We imposed a siziiar duty in the. territories. That wijll affect not only the white population, but the native population in soene. areas. ËiR... HWKINS (USiL): I think it wgulld be the sort of arrangemient 'which wouldabe- covered by Article 8, the:effecteof which would be to perrzit the continuance of the arran&e3aent, subject to negotiation, if anybody wanted to negotiate about it, iphiQh I iïagine very likely they would not, do. .R. MORTON. (Australia): If it were to anybody's interest to ask. to hàvré it reviewed, they woula be welcome to do so, but vre want to maintain this position rather than to have to insist on a formi ef customs union., IR. Hà S (USh): I think froim that point of view it is taken care of, because nothing in this Charter as drawn wouil coraipel you to abolisVh whatever preferential features there are in that relationship. 67. E/PC/C .II/PRO/PV/11 THE CHkIRbL4N: The only poiht is whether we should add a new sub- paragraph (c), or are you adequately colored by the, new sub-paragraph (c) ôf kr.ticle 8? IM. MORTON (Australia): Vfe are doubtful as t6 whether we are covered anywhere eise in the Charter. THE RPPORTi UR: àre those islands part of i.usrealian' .territory? M. lMORTON t(ustralia): They are under Australian administration. In oxne Qase, part of it is by i.andate -- t`he late. Gernan New Guinea and F&pua is part of the Australiân territory, but it has its owrn tariff f. THE Rkl'PM M: I think it would be covered, subject to. any negotiations arybodcy-right want io ask for. T!1 CMIMI&N: In thàt case, I would prefer not to have a new sub- paragraph, but to leave it und.r article 8, (2a), MR. COMBS (Australia): We are not concerned with having arMy amen&dLnt, 80 long as it is covered. MR. HMWKMS (US.) There is nothing here 'that.would wipe that out. TUE CHiIRN: The orit point lef t relates to South Africa and Rhodesia. As the Delegate Qf South .frica is not here, perhaps Mr. Shackle could explain this? M1R. SHACKCE (TK): I an aPraid-not. 'I thirik there was a customs union, but now there is not an exact customs union.' I ought not to atteiapt to deal with thq tiatter, because I am not sufficiently inforhied on it. ; IH3 CHAMIfAN: I ask the Rapporteur to get into touch with the South African Delegation siq3.1y to see whether there is a special diffidul'y left. Then we need not trouble ourselves further with that now. .We are now in the pleasant position of having oovered everything,. except the memorandum on procedure of tariff negotiations. I would su&gest thWt we give the Rapporteur tine until Saturday morning to THAT GIVE THE . 68. K.4. give us that memorandum, that we discuss that on Saturday morning, and if neel be, even Satutiday afternoon. MR. ALAMILLA (Cuba): we still have to dean with matters or indus trialisation. THE CHAIRMAN: That is the point takers care of by Mr. Coomnbs. MR. ALAMILLA (Cuba): I thought, Mr. Chairman, you said we had covered all the points. THE CHAIRMAN: There are some more points, because we will also have the chance of seeing all the Articles in their new drafts, together with the Rapporteur's report, which we will in any case have to disuse next week. I think that would be a good opportunity to discuss also the other point about industrial development. Therefore, I ask Delegates to prepare ther.selveà.in any case for a meeting on Saturday -orning, but not to ;.ake any fixed, engagements for Saturday afternoon, so that ve can try to cover that point. I would also ask the Secretary to see whether he can already arrange for a meetingat the beginning of next week to deal with the Rapporteur's report and the question Mr. Alasilla raised. lm. hitLU ULLA (Cuba) There are the Indian, Chilean ana Cuban proposals. THE CHkIRhAN: The meeting is now adjourned, (The meeting rose at 5.25 p.m.).

GATT Library

qd779yc8569

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Fifteenth Meeting of the procedures Sub-Committee of Committee II held in Room 230, Church House, Westminster, on Wednesday, 20 November 1946 at 10.30 a.m

United Nations Economic and Social Council, November 20, 1946

United Nations. Economic and Social Council

20/11/1946

official documents

E/PC/T/C.II/PRO/PV/15 and E/PC/T/C.II/PRO/PV/14-15

https://exhibits.stanford.edu/gatt/catalog/qd779yc8569

qd779yc8569_90050508.xml

GATT_157

A1 E/PC/T/C.II/PRO/PV/15 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatin Report of the FIFTEENTH MEETING of the PROCEDURES SUB-COMMITTEE OF COMMITTEE II held in Roozi 230, Church House, Westminster, on Wednesday. 20 November 1946 at 10.30 a.m. Chairman:- Dr. A. B. SPEEKENBRINK (Netherlands). (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL 58 Victoria Street` Westminster, S.W.1) 1 A&B1 E/PC//T/C. Il/PRO. /PV/15 THE CHAIRMAN: Gentlemen, the meeting is called to order. I welcome here this morning the observers of other Delegations so far as they are present at the moment. This was specially urged on us, that it would be a wise procedure to have at this stage when we are discussing these difficult matters observers frorn other dele- gations present at our meeting. We are now going to discuss, as a Drafting, Committee, our memorandum on "Multilateral Trade-Agreement Negotiations" for presentation in Geneva. Tomorrow we will probably be discussing the draft report of the such-Committee, and thus our having observers here from other delegations will. facilitate our proceedings when these difficult subjects come up in Committec Il for further dis- cussions with all Members present. I think it is best to have these other Members here in thc role of Observers, and when we have concluded our study and examination of this paper (and they will in this way have a chance of following our discussions) they will then have opportunity of asking any questions they wish to put and we will try to answer them, if we can at this stage. We now have before us the now draft of the Memrandum on the procedures for the coming negotiations in Geneva. This memorandum has been somewhat altered about in certain places to a considerable extent; so the it will perhaps be best if we follow our usual course and start to discuss it page by page to see if there are any points to be taken care of. With regard to the Introduction, that is now very short, and I have myself a few remarks to make. We say in the first paragraph of the Introduction that "The Preparatory Committee has agreed to sponsor tariff and preference negotiations among its members." I think this is not entirely the case. As far as I know, the Heads of Delegation meeting agreed to recommend to each Government that the Preparatory Committee should sponsor these negotiations, but it is not a definite decision because we felt that we were not in a position to decide that on our own. Perhaps that point could be taken care of here. Then I have a small alteration to suggest in the second sentence, which reads at present: "Upon the completion of these negotiations the Preparatory Committee would 2. B2 E/PC/T/C. II/PRO./PV/15 then be in a position to approve and recommend the draft Charter for the consideration" and so on. Perhaps it is right that we should add here, "to be worked out simultaneously at Geneva" because it is not a Character that we have here at the moment; again, it is only a draft, and we will have to get it further worked out. Then it will have to be adopted at Geneva, I think. MR PARANAGUA (Brazil): "as already formulaed by the Preparatory Committee." THE CHAIRMAN: That is not yet formulated. What we have done now is all the preparatory work; and then, in Geneva, we will expect to come to definite conclusions in the matter. THE RAPPORTEUR: It might be taken care of simply by adding that "the Committee would be in a position to complete its formulation of the draft Charter and to approve it and rccommend it to the International Conference on trade and employment for consideration." MR PARANAGUA (Brazil): ThE second line, page 2, "substantial roduction of tariffs"--- THE CHAIRMAN: We will come to that. I would like, for the moment, to take it page by page. Are there any other remarks on the introductory part? MR McKINNON (Canada): Except that I think the Rapporeur should be greatly commanded for the extreme brevity into which he has compresed the Introduction. C.fols. 3. C-1 E/PC/T/C.II/PRO/PV/15 THE CHAIRMAN: Then the second paragraph: "The negotiations among the members of the Preparatory Committee"-- I would propose that we put here: "They must proceed in accordance with the relevant provisions of the Charter as already provisionally formulated by the Preparatory Committee". Mr. PARANAGUA (Brazil): Mr Chairman, where is the place to introduce the recommendation of the Committee to the Joint Committee on Industrial Development? THE CHAIRMAN: That will come. SENHOR OCTAVIO PARANAGUA (Brazil): In what place? THE CHAIrman: Later on -- somewhere I think where we are discussing the mutual advantages. SENHOR OCTAVIO PARANAGUA (Brazil): I do not know whether it would be bettor as a part of the introduction. The introduction is very short - covering the whole memorandum. THE CHAIRMAN: I do not think that would be a good place, because we have certain general rules, and I think we migh discuss it there. Then we come to page 2. Mr. J. FLETCHER (Australia): Can I suggest something on page 1, the second paragraph? I thought it should start with those words: "The results of the tariff negotiations among the members" - I do not press the point. THE CHAIRMAN: That is not enough: we have to put in preferences as well. Mr FLETCHER (Australia): We could leave out the word "tariff". THE CHAIRMAN: Yes -- "negotiations. Now we come to page 2: "General Objectives", There I have only one point. It says "The ultimate objective of the Charter is to bring about the substantial reduction of tariffs"-. I see that that is too strong. Mr FLETCHER (Australia): I have the same objection. If you are going to state the objectives you ought to state the whole of the objec- tives of the Charter; but I am wondering wheher it is worth while spending a lot of time on it, seeing that Article 18 is fundamental to this. E/PC/T/C.Il/PRO/PV/15 SENOR OCTAVIO PARANGUA (Brazil): Here we speak of reducitons. The consolidation of a tariff item is also a great concession. THE CHAIRMAN: That is covered later on, Mr McKINNON (Canada) : That is a paragraph stating that. THE CHAIRMAN: .Are there any remarks with regard to the general objectives? Mr. ADARKAR (India): May I suggest that it would be advantageous to drop this paragraph altogether. It serves no purpose, It is generally understood that the negotiations are to proceed in accordance with Article 18 and in pursuance of that Article. So if it starts with the general nature of the negotiations, that would serve the purpose quito well. THE CHAIRMAN: I do not follow that. Mr ADARKAR (India): You see "General Objectives" starts with the declaration that "The ultimate oiaijotJvo of thlc Chartor J.s to brain * about tho substanticl roduction of' tariffs and tho eli..inati-on of tariff profaornces". Tho Chartor cert:~.Jnly has uioro thln onc objoc- tivo, e ndf if onc objloctivo ls r.ionti-onod, another objoti-v6 wi11 als8 hava to bc mentionocl. You soc, vi arc lookinEs upon tho negotJatlons ta achi-ve rmore than oae r..sult. Sone countries desiro ta utllisc thl.s in order to secure a reduction of tnrif fas, Othors would llkc to soeurc a. reduction of tariffs or rati-onal1-srtJon of tarJffs, THE CHAIRiLN: If you piut that in xtetJ cl 18 Mr ADARKIR: (Indlia): ArtJcle 18 covers th% ros1ition tvlcon ns a i. holc,* qu.t fi.i rly, 80 far ns LJ.1l countries are concerned. Il'uchl the bost thing would bo ta arop out thi8s genoral objoctiva. If any Introduction at all 1s roquirod, Jt i-s moroly thio introductory roraarks on pane 1, No further introciuction is nacossary, SENHOR OCTAVIO PARANAGUA (Brazi-1): Thcn how w;oulC i-t bo? Pir IADARKAR (India): 'Weil, to drops out thie first parnarÇaph cltUagtlhor: allra.nte tho JO visors "Tho ultiraiata oaJoctivo. of tio Charter" SEN:HOR OCTAVIO PlRaiîNJGUil (Brazil).: Or "In order ta iriplem1nt the Article 18"- Mr ADARKAR (India): That is mentioned in to following paragraph. The draft Charter in Article 18 provides that. C-2 C-3 E/PC/T/C.II/PRO/PV/15 Mr SHACKLE (UK): I thought we had already provisoinally felt that one should amend the first line to read "One of the main objectives" instead of "The ultimate objective". Does that not meet the delegate fair India? THE CHAIRMAN: "Tho Ohaetor o1aboratod idn Articlo 18 thoroofJ is to bring about"-, BCoaUSO wo aro only conoornrod horo w.th Art1ico 18, Vlould that màot your point, lIr Aclarkar? Mtr. ADiMXAR (India): WVkl, I do not pross tho point, I thought it woulcl meao lor clarity, THE cOWIFl;:;N: Thon porhaps wo 711 ldo that. 'iir LETCHER (1ùusv!ra1ici): I ar not vory hçppy about that, but I will lot it paso, 'I am not vory happy about .,lust tcr.nE ono portion of±tho Ghvrtor'anci xprossing l-t in this way; but wc will lot it pass for tho timo. I thInk Jnitillly it statos tho objootivo.. Thoro aro resorvatlons, THE OkAIrUi'!N: Should wo say horo: "Onc oftho rânI.n otJoot.ivos of tho ` Ohartcr claboratod in Articlo 18 thoroof i8 to brIng about" and se on? SENHOR OOTAVIO PiUi2N.iGUiA (Brazil) : That ,i s vory good. THE OI.2`'.N: If theoro arc no further romarks, thon WCe orao, to tho general nature of tho negoJlations. iAro thorc any obsorv-tl-ons thero? (Af tor' a pause:-) No, Thon 5lt .s adoptod, ;r:r SU&COKLE (UIC): Thera i s 8t point at the end of the paragraph, SIr. I aum not suro that this is really nooossarily. the right placo, but ' . I havre aw f'ooli-n that aornowheorc one ought, to mention that thero .!eu1ci be negotations about Stato.trading m arCj ns on the sa1em linos as tho' ' negoticLtJons about tariff a. Th,; sort of words I had thought of veer; thuse: I had thIou4Cht of this corain_ in at the end of thlis section on tho 'Gooicral Naturo of NogotlatJons"., though'that may not ,boathe rliCht'placo:- ."Tho varJous observations ln this meniorancum rcgar&ing thé negotl.atJon of tariffs and tariff preforences should be read as applying also mutates mutancUs to thé negotiation of'Stato trading margin under Art1cle 27,11 I think that is a point which WC should bri.ng in somewhere or soilm,chow, but I.rm not suro whothor this is tho right place to do it. THE CHAIRMAN: What is the opinion of the Rapporteur? 6. C-4 E/PC/T/C.II/PRO/PV/15 THE RAPPORTEUR: I think Mr Shackle's suggestion is a good one. Mr SHACKLE (UK): That I had thought of coming in the end of this section, that is to say, at the end of the first sub-paragraph at the read of page 3. THE CHAIRMAN: Yes, Articlo 27 of the draft Charter. Mr SHACKLE (UK): Yes, of the draft Charter, if you like. THE CHAIRMAN: ls that agreed? (Agreed.) Then we come to general rules to be obsorvod in nootiations, In tho fîrst l1no I think I voulcl llko to put in agnln 1Pc araralph 1 of ArtJc1oc 18 of thc draft Chartor sot forth"-.- Any rormarks on thls page? -Ir NiOKINNON (Canada): V;hat aro you dolng - $nsortJnG tko viord "ldraftl"? THE CHAI¨;AN:. Yos, bocauso i-t is still a draft Chartor, lr ?IoKINNON. (Canada).: Is thorax a. typoù;ralDlical horror In thçt. third. lino of sub-paragraph,(a)? THE OHAIIRhAN: "Prior i-ntornatlonal c0rar.;l-tLionts shall not bo pevralttod to stand in tho way of nogotiatlons with rc:spuct to tariff profor- onces, i-t bolng understood"- 1zir NcKINNON (C0nadan: "tar-ffs and proforenoos". THE RAPPO-hTEUR: As approved by thu Subcomml-tto.. THE CH1AIMUN: Are thorax any other rormarks w1th rogard to page. 3? Mr FLETCHER (Australia): Thu last two l-nos of "a": failingc that, by termination of such obl:.,.tl-ons in accordance Jilth thelr' torris", I flnd difflculty i-n approclati .nlr: t the practt-cal limplîcatloàn of that is,% Doos i-t mean that i-f a country rosists negotiatlon or doclines to roduca a t ariff, th'. country wl-th the contractual àbli.ga- tlon is forced to terul-natc i-t?. I thi-nk i-t should, be elistl- onough to give the country that enjoys the contractual obligation some say. D1 E/PC/T/C.II/PRO/PV/15 MR. SHACKLE (UK): May I say a word, Mr. Chairman? My understand ing of the meaning was this. Let us suppose that a country which grants a prefernce is thinking of agreeing to some modification of that preference, it would than go to the country which under a prior commitment enjoyed the benefit of the the preference and rould see whether it was agreeable to/change. if it were agreeable to the change, then it could be/done by an agreement between the contracting parties. If you did not got that agreement; then the country which was granting the prefor- ence 'rould have to consider rhother in the circumstances its iritereoias lay in just accepting that that particular conimitment could not bc modified, or, on'tho other hand, in terminating theprior commitment undor rhiéh the prof:ronco tas contractually providod for. It t.ou1d hava a choice. If the beneficiary country did not agree, cithor the idea could be dropped, or, altcrnativoly, tho country -.hich gava the preference could ask itself trhother it ras 1rorth'its 7..hile in the ciroumrtanc's to terminate the prlor agreement'. It vrould not bc forced to do it; it rould bc confrontod'ith the choice of -.hAthcr it wouldd or vould'not in those paxticùlhr cîrcumstancos. MR. FLETCHER (Australia);: I am rondoring whether that makes it quite clear'. in the i-ay I rond it, it oould bc interpreted as forcing upon you a situation .-hero you havc got te terminate an agraemtnt. THE COAIRMAN: The'main point 'é raised ras this,' that trhen re como together in Geneva a country accepted there a certain obligation.. It is up to.'that country t'o find a vay out of certain diffioult- . ios it may meet rith'rgar'eo othor existing obligations, and if it thon found insurmountable difficulties it oouldJ come back and say "I cannot fl'f il ry obligations", and thon ro rjould hava to apply Para. 3 of Article 18. But it is up te thc country itsclf to find a 7ay out. MR SHACKLE (UK). Might I possibly add a word or two supplementing 8. E/PC/T/C.II/PRO/PV/15 that I said before? I would like to call attention to the words in line 4 of Paragraph a, "notion resulting from such negotiations It follows from that that it is not, so to speak, a question of compulsion to terminate an agreement. It is simply that if, as a result of the negotiations, it is agreed that there should be some modification, then that modification would be given effect to in one or other of the ways described below. That is my first point. It is not, so to speak, an ipso facto compulsion to terminate the prior commitments; it is only action resulting from the negotiations; that is to say, action resulting from agreement may load to this consequence in the particular circum- stances that I have described. That is my first point. My second point relates to the words "in accordance with their terms", in the last line of Paragraph a. That I take to moan that if the prior comnr.itnont is an agrcamont trhich has a tormination provision in it., thon that tcrnination provision .-ould n¢cd to bc dompliîd :'ith; that is to say, tho roquisito period of noti.o rould nocd to bc givon. MR. McKINiNON (annada): Mr, Cinmirman, thc -.oirk of this Sub-Oor-inittoc falls into tro divisions: ono of tariffs and proforoncos in a substantive *.-ay; thc othor to discuss procodur.o. It some to me re arc compotont only-to discuss, in conrhootion -ith this Mermorandun,. tho mothod by .hich *.o shall do .hat Articlo 18 to1s us to do. Nov', ara '-c starting out to amond Article 18, or %ro %7o adopting mothods of applying it? THE CHAIMLAN: tZc arc hcro only adoptinrg methods of applying it. Article 18 v'ill comc up for discussion in Committoc Il, togothor .7ith our Roport'as drafted by tho Rapportour. MlR. MoXINNON (Oanada): That is all I rnntod to know. Thoro is no suggestion that Ylo arc ancnding its wording nov? THE OHAIEMhN: No. Any turthor remarks undor OGcncral Rulos"? MR. 0OOSBS (Australia): YOs., Mr. Chairman. I am not quit suro'of the offset of the ruling you have given on the next rule. It 9. 3 E/PC/T/C.II/PRO/PV/15 would appear that it is a matter of principle, rather than procedure. It is the desire of the Australian delegation, at some stage of the procedings, to state our view on the rule embodied in be, but I am not sure whether you would wish us to do it at this stage. THE CHAIRMAN: I would think that would bring us into Article 18, and, as I said, we will in our Report give our arguments as to why we drafted the sub-paragraphs as they are here, and I think we could discuss it more intelligently thon than if we tried to do it now, because we should have to give our remarks on every part of our subsoquant report. I nould hava proforrod ta discuss this .mmor- andum -rith othor dolcgations at a lator staga, -but just no" wo "ant ta mako thom conversant *.ith'tho taxt of.it, ta facilitate further discussions at.a lator stac., LR. MoKINN;ON (Canada): Tha+ i7ould bc on the understanding, though, i that iï any of thoso rulas should bo amondad in our othor capacity, then tho consaquantial changes -ill bc mado in tha proaodura1 memorandum? THE CHiIPRMAN: Ccrtainly, MR. 8R^CKLE (UK): I amo wondering -rhothor it may bc desirablo in tho first lina of this Q'cnral Rulos paragraph ta say "Paragraph 1 of 4',.rticlc ln as provisionally included by the Praparatory Draft Committoo in tho Draft Charter", rather than "Iof thoa/hartar". I think tho insertion of that :ord "provisionally"' docs maka its status marc cicar than if c seay "/»rticlc 18 of thc Draft Chartar.1" THE CHAIRMANI: Is that not aovorad by thc second paragraph on pago 1, nhore vrc put in thc aord ",provisionaln"? MR. SHACKLE (UK): Poseibly.it ie, but I think it rmkc it marc cloar and marc explicit. MR. McKINNON (Canada): If we do that we shall have to apply it to 8 and 29 and 32. 10. E/PC/T/C.II/PRO/PV/15 Mr SHACKLE (UK): I do not press it. Mr. LECUYER (France) (Interpretation): Mr. Chairman, the other day I made a remark regarding the paragraph c. of this draft memorandum. It is stated under paragraph That it was agreed to give due allowance to tariff preferences and consolidation of tariff. In my opinion, it was also necessory to mention quantitative restrictions, which have been adopted in latter years as a means of protection. I thirc tht .r ii.v.ins cn .r Shackl. crogdwith mc on this point and I, thcrcforc, vondcr wlc.thcr this arfiiclc could not bc complctod in the sonsc I have indicated. -.*î Ci{hLùN: I think this. only cuotocsirticlc 18 .and wo ncver agrecd to change paragraph c. of Articlc 18. 4le. only thin% we did yV;es -' savy that vwh(in vi camc coua.~ ta tho ccl3lnation of how cvcrythinLg should. bc applied wc / pcrhaps put in somcthing of that sort, but not v&,h regard tà thc ch-nging of tho wording of Lrticlc 18. im. LECUYMi (Franco) (Intcrercation): I do not insist, but I bhink this point should bc covorcd somv.whcrc in thi, mcmor.ne .ndum, so iQrh'.)s v& ;ould consider it lattr. i-.iE CL~ISN: \fe vi.ill come to 1. l.tcr, yes. :hc main point, Gcntl.cmon, is that our happortcttr h-s put on hcrc on pagc 2: "ohis m.anns -h..t ilO country would bc cxpectod-to grant concessions uniic.ur-J.ly, without action by others, or to grr.nW coneczsi)ns -o cchurs which arc; not ao-,<=u.to1y coUntcrbaJlanccd by concossionsin return. Thc proposed ncoctia.ti .ns n;rc aiseo to bc conducted on a scloctivo, product-by-product basis which vrill afford a.n -.duquato opperwunity for taking into account tho circumnta.nocs surrounding or.ch product on which n concession riz-y bo eonsidcrcd. Under thin selective procoduro a partricular produçt m.y or.mry not bc ..dc thc subjct of n: tariff concession by a prrticular country". This is .. vury bro;a.d formula, trying to 'give L'. principle. Txhe point is whothor we should include hure tho sthe ci:. circums-e.nccs as rontioncd by the French Dc}egc.te nd malso ipecir'.1 circumstances as lw discussed thom in tho l^st mccting of this Sub-Conauitco vni.h rrcgpc'd to. sho proloso cf bho combined Cornmittec of Cosmittoos onc and tveo on industrial. dcvclo;*.mont. Porha.ps hero I would likc to have the advice of our Rapporteur. THE RAPPORTEUR: Mr Chairman, I should have thought from the earlier discussions it was agreed that the position with regard to quantitative restrictions would E/PC/T/C.II/PRO/PV/15 be this, that countries, before they were asked to put into effect the general rules for the elimination of quantitative restrictions under any action of the Charter, would see what they would be getting in the way of benefits from the tariff negotiations and in that way there would be a general balance. I did not thinlc that the Sub-committee had felt that quantitative restriction should be taken into account on a selective basis in these negotiations, but that countries maintaining quantitative restrictions, in granting concessions and balancing those concessions against what they got would naturally take into account what they were asked to eliminate in quantitative restrictions when the tariff concessions wcnt into force. I think a point of that kind might be included in the memorandum somewhere to indicate what the situation is but I do not think it should be included amongst these details relating to the selective character of the negotiations. THE CHAIRMAN: I w.ineir ,.ysclf if it would. bc better to come to thbt point when wc discuss thu Exchango Doprociation. ir iLcKINNON (Cr.ch): No. Àr Chr.irmn. It shoulG not bc in this memorandum ct all, unlobs ,^nd until. it is in h -rhicles in the Charter. I think the bbscrvrations by the hast four spcr.kcrs indicr.tcd thc difficulty vwc arc in, nc:mcly, that *h crc tr; ing teo ro f or.irrd, but with the cart bêforc the horsc. eC aru. attempting haro tointicatc how 4%; shr.ll. apply ccrtrin rul.us. lic arc now r.parcntly facing thc situation that h ihc. rulQs arc noe yet ,.doejtud. iherofore, if vrc proccod and discuss it on -shat bc.siï now, wc have thon got to discuss it on tho Recport of this Sub-Coeraittee in respect to tariffs and proferencos rnd then go back a.nd ^mund thc procodurr.h d'.curiunt. I suggç;st that in respect of r. growp of provisions such ns thosuv we should o.ccept this as being the wording which has bc-un a.:otecd, vrhich in frct it is, and ve rc.r not coretpezent c. iihc moment te rancrid it. If in a. lh.ter Sgssion and in mnothcr cer:ycity we amond it, wc 1ave to coxiac brck rnd cdo the work oydr agrin, but we arc net competent to oecnd it ..t t'.e monioint. eL< i Ci (L*ustrahio.C I focul th-.t t`c fact that it is in quotes shows that it is an ...rticlho which h^.s boun dociducl somuwhcre olsc. M2. écKINNON (Crnada): Quitc. :st PL:;E.SOS (1iustralic.): .:hcrrforQ, wc cannto altor it. Wc can discuss it quitc a lot, but Whe.cc iLb r.ncthlr plr.cç ;hrc it can bc raised. 12. . E/PC/T/C.II/PAC/PV/15 THE CHAIRMAN: I suggest we just take note of the point of Mr. Lecuyer and see what can be done later on. Mr. SINCKLE (UK): I do not what to suggest in any way reopening this matter, but I would like to round a passage from the proposals of December 6th last, from which I think this passage was taken. It reads like this: "In the Light of the principles set forth in Article 7 of the mutual agreements, members should enter into arrangements for the substantial reduction of tariffs and for the eliminatiton of tariff preferences, action for the elimination of tariff preference being taken in conjunction with adequate measures for the substantial ly reduction of barriers to world trade as part of the mutual/advantageous arrange- ments contemplated in this document". I think that givos the phrase "mutually advantageous" a rather wider extension than just the tariffs and tariff preferences. I see that would mean reopening Article 18 to take account of that point, but there is a slight difference which I think it is worth calling attention to. . . . E.1. E/PC/T/C.II/PRO/PV/15. THE CHAIRMAN: Mr Hawkins, would you like to comment on that? Mr. Hawkins(U.S.A): It seems to me that what he has said is true, that in considering the advantages from all the sections of the Charter, that does not mean that it does not apply here as regards the concessions given on tariffs yb one country to another. THE CHAIRMAN: I again suggest that you leave the point for the moment and see whether we have to return to it later. We still have the other point, which we discussed and adopted, as far as my recollection goes, in the last meeting of the Sub-Committee, that in this memorandum we should, if possible, refer to the Articles of the Charter in regard to industrial development, and in the Charter itself we took note of that under paragraph 3 of Article 18. But there is a diiticulty. I think ve can cover it if we have the whole oft articlee 18 already applicable withf regard to the conduct ofeur.initio1 ne.otiatLens. i5 ALIi.OL. (Cuba): I think we cor.te back to this Lrtidle 18. I vould strongly support the position taken by the Canadian Delerate ,that we just go on with the dious84sion cf procedure. THE CIRKMAN: TLhere is one point that Ilas not been covered. in the rnorandum. That Was agreed to at our last meeting. MIR rLÀMLà (Ciba): ïie proposed a nod±tication oe the article that -as proposed by Mr Shackle and we took t,. It is not referred to here. TIHE CHIRAN: 'But I veuld just 1ike to keep it in riind. 1M MD&RKàR (India): It seems to i.m that if we are £oinL to retain the initial paragraph on !'Genera1 Objectives", the kind of amendaLent which ive have Lmde in paragraph 3 oe A;rticle 18 could be covered by an amuendrent of this paraersph. The second, sentence of this parajaph reads: "The negotiations axaong the r.bers of the Preparatory Oomi2littee should therefore be directed. to this end, and every. effort should be uade to achieve as iiuoh progress toward this goal as may be pracotiable in the CirOUmatances". ie ti4%ht add there: "having reward. to the- provisions ef the Charter as a ivhole" or, better still: "having regard to the provisions on econer4c development". mE CHMIPMN: iWe could sary having rei;ard to the provisions of the Charter as a whole". I would much prefer that, because that is in paragraph 3 of Article 18. 14. . E.2 E/PC/T/C.II/PRO/PV/15 MR ADARKAR (India): "having regard to the provisions of the Charter as a whole" would over it more than "economic development" only. As a matter of fact it is implied in the phrase "as may be practicable in the circumstances", but I think it is better to make that clear. MR ALAMILLA (Cuba): Where is that? THE CHAIRMAN: That is in "General Objectives". MR FLETOHER (Australia): Might I suggest, so that we can get away from these ques- tions of policy principle, that for the whole of this heading, beginning "General Rules to be Observed in Negotiations", we substitute something like this: that the negotiations should be conducted in accordance, vith the provisions ot the Dratt Charter.. I think, if you start on'the basis uf introducire one ir ;icle, there is no l:lnit to the number of articless that do enter into the negotiations. I think iwe have to remember that in fiïr'. analysis nost of these neLotiations °o ;round the products of industries, and at least ail the Leneral provisions in the comimercia1 policy charter bear on the products of. industries in different vmYs, ihLe. one will have no bearing on one product, another articlee wil have another bearing, and I thinc ve will get into an avdful tanr).c here if we try to isolate different articles of the Charter and say -that vme wil condwut negotiations in accordance with that particular article. LR ia¢KINNO (Canada): I viould like to repeat LrT observation, that we cannot go putting into a _orandurn on procedure things that are not yet in the Charter. The point raised by the Indian Delogate will have to be considered in our Report and it vf. then Eet into the Charter in somiem foria, but we camot deal with it in a momorandum on procedure. MR .è2Ia1LI (Cuba): Is there any objection to adding the phrase that vas suggested by. the India, Delegate just nou? me C LERIN: It ia a tbi:n% we adopted in our Coïriuittee, and I cannot follow you, *fr: McKinnen, because we have in this ;:iemoranducL to elaborate what we have adopted in our Sub-Committee; therefore, wehave to see how we can cover it. I am quite prepared to do it later, but I think I am now in agreement with the Delegate of India. MR VIDELLA (Chila) I would like to see that wording included. 15. E.3 E/PC/T/C.II/PRO/PV/15. MR HAWKINS (U.S.A.) what I have got you could not call an objection, but it does not seen to me to be necessary. After all, the Charter is not going to govern the calculations that have been put in there. If we start putting in this procederal memorandum every calculation in the Charter, it is going, to be a terrifically long memorandum. My objection therefore is not one of substance but one of form. MR OU.MK£E (United KinEdoei) Possibly the point v>ould be ooverod it in this section "General Rules te bë Observed in Neeotiîxtions" iicre substituted by a. aïnre sentence: "The General Rules are set torth in i.rticle 18 of the Draft Oharter", and we can take out the word±nv cusG;osted by th¢ Deleeate f'or India. It js better to leave thern i3 theïr original content hican to place thol:L in a different context where the balance of emphasis ï s so; .at di.cnt, hi iJ)RK (India): Tho reason sw:-Iestedq i.8 sa oorprehensive that I fail to see what objection there iB te naki±n it. It îc not specific in character at all, It dses not :akce any speïfic rcrerance to ar, particular part of the Charter. It merely states: "havinL rcj>-d te t'he provisions oe the Charter as a whole". TH CHE.ML.N: May I Just refer te page 13 toi o: :.ie rornt, and perhaps then ve can dis'oues it, The tirst parapm.ph reads: "Th.e ;roeeiernt should conform in every wày to the pri.oip.les laid down in the Charter and should not contain arr provision which weuld prévent the operation of any provision of the Charter", !R .-MDWIk- (India): It js only the Qreenent, The waJy in which the Rappcrteu:' has put it recoLly-reco es the dittiauties that individual countries i:my feel in acbievin4 tho cyw2. vzhich has been- set forth, The need'for this arises in rl-inrr it clear that the countries tacinE part in the negotiations wïll, not be righU in briînZin3 forwarcl all i.nnrier of ditficvlties, The sentence reaies lke this: "every tEfort should be Lude te achieve as ;mah progress toward this goal as L-rv be praecticrable in the circumstancess, That My erable a Country taiLUri part in thfe .;eotîie.!Ions ta b-ing forward all runner of difficulties, saying 'wr progress towards ïsis ,oil i' hampered by: these dittioil.ties and these dtieù'otieïe" * The =erit cf the qualifying phrase ia that, urLess those di±tioul t.+es are recoEnised in soree part of the Charter, those difficulties will not be kept in mind. "As may be practicable in the circumstances" is rather wide. The qualifying phrase "having regard to the 16. E.4. E/PC/T/C.II/PRO/PV/15. provisions of the Charter as a whole" limits the range of the difficulties which are permissible in this connection. THE CHAIRMAN: I would be agreeable to put it in there. Thatwould be in conformity with paragraph 3 of Article 18, as we have adopted it. MR HAWKINS (U.S.A.) I do not object, except on formal rounds. MR McKINNON (Canada): My objections were purely on formal grounds and on a well taken point of order; but I am not gainsaying it. It is a work of supererogatior. I would gladly agree to including the words which he adds after the word "circumstances". THE CHAIRMAN: Then we will add "having regard to the provisions of the Draft Charter as a whole". Then, gentlemen, we see now turn to ''Miscellaneous Rules of Guidance". It is fairly short, and we could go to page 4.: "Base Date for Negotiations". I have a question to agi: hcre. In the second sentence of the third pa.raGaph .it says: "'ollovicvr, tâe discussions during the first session of the Preparatory Cor.rittoe indicate tbia ;ccaure of increases or decreases in. preferential :r.ins dirinLj thv pazt zv:ral years, the establishment of a oorion date presents certain dLfficulties amC i:eo not be practicable". I understood that you also had. this d'fE4cw1it.vX;;tE. rc-Lld to tariif systems. For instance the French Delegate pointed out that 1)39 -mould, for h.ir, have to be the base date, on account of what h.spencd clurir.L tX.,;a.Lr; and I th-nk othor countries LOy find. themsalees in the sane dLffouPlty. For instance, I`think lir iLiKinnon .hîiself remarked in the earlier discussions that iur-ini. thc mar there were certain changes in the tarif system. that shoul-l bo owvcred b;. the base dates, `and. we in our country have done the saue thin&. iR MoKfION (Caina:a): a do not insist that z-V point rovers itself in a procedural LYnora.nduL.; ..nd to reet -Âc poi.-it now raï±sd by the Frcnch DeleFate, I suE£est that we droo a-11 the ivorKJ. betvoen ':becxuJc" in the fourth lino, and 'v>;-: ' three J..ino a lur. It u,'ld thon read: "Howvever, the discussiokis udrinc the zirst cessio-. C the ?reparatory Corm;tittee indicate that the establishr.nt of a coi.ion datu presents certain difMiculties and may not be practicable". 17. F1 E.PC/T/C.II/ PRO/PV/15 THE CHAIRMAN: I am agreeable to that. MR McKINNON (Canada): Shall I read it again? "However, the discussions during the first session of the Preparatory Committee indicate that the establishment of a common date presents certain difficulties and may not be practicable." It means deleting the reference to preferences. THE CHAIRMAN: I think that covers what we really discussed. The sentence after that reads: "It is therefore suggested that immediately following the close of the first session of the Committee each member of the Committee concerned should inform the Secretariat of the United Nations as to the date which it proposes to use as the base date for negotiations with respect to preferences." I think we should insert here the words "tariffs and", so that it would read "with respect to tariffs and preferences". MR FLETCHER (Australia): I find myself in a good deal of difficulty over this base date idca and I am inclined to think that we arc havinZ nuch ado about nothing. Our difficulty is in giving a base date, say, at the opening of tho negotiations along the linos suggcstcd hero; but I thilik if you cxoni.nc thc position it is net a baso datc that you want. I can visualise a situation whoro, gencrally spcoacini, you regard, lot us say, thc end of 1939 as fïxinM your prcforoncos. That may bc tho last proforeitial rcgreenontycu have made. Novr, subsequent tô that you can .have on different datrs corq.I.ntc suspensions of duty, and if you arc looking for a base date covering the vholc of tle tariff and particularly a. uniforni date for all countries, I think you cr0 cc.rchinrg for sor.ithinrg that it is quitc impossible to find. THE CHIlXhi.N: It is not a uniforri date for c'acicountry; ovory country can state its ovwn date. UR EECHER (Australia); *That brings us dovn te a base datc for a particular country. I think we could nll, aftor a good dcal of investigation, find out what dat¢ wc weuld bc liroparcd te regard as a base date and everybody would * bc prepared to accept - cxccpt for certain exceptions. I spokc o? suspensions. You thon have cases `hcrc duties have bocn toreporarily incrcascd, and not. ill on tho -amo date. Thesd wartir.ie suspensions and wartiïno incrcascs havo gonc. on over the imx period and if you apply this rule of autor.atic roduction te things of that kind you have got quitc an unjust position; se that you finish up, I .thihklcnwhor you have got to search for a date that by and largo Eovors your tariff; but thoro must bc reservations in respect of givon products on which, 18 F2 E/PC/T/C.II/PROPV./51 say, emergency action has been taken in the matter of suspensions, and recognise those as being technically existing preferences as at the base date. Then it says that tho provisional tariff agreement is to contain a general obligation on the part of the signatory to accord most favoured nation treatment to each other signatory, and so on; and that seems to be the purpose for which you need this base date; and there is a secondary purpose but I think the base data takes care of itself during the course of the negotiations and it is immaterial whether we decide on it before the negotiations or after, as long as it is a fair and mutually acceptable date. THE RAPPORTEUR: I think at least in certain cases it would assist in preparing a roquest for concessions from others to know what data would be considered by them as acceptable as a basis for negotiations. MR FLETCHER (Australia): I can see your objection but --- THE RAPPORTEUR: I think your particular point as to fixing any one day as applying to all products right be taken care of by do1eting on tha top of pagan 5 the :roquiromant that tha date should, hold good for rll products, MR PLFCrn3R (A.ustralia): Mould not that bc donc aftcr thc negotiations or in tho course of thc negotiations,!? THE CWiAIRML'.N: Tho point for us if that you 3nust knovf whecr you basa your roqucat and.;your concession - that is tho raih point - and that is wfhy cvory country has ta givc a date as a starting point for its norxoti0.tions; and that is why wa prefer it ta bc for acl products. I can soc that for onc oa tvo products thera should bc a diffarant data but if wc start vrith that via conplicat oaur coming negotiations ta such an extroae oxtont tha.t thorax viill bc no and ta it. MR EICHER (.Australia): I am thinking in tarmns of a man who has a. good doal of pracâîcal work ta do, and I knovr that if vir have got to search for this basao data and make sure that it is right it noans a caroful anolysîs af thc whole of your tzriff and *your contràctuai.obligations. Novr, vwc arc gaing ta sjond a grcat dcal of time in doin2 that and this proposition docs throw vory hcavy derande upon all your technical, resources. If I wras convinced that this basa. da-tu is os3cntial prior to thc negotiatior.s I vould say sa and agroo taoit, but I ft0l quit confidant that thc point 4t scoks to covor can bc lcft ovor ta a later stage; and that vould acan that such tochnical rasourccs as wc have wo could utilise for the csscntial preparatory vork.l. THE CHAIRMAN: I am very much afraid to do that. May I ask the other members of this 10. F3 E/PC/T/C.II/PRO/PV/15 Sub-Committee for their opinions? MR HAWKINS (USA): I would like to be clear on Mr Flotcher's point. Is it your idea that you would take the data as the date you start negotiations? MR FLETCHER (Australia): No, I think that the search for the appropriate date in a different problem for every country. I think, speaking for our own country, it would not be a very big problem. We have not had many suspensions of duty. There have been suspensions of duty in other countries that affect our preferences and there have been temporary increases of duty in other countries that affect our preferences. It requires a very close analysis to see just how this rule would work out in practice if you have £ot to scluct a data. I hava get no quarrel vrith you in principle at c2l; it is thc âothod viharoby you arc trying to roach this particular objcctiva. MR HAVEKINS (USA): I am not vory cloar, I nrl afraid. I do not lcnow your situation, but vwiy could not Australia, £or cxcwuplu, say, "Wc talco as a basic date 1939"? You Nvould not regard your viartirm conditions as bciinr normaol. The countries conccrncd have got t`o know the basis of thodc requests. MR EIOCHER (Australia): I blicve that it is quito lilccly that after wc havoc mado an oxtensiveo analysis wc could tak¢, say, tho date of thc outbreak of war, and r.aybo with onc or two qualifications covcrinl3 or.icrgancy action viu viuld bc right; but I nm net in a position to knovr that until that vaolysis has bocn miade. That looks after ona sidc of it. Thcn you soc difforant countries vihich arc .cnjoyiriG imdcr contractual obligations certain proforcncoc on this and that conù.iodity. Wc vould be interostod in seeing that thosc countries clid not adopt a data that automatically knockod out tho proforonces miurcly to conform with a vrorking principle ïiko thi3. MR HAWXINS (USS): That imuld bc subject te discussion - if you namad a date that suited your circunstancas. MR PLEOCHER (Australia): Would you net agrac -viithr mc that you cannot namc a common date vehcre thorax arc suspensions and increases join on ovar a period of ycars? There i8 a data that vioild cover thc bulk of your tariff but it would not bc tha date that you would reard as acccultablc in respect of' this and that product pn which thc cluty had bocn tcrq)orarily suspcndedd and in othar cases on this and that product on which, say, tho duty had bccn incrcascd. THE CIRMA.N: In not tho point this? Whan you talk about a duty tlat has bcon tomnorarïly suspended tho duty is still thera; it is on].y that .you did not apply thc duty. Se thora is no problcrii horo, Tho only problem viould bo that you _ 8 - - l - n ; E/PC/T/C.II/PRO/PV/15 would have raised certain duties owing to wartime considerations, or something like that. I think that every country must find a solution for that problem. Perhaps they would have to give way on that , but if they cannot do that with rogard to this problem I cannot see have over we shall come to conclusions in Geneva; 80 I would propose that we simply leave this part of the paragraph as it is. MR SHACKLE (U.K.): I think it may require a little qualification in one respect, that is, that a base date which suited one tariff nc3otïcting country might. not suit tho othor. In that caso y:u î.àight have to fix urp soi.c co2nvroÎaiso. so I do not think it would bc quito as hard aC.IC fast as this praCrapDh -uiuld suggest. I an thinking of vhhat apporrs at tho bottomz of agGo 4 and the top of page 5: "Tho basc dato for nogotic.tions cstablishod by any country r£mtiîng proforoncas should hold gjod for its negotiations on nll products with all othor countries mihbers of tho Prcparatory Coi=dttco."1 Supposing the basa data that, shall ve say, tho United K.ngdoii talcos docs not suit Franco, wc ricy havc to soolcsollao compror.mise, s0 I do not think ic crn say ilurc th:'n that it should nomiioally hold. good for its nogotiations. UR MoIÇIINON (Canada): I do not think ycu cari qualify it that wny. I scc hr *lotchorts difficulty fror.i tho standpoint ho r.âcntioncd, and I think that is a difficulty which onc of Us has to faco and assume. I do not agrec vrith Mr Shacklo that thora is any nopossity flor agroc.ncnt with any othcr party. As long as contractual obligations cxist thcy arc r.maintainod; that is all. If thoy cannot bo negotiated away thon thcy havc to bc facod in sono other m1a.nnor; but it is entirely up to each country to pick its own data, and aIl it has to do is to select a date and notify the secretariat. 21 G1 E/PCT/C.II/PRO./PV/15 MR LECUYER (France) (Interpretation): Mr Chairman, I think that the question is really a very simple one. All we are Secretaroat to do is to see that the different countries inform the Secretariat of the base date that they have adopted in order to facilitatc future negogiations There might be some difficulty in the case of a particularly country estab- lishing a date,\but I do not think, generally seakling, this is very difficult to achieve. As I say, there may be a difficulty for a country - it is not the case for France but it may be the case for other coun- tries - to establish one single date for the products in that country, because it may have been that for single products suspensions or in- crcasos have been made at certain times and that the basa dat-c for that is net thc saiic as that which is a \ -licablc to all thc gencruL a-roducts of tho country, Tioreforc. I think. t-hat tho iu-,ticn i.iadc by tho Rampnortour to delote tho last lart of the paragraph ending on pago 5' viould bc correct and wioulO. go sona %ray torrards iicoting tho dosircs cx- prussod by the iustralianr Dclcation. Novi, if a country ineorr.is the Socrotariat and othor countries of its basa data which it has ado-I)tod and subsequently discovers an anoriwc y in its tariff structure, it can alvrays oaà-nd this in thc future, and I do not think that any othor country would objoct to anl aiicnl-.icnt of the base date in rcasonablc circum3st.mc¢s. LE MoKIMON (Canada): I was going te sày any othor country cannot objct. Tho onus of dotcziiining, a date, which r.may bc difficult t, is on the onc country. It is not a r.bttor of agruQeicnt. It vrould notify the othor countries of tho data on which it i basing its nmcotiations. THE [email protected]: Thc only point, thon, ia v:*iither v: vill lcavc thc .rords as thcy arc or d¢letc thcn and ri.1cc tho clause iacro general. I understand the Rapportour is agrecabl2 to altering the ;rords and that it vould croaote no special difficulty, if vie dolotod thcso veords "of ail products" . MR ItKINNON (Canada): I think it might lcad te vcry gcat tiffïicultics and lcad te recriminations, to srgv that for a certain list w;: 90 back to 1939, for another list to 1941 and for another list to 1946. I think it would lead us into a very strange situation. 22. E/PC/T/C.II/PRO./PV/15 THE CHAIRMAN: I would prefer myself, as I have indicated before that we take the risk, and that a country should take the best date it can and be prepared to give and take something here. It they are not prepared to do that, well, we cannot see any sense in this. MR FLETCHER (Australia): Mr Chairman, I am quite concerned about that. If . as the result of the acceptance of a single date we found that the application of a particular rule automatically climinated a preference, we would think that the climination of the preference on tho grounds that we had accepted this working rule or a ^sing-lc atc vias totally illogical. That is tho pointt I c.% tryiar: to _,ot ovor. I do not think a sir*lc d^tc i3 2acticciblo cnd at thu: oa.,c tiïi.' just. It may bc in normal timaos, liorc you harvc both, sVy, at thc bcinninî of thc ycar, o. -twarcls suspension, and thcn a fcw dilys af't-r/a si'jst.arntial incrcaso in duty,., and a strict r..mlication of tho rulc to thc uli.Uination of ;-.irgincl rates, but you crnnot visuzaisc thc C.ifkct. TH CH'IRN. : If vic orly add hcrc "but .ttcncralU.y hold good for its noao- tiations vith othar countrics", I third: it irivcs tho rulc, and in vary uipccial c cscs you couCi coï.1< back te to h.t. I thinic ifv m said "vrill gcnarally hold t;loo", that ruill :.Lct tlw Lioint. I ah not too cnthusi3stic about it, but on tho othc.r harA. vrwc n.'t À.inU . solution or.wc wil1 nrvor bc câble to noçotiato in Gcnova. LE ~L.A.dILLL (Cuba): I do not want to introduce .. new subject into th. ;'.is- cussior, Mr Chairman, but I thinlc it is a vcry iuLortant onc, and I mus.t do it nowv. You say that cvory country is !;oine, to stato its owm to or datcas whatcvor :a1y bc thc solution that you comc to on thoso s~-cific ~lroblcms which wo hlkavc bocn discussing u. to novi. Vlh:n a tariff prorornco ldcpcnds on a bilatori1 or ïivybe on a. trilatcrril contract, v;hat would happen if onc country undcr that contract vwàs to <ustal'ilish onc datc, and anothor county i7hich is a p;Lrty ta that saic convontion fixod another aind a diffor- ont datc? Thorororc I thought it mmas :.luch better tho way it r;as boforc, that through ±ijlornatic channels the country voull. hava to agrec to a cor.mon da.ta on which the pr¢P¢roncc should bc fixcd. I ru not a1kinay a point of it, but I o.n looking at tho possible .)robl.ii thorc, cad I *vou1d likc to havca tho ideas of other members of the Committee about this point. 23. E/PC/T/C.II/PRO./PV/15E THE RAPPORTEUR: This memorandum would not prevent any two countries from consulting as to the dates to be used. MR.ALAMILLA (Cuba): But would it permit two countries that have an agree ment in which a certain tariff is fixed, that is to say, where a tariff preference is fixed, because one might fix one date and another might fix a different date? Would that be permitted? THE RAPPORTEUR: Well, the memorandum would, yes, but I should think that the situ,-ion rouldC bc taicca croxc of by tho tra.dinr, operations, buut I do not MR .L^,ILL.?; (Cuba): Tho only lpoblcu.i is th.t thon vwlnt veo avy huec vsuld do, bacauso if vcrzy country is 'oinc to dcsianate its o;n.d^.tocand vie havc to qualify that by sVyina that vzh,..ncvcr thosc spociric tariff preforanccs arc dcronding on c. bilnter1 convention, vihioh is al'r.wys thc case - or ovon iorc - thon thc -artics to tho convcntion h'.v... first of oll to aerec to ca cortrin date which should %aily to o.11 thc miciibcrs of thc s;ccific arc;:iont. I do not proposc nny sccific u.vrds, only tho; idor. TBLÎ Ca2oijT: 'e arc nom, ujp against a little difficulty, and I agree wzith thc iustralian Dolcatto hcre, thn.t it wou.l create t' certain cc.1ount oâ. troublJ.c. Thcrofore ;crha^c I ui-ht rc;at ry sugacstion, which is to say "Senerally hold r-ood", and if thorc arc soi-ac vory srocii.1 Droblori.s which thcy miî,ht have to facc, thln wc ccar Sot ini'ovm:ration as to thoso have problems and e c.an discuss that bjforo, but vwc r.ust/at thc beginning of thc ncZotiations a kind o2 Tariff Steocring Coimittoc vhiàh woulù thon tako carc of thosc sDocial problems. MR J.LUILL (Cuba): You do not thinc, vzith tho P..%"I)ortcur; thc.t sos.icthiAn could bc put in therc sc'ying that aSroci-nnt should bc coTI td bctviocn tho parties? Thos tariff Iwcfcrcnccs acicena on mutually' a;reod conventions. TBE ILPRTREUR: I think if you cMU thcat you ;oul.; bu te11ir thc various countries how thoy should. fix thQir datcs. This simply s.ys th.t thcy have to try to establish a c'.ato and thcy havc to toli thc Socretariat. But thcy arc come-potcly froc. MR ilicKIiqlON (Canada): .nd morc than that,. it is not corMpctcat 'or us harc, sitting rs a Prococlural Sub-Coniu.ittoc oif tlhe Prcvpar.atory Comtmittec, to tcl1 countries how they should carry out their contractual obligations. That 24. G.4 E/PC/T/C.II/PRO./PV/15 is up to them. We should not have anything, to do with that. THE CHAIRMAN: Shall we try to cover it with the words "generally hold good"? MR McKINNON (Canada): That may provide an clasticity that may be very welcome in certain cases, THE CHAIRMAN: What do you think, Mr Hawkins? MR HAWKINS (USA): Well, Sir, I think that is probably all right, but I do not see any difficult in naming a date, a general date. THE CHAIRMAN: No; but the only point is that as it roads now it is very definite, and if you put in the word "generally" it would cover the greater part of these commodities concerned, but there may be certain othor pointe that ;c would. bo nblc to covcr by snrinZ "8Oncllly". MR L.KINNON (Canada;): It rnifht bc intcprottd. as covorintr cvorything but thc really i:portant itor.es, vJhich vould bc bad. R FPLETCOIR (;.ustralii): Docs not tha question arain look water itzalf in tho othor propositions that you hava got huro, that you contapiplato . situation whorc you finish ui with a schctlulc shoviing thc prcforcncc idorgins? I hava thc facling that this question of a data i3 quit unncocssaxry at this stage. Su;posinr: ,ustreis vras tryinmZ ta do a srnart trick and put sonothing over on any crivon coemodity that sorncbody vras nc;otiatin- wiith us, or vith the pcoplc to whomn vz had a contractual oblication in rospoact of a givon cormodity, ovcr sore is5ue that arises front thc susprnsion or a torp,;orary inercase in a cluty, it viotild soon cor.io to J.ight, and it is tharoforc for thc Confcrcnca ta d otcrr.iina. 14lL.IMS (Us:.): You viill gat a groat dcal of confusion harc if thorc is no data fixod. I (Io not supp)osC anyone -,auld do it, but it is quitc posai- blo that if countries had 'basod thoir activities on vrhat thcy rcaardod as a normal date, say 1939, whan thcy w*uld corna into negotiation, and. so:.-c- ona said: "téora wc havu cha-ngod ail that.- Wc hava qmadru1icd our tariffs sinco that ti;:w" - what ha;yions to your negotiations? R McKINMON (Canadja,: You hava got te hava a baoinninc asoimrhorc. It amy bo that in rospeot of certain iter.ms a finalcbcision rril1 net rcst on r date at all, but that will all come out in the negotiations. I do not 25. G.5 E/PC/T/C.II/PRO.PV/15 think, however, that you should vary the rule that there must be a starting point, and it is the responsibility of the country to name its year. THE CHAIRMAN: Then I just finish this discussion on this stage by asking whether we will put in the word "generally" or not. What do you say, Mr Hawkins? MR HAWKINS (USA): No. MR McKINNON (Canada): No. MR SHACKLE (UK): No, Sir. MR ADARKAR (India): I would jrcfor thc -'lain use o? tho -mcra "oncrially". MR LECUYER (Franco): No. MR 1tiMII<Li (Cuba): I clo not insist on puttinri it in. MR VIDEL=. (Chilo): I ar. of tho scr.umC opinion cas tho Inclian DlclGatc, 26. H-1 E/PC/T/C.II/PRO/PV/15 THE CHAIRMAN: So we have 4 against and 4 for inclusion, So we must leave it out for the time being. Page 5: any remarks? SENHOR OCTAVIO P'RANAGUA (Brazil): Yes: "Avoidance of New Tariff 1oeasuresf, I would Ilko to know If tho Rapportour would angroo to add that the Provision of this paraSrral)p:l shall oporate in accorcirnco with thu provisions of Article 29 of tho Charter. THE RP?PORTEUR: I thJnk this ios ,ust a gonoral statement and therefore you wélould not noed to provide for any except.1ons or escapes or a.nythIng of that sort, SENHOR OCTiAVIO PARiiGAi'UL )Brazil): In any case, wc t maikc this rosorvatJon In the casn of unforesceon devolopmepnts, hlon wc cain tako cniuergency tariff action, Becauso af ter tho/negotnti-ons we caan tako- omergency action, I think wo must be entitled before norotiatJon also td tako ernergoncy actJon. THE RAEPOiâTEUR: Then I should think there would not be such a measuro as wou:ld tond to prejudico t.ho success of tho neCoti-atlons, so that it would bo porrilttod, SENHOR OCTAVIO PARAGANUA (Brazil): Yes, emorgeney action; that i8s covered. THE CHAIRMAN: If it wero a case of roil oer.roney, I thI-nk that would consti-tute a good c.efonce at Gcneva; but I ,hope there wl.ll not bc much of that, Mr NoKINNON (Canada): No, because the other ne(,otiating country would not pay anything, to have the enorgency moasuro roducod or removed., Dtir ADARKoM (India): T.hts portion, in the way t i-s worded, is rather inconsJstont w5th the sonteneo under "Generv.l Nature of Nec-otiationsil 'on page 2, *whlch reads; ItUnder thils selectivo proceduro a partX'cular product may or may not bc mado the subji;ct Of a tariff concession by a particular country. It i oepon to a country to exclude certain tariff items from the scope of neGot-ations, and therefore in respect of such items l-t should bc open to that country to effect -nw tariff' measures prior to thle negotiations, 1711at I would sugjost SIr, i-s tat if such measures are in fact effected, thon any concessien i-von in respect of such measures should not be rogarded as of any value for 27 H-2 E/PC/T/C.II/PRO/PV/15 the purpose of negotiations, unless, of course, there is mutual agree- ment between the negotiaging countries. So far as India is concerned a tariff Board has been at work examining the problems of various Indian industries, and at the time when the Indian delegation left India, the Government of Indla had already reached decisions on seven roportà subrmi.tted by tho Tarl.iff Boarcl. It is not uniXkoly that action has already beon takon or Js about to bo takon on those reports. It seems t o mO, Slr, that If any actIon ls. takon in such clrcumstanrcs as .-n increase in duty or the î.r.position of a new duty, then such duties should not bocapable of boing brouEcht fo-rJard as a quid pro quo in these nogotiatlons; and I think that object izould be botter served by re-wiording this portion in sor.ic sense llke this that l-n any determination as to whether a member has 'u1lt'llled Its oblIga- tIons under Article 18, thc concessions given by it in respect of' any tariff f measures effected prior ta the negaotlatlons shall not be taken into account, or, will not be taken Into account. THE OHA1iîAiAN: What is the maIn idea of thlc pnracEraph? I thlnk, if I understood it, that wc must have sa.ia con:l.donce In tha comi-ng rtmonthe before our nzijotiations over a short period that we $hall not seek any devoloprnents which m:,ht bc lookoCd upon an riieubers trying to improve their bargailnIn position, I thJn. tlcLat J s the main point that ls covered by thJs pararaph. So that perhaps we could pit ln *here:- -"lwhich mirht bc looked upon as i-Yprovlng tholr bargainIng position and therefore tending to preludi-c the succoas"-, That is the Ildea th..t via have here. Mr ADARKAR (Indla): The object.of asugo8sti ng thi-..arnenuinnt le to express just that Intention, that iJn any deteri-,nation êts to whether a tDember has fulflllcd its obligations under paragraph 8, the con- cess81ons gI-von by it i-n respect ofa new t.ariif'f easuros wJ,11 not be taken into account, but, at tht sanIC t1iie, euch -a provIsion w1ll lnot preclude that member from Irntroduclng cosirable changes Jn 1-t8 tariff's i.f such measures -ara considc.e. clslrable; nor would lt pre- clude such new measures fromr. beonC brought wi.thin the scope aof negotiations. THE CHAIRMAN: Yes, but that is the main point, I think: if you have H-3 E/PC/T/C.II/PRO/PV/15 a now tariff there, then you improve your bargaining position, and that is just what we want to prevent. Mr ADARKAR (India) No, any directions given in repect of such measures should beinsisted upon be the countries effected by it, but they should not be expected to give any quid plro quo, and if a, country has only sUcOh rocuctions to show, lt should not bo rogarclod n.a havjnç;., fulf J 1od c ts obl-gatJons undor 18. That wias thho intention, THE CHAIMiiN: It is a very Iniportant point, Mir ItioKINNON <Canada): I thinc it would bc too bmd ta rm.akù tho artmonciJ.nt sugEEostod. Aq' I ruad thls little 'paragraph, l t is riloroly an e xprossiJ. of a pJous hope that thoro will bo Good will among tho potontJal r.îoribori anci that thcy aro not goinf, cut ta ralse thuJ.r.tarlffs in advance; but thore is ne question thoy nra porfoctly froc ta do 8, f thoy wl sh: they hava utterly untrc.iraiollod froclor to raise ratas' as ruch as thoy want; and I think wo rather br-nftho wholc qu0sti-on into a dubl.ous aspect if wo r.make a provision for it and say: Howover, i-t will lnot count idE they do it, I thi-nk it i9 bettor to lc>avo i-t whoro it is and th¢y linve tho fullest frooclorm.i// Mri FLETCHER (i.ustral.J a): I -havo boon thI-nking that perhaps wo ara doaii-ng with this question In tha wronn place harc, I can sac the objoactl.vo. I can say that I agiae wJth the obioctivo; but If you attonpt to put i-t i'n what purports to bc a set of rulOs, I think you are; pttittJnG it bn a cdfforont setting, ancd tho thouCht cidi occur ta rma that perhaps tho propor place ta deal wi-th thIs8 thint i-s by rosolutJon ni tho General Committee, or sor;ethi-nt,- of t.iat kind. That Js onc aspect. This-hore raifrs to now tariff monsuros, Well, whcn you coaM ta administer tarif-s, just vihat constitutes a naw tariff mioasuros is a very nico point, No doubt you havo in ri.Ind those major tariff chrangos that are intonided; but tho bi-dest trado barriers that you oncountor thoso days aro the trade barrlors intrzoducoci ovor night by tho altoration of a ruling mado on i-mport contrai. You attor.pt ta put a standstill on tariff measures; but trierc ie no standstill on all the othor moro drastic dovicos, The major point I hcvo is, that thls soan8 hardly a place to put in a rule that i- virtually a- taiff standstill, and I fool in rathor an i-nvi-dious position wa.lon you H-4 E/PC/T/C.II/PRO/PV/15 attempt to put this in and accept a rule without having opportunities to consult your government as to whether they are in a frame of mind to support a tariff standstill. Mr McKINNON (Canada) : Mr Chairman, I think there is a lot in what Mr. Flotcher says. We are attempting here to explain a rule or say how it will be applied, and there is no rule. There is the most complete freedom. That is the rule. Dîr VIDELA (ChIlo) : I aIl not ntilrcly in anrciicnt wi.th thc Australlan dalolati.an, because I thiïini a sort af trucc or rocor.imcnriatl on of truco should npply to all the Charter. Yau Iknovi thtnt thora aro quanttatol.rvo rostrictions, anc. if vic aro lJi-itocl only to tariffs In a sort of trucc or rccomrn.ondatJ-on oa a truco, wo rmay bo unbalancocl, wo iuay be h,.nc1ioappod v-i.th thls rocor. rmanCati-on; curni, on tho othor sdcLo tho Subcornlmttoc on Quantitr.tJ-ve R¢stri-ctions vujill not r.mali a rocornr.-ioriRati on bf tho samo sort, ::nd then wc shall noecl to ovorcanom this by tu'.lzng into account this rocoîrmen!4ation., io shall noocl ta counterbalanco w;ith thw .1-ichor rlutJ-cs any moasure tckon In r.agari to quantltatIve restrictionss. Thcroforo I Qntiroly ce2ree anCn back tho sugCxestJ-on of the Australian cliE gratJin that this paragraph shioula go tr the g&norel arooi.int on the Charter - I do not know whothor J-t shoulcd bû Cao.mimttce V, but vt shall coe later. Y.r HiWKINS (USA): lir Chai-m'an, I tako i t that i f onc trJ os to intro- dLuce a rulc 1Jko thJ.s i.n a raeeti.-nt, it i1-ll i-nvaolva a vory pro- iont:od nncl tryJnL Ciobato. Shoulci you do J-t horo, thc moraront you tvy to ostabll-sU Eenurrhlly at tirmos l:ko theso whcEra a short supply situation st:lll exJ-ts and recul .t:iono anù control -nust ntc.essarJly be in a state of flux, you just C*o not !;et it. On the otheer hand, you cannot hava it haiero, bcaurc this Jsapoin, of the miore or less zeriiano>nt tariff nen.suros .uI.ch nro to 'ba tlUa basic s for nogotiati ons *It J.s foasJ-blù hero; . but, as ;M.r I.icIKnnon saJ-cil, ven horcJ-t i-s not bindli-;, in that it provonts any Increase wlhatsouver; but i.t C.0ocs state a r-.ther Important basJ.c )rJliiaipDle whiich it J- esj-rable to obsorvo if tlia negoti nations arc to be succass;ul. Hiy only point, ir. Chai-rman, J-s to takne l.t out heroa You hacd botWer abandon Jt, You cannot get anywhere J-n general oetJ-n-, on itl I.1 E/PC/T/C.II/PRO/PV/15 MR McKINNON (Canada): I agree. I think we should leave it hore for what it is worth, or drop it altogether THE CHAIRMAN: I think we should have it in here for what it may be worth. I think: it is very important, having, regard to the coming negotiations . MR VIDELA (Chile): Under tariff measures and restrictions. THE CHAIRMAN: No, because the point there is that we have certain restrictions at this moment which certain countries simply had to impose temporarily on account of the very difficult situation and which have been covered by the provl.ions of the dra.ft charter. They do not do that for pleasure, but simriy because thc-y have to do it to cope with n situation of emergency, but theme are per- manent measures. If you raise a tariff, you rniso it ond it Ls a thing that will go on for a long. tiT.no It is a sut ject for negotiation. lilith regard to quantitativte restrictions and all thc other things, if ve adopt th, charter nt Goneva, they will be abolished generally. YR VIDELA (Chile): This is e. question of tariffs, I know, but there are quotas 1aso. to usel to send aprles here un to 1932, but 'in that yeor we could not send o single box. MIR HAWKIIS (Un1ited States ): If a- ottas rre to be discussed, I think it should be in connection with the quota ;e¢tion indn handlod by the Quota ComniIttee Ne are deciing here wIth tariffs and the Y negotiations next Spring t.nd gcttiing conditions favouratle to those negotiations. THE CHAIRM4AN: I should be xvu,, sorry if we ieltei thia parngroph, which is in generni ternis. R.PARANAGUA (Brasil): Wthy do we not put rttnriff uwansures and iu'port * rcrstri.ctions of a permoanont chartactor"?1 Thnt inonns, if it is some- thing in an emergency, Lt will not bo taken into consider.stion. PE VIDELA (Chïle: Yes, I quite tigrec with that. THE CHAIREAN: I.do not mind that. Ive PARANAGUE (Brazil): If thst is the. spirit -- the question of a 31. I.2. E/PC/T/C.II/PRO/PV/15. permanent measure. MR HAWKINS (United States): My objection would be this. I Think ni substance it is right but, if you put that in, you are tending to refine this down and make it more precise and more tight, whereas it is only intended to bo a general expression of principle. You cannot get now a tight tariff truce. The moment you do, you are going to have to consider a. list of exceptions if it is made too tight, and those exceptions would, I think, cover pages, Most of them would be all right, but we are trying to express a general principle here, relating to tariffs only. MR ALAMILLA (Cuba): The Cuban delegation feel perfeotly satisfied with the paragraph as it is, oonaldering it has a moral obliga- tion for whatever good it.is, and vzith these qualifications, that it does not prevent a country front doing it but that it La something *which wouid not be a good thing to go. That ls the waywe feel and we strongly.support that the paragroph be left exactly in the way Lt is. MR VIDELA (Chile): I would leave nq reservation, Mr Chairman, subject to this that, if the Quantitative Restrictions Sub- Committee is .making the same rocommendation on quotas, I will accept this paragraph in this section. 11 HAWKINS (United StOtus): .I think it Ls only fair to prediot'that the Quantitative Restrictions Sub-Committee wll1 not be attempting prior to the coming into force of agreements to effect a truce on quantitative restrictions.. It is diffloult thing to do in these times. It may bo all right, but I should doubt it very much. THÆ CHAIRMAN: I think we can leave this point now and leave it as it z is here. MR FLETCHER (Australie): I am satisfied with the explanation. THE OHAIRMAN: We note your reservation, Mir Videla. MR VIDELA (Chile): Thank you. MR ADARKAR (India-): Mr Chahrinan, in brder that our position should be. 32. I.3 E/PC/T/C.II/PRO/PV/15. made quito clear, I should say that in soliciting the particular amendment, we attached more importance to this provision than is attached by the Delegate from Canada or by certain other dele- gations, as appears from the discussion. If it is made clear somewhere in the report that this does not prevent a country from introducing desirable changes in its tariffs, I think there should be no objection at all to letting the partlcular provision stand as it is. Our only anxiety is thet Lt shtou1d cppeoi somewhere in the report or iL' some other document -- in this document, If possible that it does not prevent ae country from introducing new' tariff j ensures which are considered essential. eiy object in suggesting the .amendment ovas that such mensurcs should not be taken into . account .in determining whether a country has fulfilled its obligations underA.rticle 18. Thot brings in the spirit of -the .truoe. *TI:E CHAIRMAN: Msy I suggest this, that you discuss with the Rapporteur the question of putting in his *report 3 ome kind of statement such as you have made f'rorn your side,' I think Lt is better thon disoussing. it and trying to reech agreement, I think that.would preserve the position and would bc, the best thing to do here. MR ADARKAR (Indie): I will explain lt to the Rapporteur,' Mir Chairman. - THE CHAIRMAN: Then we come to Exohange Depreciation. MR PARANAGUA: (Brazil): lIr Chairman, I want to csk the Rapporteur about the .meaning of the second port of this. paragraph. I carn understand that exchange depreciation, but there is un addition here. Does this second' part mean that, if thers is a reduction of the incidence of the tariff owing to cIrcumists nces, we are obliged to mainte in this reduoed incidence of the tariff? THE CHAIRMAN: Which tart do you.mean? MR PARANAGUA (Brazil":. "At the same time the principle sot forth above should not be expanded to cover changes In the ad valorem equivalent of specific tariffs caused by changes in general world price levels of commodities because, when we concert our E/PC/T/C.II/PRO/PV/15. specific tariff into an add valorem tariff, we will convert according to the values at the time the tariff was enacted. When you put specific duty, you always have in mind a certain value of the goods. That means you are doing the conversion according to the time the tariff was enacted. Is that right? Is tgat when I understand here? THE CHAIRMAN: Yes, but we have tried to cover that. I do not know whether yours were special tariffs introduced during the war. MR PARANAGUA (Brnzïl): I think^I cin moak myself clear with an example. If' I have a motor cor of 2,000 pounds weight, the value of the car ie 1,000 dollnrst If I put 300 dollars tariff on this car thet means 30 per cent. I can oven write 30 per cent ad valoreir. or 300 dollars on 2,000 pounds. N0w, a country having nn ad vèlorem' tariff to which this crr goes 1t 1,500 dollars will tex thls car 45Q dollars, because. it is 30 pur cont, but the country with specific dutios will tnx it nt only 300 dollars, because it is by weight. Then, whon I am doing the conversion, I amr doing the conversion frorn the time I enacted ry tariff, because other ise it would be a reduction from 30 to 20 par cent in the incidence of thê tex. THE CHAIRMAN: Yes,, but We tried to cover that with item 8, which says that you have a normal price luvel and, if you convert from specific duties to ad volorem duties you Sot tho rate percentage. MR PARANAGUA (Brazil): What I want la to maintain the same Incidence .of duty. If my intention was 30 par cent translated into weight, in doing the conversion now I cn .nintain the sema incidence of duty andg I suppose that je covered by thet par.ograph, is it? THE CHAIRMAN: Yes. IiR PARANAGUA (Brazil): There 1s nothing contrary to 'that in the last phrase of this paragraph. I do not know if the Rapporteur will agree with that? THE CHAIRMAN: Did you follow that, Mvr Leddy? THE RAPPORTEUR: Yes I think thora is somo diSficulty caused by this sentence. 34. I.5 E/PC /T/C .II /PRO/Pv/15 MR PARCANAGUA (Brazil): I proposed that we put here that the conversion from specific to ad valorem duty cannot result in an increase of the incidence of the tax. MR HAWKINS (United States): Yes;. I think that is all right. MR PARANAGUA (Brazil): Thot is that the conversion of a specific tariff into an ad volorem tariff would not result in an increase. of the incidence of the duties? THE CHAIRI,.AN: If it Ls agrieeable, we wilîl change this sentence in thr - a y. -We then come to the next .item. MR FLETC.HER (Australia): lir Chairman, be±'oro you love the Exchange *Deprecintion and tho change from tho spacifia rote tarifl! this i3 presenting me with some nice complications, in the sense that, when AuMtralia depreciated her.ourran&y, sha did exactly the opposite to what you are proposing thnt theso countries may do. I think I ought to point out thot I think you are thinking oô this from the point of view of vihether you havo the protective incid- ence of a duty in mind'or the monotary unit incidence of the specific rate duty. To come back to an illustration which I will state as simply as I con, at one time the AustralJ.ian pound anb the English pound were on parity. Thon kX::: a situation arose in which lt tookl25 Lustr'alion pounds to buy on article that co0t £100 in England. Thot additionnl cost to the Lustralian importer served as a protection nnd throughout our tariffs we brought down the rates of duty to obliterate the extra protection that wes provided under the exchange dopreciation. I should go on to ssy that there are still a number of' those old duties in foroco; that is that they have not been altered since .ustralia dep'eociated her currency. I think we .wcnt to be realistic in having 'utLes that will stand alteration and, whon the poopla who will be affected see that you havo a depreciated currency .pnd when you recogniso it is a base which entitles a person to raise its tariff rather than reduce it, I do not know what the'situation will 35. E/Pc/T/c .II/PRO/PV/15. bo, This argument nbout a spoaiïfc rate ond rd v1lorom dutxy is a tremondously complex thing and, if wo ror. going to tln'ah it out to our satisfa otiona, I should think we should be here for months and months, I WassWOndGring whether wo could not leave this out entirely and fi.nd another woy. 36, J.1. E/PC/T/C .II/PRO/PV/15. THE CHAIRMAN: Australia and also France are faced with this difficulty. My idea would be, it was just the, rate of protection which would. not be increased. If we then found it advisable not to increase it in those days, and even to decrease it -- that is quite right.. I think the other part will apple, that you should not try to iziprove your barrainin ,position. If you do feel, in the old d ays, that you should have increased the protection, as far as I see in your e=xple you had a. special price; you paid more for that. ta PLETCHOR (Australia): iMiore in terms of your ovin currency. T!E CHAIIPMNN: Yes, and you thought thut adequate protection. Vihy are you changing it? It is sirmpy to £jive people a system te work on, MWhy are you chanrEinL it?. That is cohtrary to the spirit of the Charter. .iR PIETCUER (Australia): Could I ask this question: WYhore a country is in thcse difficulties over the speciPic rates, have you revenue considerations in mind or protective considerations?, TrAE CILIMN: In Ï;r opinion speciiïic duties are never used; they're always protective; that is the use of protective duties, IR PLETMOER (Australia): If you vant to ;uake a certainty of revenue, you put 1/- a gallon on beer; you do not J.uke lt ad valorem. I do not know whether I can see axrr wvay thrôuLh it. i3.t5 LECUXER (Franoe>(interpretation): kir Chairïuan, since France has been mentioned in the course of the discussion as an authority v;hich could be envisaged in this Report, I would like to state that the reason why France has adopted ad valorem tariff s instead of specific tariï'fs is that speciPic toriff a no longer exist in France. They have been suspended during: the vwar. We are now establJishin& a nomenclature which docs not correspond to the previous tariffs. We have the norLenclature, but ve do 'not yet have the rates of duties which should be inserted into it. We will estabUish this rate of duties and the rates will correspond to the protection vihich was Orantea in 1939 by riceans of tarifes. We have assBued certain obliî£ations towards the UnritecdStates, for instance, in this respect, ..tkt the sore protection vwl3 be &ranted in the near future as was Lxanted in 1939. Therefore, I do not mind whether this 37. J .2.. E/PC/T/C .II/PRO/PV/5.1 sentence remains in the text of the memorandum or does not, and I feel that many countries will have the same feeling, France is not particularly interested in this particular sentence, and I just say that I think that in the discussion we are having now; we are giving too great importance to the discussion of this problem. which, after all, is not such a great problem. Mr PANAGUA; (Brazil): I am sorry it is not in the Report clearly that no country can improve its barçaininïM position, The whcle Report is for that, and all other considerations must be. put aside. THE. OWHIPIUN I used these viords before, and I quito atree.. kR P)Î iNi GtLL (Brazil): It js quite clear -- under no protoxt. TP3 CILI.ihN: \«e could. put it in zoracwhere; perhaps it would bo better in the previous paraEraph. I thinrc that is tho idea, that you cannot ir4prove your bargaining position. .iZ VIDEEL (Chîle): lie are co-iinri back to the avoidance of new tariff maoasures. E CH N: Perhaps. kaR VIDULIuè (Chile): I thinlc it is a very Liportant point, THEI? CHRILN.N: ele vrill see. where we can put it in hore -- "ii.proved bargaining position". Comirin back to exchanLe depreciation aajin, I feol that I would like to have this phrase, which, after all, Lives the position, It does not say that a country cannot have arcy specific duties. Therc i8 no obligation to change that; but/it changes frorn specific duties into ad vàloren dutieoo applying this principle, I cannot cee that it should raise iIarq difficulties. M? PLETCHER (i.ustralia): I want to reduce tariffs. TH5 CEIRLN: You arc still free to do that, iJR PXiMGIY,, (Brazil): You have a ceilin;,4 M M, Cd.IRi. N; It is only a ceilîin". .iR FUTCHER (jusBtralia) I was vonderini5 whether it would be possible to cover the idea without.referring to the specific rate 5'ate of tariff . "The position of certain countries may be dcrastically chanLeed as the result of wax, and its af tezltath", and ëo on to say that these Lmr necessitate or justify an alteration in the tariff. . ~~~~~~~~~38. J.3. E/PC/T/C .II/PRO/PV/15, THE CHAIRMAN: We should have to see it in writing; but I think I get.,the idea of that though: it is not quite clear to me. The position is simply that we have had-certain difficulties on account of the war and that certain countries should be allowed to work .that out. i:1LETC}BR (Jiiustralîa): such a situation as you a;Jt HiLKINS (U.S.A.) : Your THB CHi.IRWBN: Yes. viR PLETCIEER (;tustralir)': ~ilR }l.%'ïINS (USi,; It You could aleve Lt out, 1OE: EKæTCHE (;iXusGtramia) removes my dif'fLculty. THE OHMiMN: Are menbers I an not ar&uinï aCainst the Justification for deleting are in. Could not we think Lt over during lunchtinie. previous plawrraph covers a &ood deal of the sense of Lt, These are people vho are over-protected at the mnomaent, is really part of the precediLnj paraL.raph, if it iL causing MIr Iletcher Ereat difficult. I would prefer to see the paraFraph out, rqyBelf. It ibn1y aL.eeable to having Lt le±t out entirely? 1i PLPïML;GX'. (Brazil): I do not a£ree. This i8 merely part of the ExchanL.e Depreciation. We are havLn_ trouble' about that, because when countries beLin to do the conversion there wo6ld be a discussion about that. iM WJOEINS (U.S.a&.): It La covered. by the principle in the preceding paraLraph. THE CHhIRMLJN: Let us Just think it over durinçk the lunch interval. I think perhaps we could solve. the difficulty by layinrj more stress on the principle of the pi'eceding pubra£raph. . MR P iRNi`1,GUW (Brazil): WVecould*put a reservation in the precedinL paragraph about not inoreasing it; to do the conversion without increasin, the incidence of duties, and then that L8 ccivered,. I prefer it as it i8. THE CHWiEM1N: We wÎl1 return to that later. The. Lmetinr of the Quantitative Restrictions Sub-Corrittce for tonight has been cancelled, and we have only this difficul1tA 'that thére Li à: meetitL of Coï;tiLttec II at 3 o'clock. le HàYû=INS (U.S."&.): That is onlJy the TechnLoal. Comittce, THE OHLIM-N: I have not to be-present, but I thLnk perhaps other De1.£,ates L.my have to be there. I a;i qûite propared to ,o on this afternoon, but I think Lt wifll create a probleni for Mr VidplUa. 39. J.4. E/PC/T/C.II/PRO/PV/15 . re- MR VIDELLA (Chile): I ought to be there. I will have my/reservation on both paragraphs. THE CHAIRMAN We understand that. MR VIDELLA (Chile): Because we have also specific tariffs and I shall need to see what is here. THE CHAIRMAN: Nobody is committing his government, but we want to reach such agreement as is possible. MR VIDELLA (Chile): I insist that this first paragraph on never tariff measures should be a general paragraph covering the whole of the Charter. THE CHAIRMAN: Have you any objection to going on with our work this afternoon? MR HAWKINS (U.S.A.) I think it viould be a ood idea. THE C hMiN: I think it will. be better ta L;o oc>n this afternoozi thin to leav Nve Llut cover it today if possible. . V!c vwilJ irîfoni you of what we have done iiR,VIDMli (Chile): Yes, of course. T' CHI.IRMLN: Thon I suvest that vie r:dct abain here at 3 olcloc'c this af ternoon. (i.'zeed). (The reetii. rose at 1.02 pr.) (For Afternoon SessiDn see EA/C/T/C.IIA0/PVA5 - gart II) it;' 40. K1 E/PC/T/C.II/PRO/PV/15 - Part II. The meeting resumed at 3 pm. THE CHAIRMAN: We still have before us page 5, and there was only one question left: whether we delete the whole clause on "Exchange Depreciation" or leave it as it is there but put in something in which we could put more stress on the previous paragraph, being the question that members should not improve their bargaining position, or combine both paragraphs - that is also another possibility - and shorten it; but we have to get out of this difficulty now if we want to prevent a reputition of the same discussion in the main Coer.ittoc. !R LECUMYE (Prance)(Interprctation): I thin]c it would simplify natters and al8s got rid of the r.Lisgivings vy'hich have bccn clxprossod horo this morning if vic add te thc paragraph undcr discussion, that is, "Lroiïdancc of nev tarifP moasurcs", an additionalsentenco stating, "Particularly in case ofe conversion of a Specific tariïf into an ad valormu tariff the substitution should not have as a conecquence an incrcasc of the incidence of the tariff." THE CHAIRMAN: If' wc sir.ly put in that attor the Pirst sentence I think your point vdUl bc coverod. and cvcrybody v;ill bc happy. MR FLETCHER :(Australia): I an %-ondcring. vhothcr me ought te say "an incrcasc of the protectivec incidence oe the tariff". This is vcry close te tho rough draft I prcparcd. MR LECUXER (Franoc)(Interprotation): This is our îaeaning. - "protective incidence". MR FLETCHER (Australia): I vll rcad out our draft, vihich I think is vory cloe0 - THE CHhIRMAN: I think if we arc aFrced, it is suffioicnt te have this one. MR FLETCHM (Austrgia): I think thero is . ditferençc betvmen a rate ïeposod for genu.ien revenue purposes ana a rate ineZoscd for protective purposes, that is, te protect ,a donostic industry. THE CHA.IRMhN: I think the point vie want te cover is the rate e.q protection, not revenue purpOses.. ER SHUCKLE: Could not wa simply put in the -oerd protectiveo" before the vwrd incidence¢" ?,, THE CHAIIMN: That wvas Mr Lecuyor's idca, I believe.. Perhaps vo r.ay have it again sa that woe shall krLow the cxact wordirig? Tho first chwirgo that was adoptç:d this riorning, I think, vras that wc should. put in the first sentence of the par4graph "Avoidanc of new toritt r.moasures" -solmothi.ng about not irproving tho bàrgo±ning position. 5.\c agrood onthiat. Thon atter that we should have the sentence suggested. just nov( by, Mr Loeuyer, which he wiJl perhaps road out again. ! ,l ~~~~ 41. K2 E/PC/T/C.II/PRO/PV/15 MR LECUYER (France)(Interpretation): "Particularly in cases of conversion of a specific tariff into an ad valorom tariff the substitution should not have as a consequence an increase in the protective incidence of the tariff." THE CHAIRMAN: ls that agrecable? (Agreed.) Thon I think we have settled that difficulty nicely. Then we strike out the whole paragraph on "Exchange depreciation", and thon we come to the very important pv.raGraph "Principal supplier rulo". Are thore any rorrlcs thora? I thinlc tho point is covcrod. R MNcKINNON (Canada): It struck ma as a very ado4uatc orarification of the paragraph vwioroad thd last tir.mo, and I thinlc the Rapporteur has donc an cxocllont job oô roconciling tho various thoughts that woro cxprossod, mm n'LETCHER (itustralia): I havo two points on thià,paragraph. ThO firit sentence Saya: "It is generally agrcod that thc negotiations should proccod on thc basis o0 the 'principal sUppp.iort rulc.'` I think lt veuld hclp the reading oË pooplc vWho are unfar.it liar vrith it if e eaddcd thc vierds "as dotinod in this paragraph. It îa net a very big change to ni.kc; and I mention it bccausc so riaany pcoplo scor. inclined te interpret the principal supplier rulo vitËi a grcat doasl of rigidity; and you have got te rcad thc rionaining portion oe thc rti¢lc carctflly to soc how this principal supplier rulo is to vork. THE CW1,IRMY.N: Wo can adopt that suggestion, I think. M PLETCI Q (Lustralia): Tho othor point I had in ri±nd xvas this. On page 6, about the iiddlo, wo hav¢ the vierds "the importing ricibcr should", and I va6 goïng to suggest thd addition thero oe the vierds "as a gonoral rulc be viJ2ling to"; se tht.t it would road, "tIhe izporting raor.ibcr should as a goncr.l rule bc willing to include that product". What I have in rind is that thora riay bc certain cascs in *-hich you would have a good case for resisting negotiations on a particular itrn, notwithstanding that, say, th¢ pooplo constituting the nucloar group supplied 60 per cent of thù product. You might have vory good reasons for vvanting te rotain it for nogotiation with another group, and I think wu should bc loft viith sorno little latitude te dcal vrith the ocdd cô.sos that would arisc, THE OHIiRMAN,: I do not thinIc thorax e:rc any objections" te' this change. I have no objootions te it, for my part. la it agrood? (hgrood.)' .Thon, gontlorion, wc have covorud this parograph on "Principal supplier r;lc". Wlc now corax to "PForn of tariff schodulos" amcI I hnvc onc point te rc.iase hero. Wo spoak ofe'"a total of sixtoon schcdulos of taritt concessions". I think 42 . . - - K3 E/PC/T/C.II/PVO/PV/15 if Russia takes part later it will not be a matter of tariff schedules with them and as it reads now you have only covered seventeen countries, and I think it would be wise to make provision for the eighteenth. THE RAPPORTEUR: I think I could put down that in addition there would be a schedule if Russia participated. THE CHAIRMAN: I think it would bu vîisc te hr.vo thc.t. Arc thorax any othcr rcnr=ks? KR PLEC=il- (Austrilia): I havo vzhat 1, thiilc is a rathor rundo.uontal question: to ràisc on the forrn of tariff schoclulos. I have loolcod ot this rmultilateral agrcmniont to which, lot us gay, sixtocn schodulcs arc te bc attached as our ncxt igonoroto goal, I rcgardod thc dreftinM of thc Charter as thc firat goal. Thc second goal is thc rnultilatorc-a agrccr.icnt. Novw, thorc is a trchondous amount of work - and rcal vweork - te bc donc bcforc wc roach that sacohd goal. I would bc very intorostcd te loarn vihcthor anyone reCl.rds thc idco. cf a sixteon- or soventean-sided-tariff agronent on the lines envisgoed as a tcchni&.l fQc.klbility. Speoakin. frankly, I have the Bravet of doubts as to wvt ther it is n technical. foasibility vrithin a r.atter of ' months. It may bc a technical fcasibility vwthin o. r.iattor of ycars, but just how si:;tcen countries can got thoei.solvos in a position to conclude this sixtcon-schodule agreenont within a rnoattoi of months I do not know. I just cannot sec ao way through our ovm particular difficulties thorc. Now, in thinking round the problem I have cerne up oaginst a second issue. I do not knov; vihothor it is o rcal onu; I may bc oxàgLcrating. it to soec extent; but it is onc through vkich I cannot soc daylight nyscl oa. tho present timru, and I thinc unless vie can sec daylight through it vie mev havc to recast our thought, particularly as te the woay in vihich we attack tho problem of rcoaching thc second goal. huinpo a sixtcon-sidcd agrocenent, you havoc the question of its simultancous irqnomuntation. 43 L-1 E/PC/T/C.II/PRO/PV/15 Mr McKINNON (Canada.): Not necessarily. Mr FLETCHER (Australia)): Well, as I say,. I may be wrong or I may be exaggerating this, but I have givon qaroful thouGLht te it ancl I clo net soc any answor te 1t in our ovin ca8s at tho prosent tJio, THE OHAIRIilN: Perhaps baforo you f îurthor I ïCLny try to oxplaJn, and mora.bors will correct mo i$ I ara vn'oner,. Thoso arc thio idconss vie had here: we Got 16 or 17 1ists cf cloc,.ancls to othor countries. It has to-bo sont i.n boforo tho 31st Docoobbr, nn:; you can acicl adtitJonal. lists lator on j1ust to got tho full Jinforriation available. Thcn tho various iuomocrs wvill reccivo copies of' all thoso l-ste; so that thoy will be &ble to stucly thon, cori.len thora, anc' s0 on, ancd sec howv far wo go vi;¶th regard to tho roqueste. Thin at tJho boC;i.n iing of our muoting nt Gcieva, wo get on tho tabla the s.ceio A:ind of lIsts and concessions te bo offeorod, Again thoso list8 have to bc conbinod ancd coritfronteci wlth t.hc lists of ctormands. Wo shall thon hava nt tho boginni.ng of our Goneva ricti-ng IirtmodJatoly a Tariff Stoorln. goerai-tt- ce, boing thoaHoads of Dol.eati.ons or betng otho'r people. Thoy will, v.iJth theomaterial avn.allablo, t.nl;c cortaJn decisions as te iewo tho negotiations should tako placo, vhoro, ne we hava seon tho prI.ncipal Supply rulo .should, 'form a very important pait In that way it is hopiod that wo will b¢ aolo te have certain neeotiatJons goln; on in such a v!ay that not all the countries hnva te talse part in thesc nogotiati-ons, and tloy xvl.ll bc dJ.roctocl te thom lator on vwhon tho comraocdtites in whJch thoy ara apoclally Intorasted corace into tho pi.cturo, In that way viw slall not have a11 thoso nogotlations sjmul- tancously, as you onvisagae, NOverthcioss, thero W ll bc sovaral nogotiations at tho sarmo timo, ancd thoreforo in a further part of tUis emoiuorandum we ask the countries te statc as soon as possible ,how many schemes thoy will bc able to sond. and further, to which count'los thoso schomes should apply. Is net that the position? Mri FLETCHER (Australla)-: Ycs, 'iily I an fl'a liai'r vith. thlu procodurc' that is proposed, I may say I cira act1voly workJnL on it in Australla. But I ai Jin trouble ovor a s situation vilere a nurmbor of countrie s have got substantially throueuh thcIr mochanieca.l probloras, you arcat tho stage of'i having a multilateral aCSrouil:nt, and you aro facod wvlth thc L-2 E/PC/T/C. II/PRO/PV/15 question Of its implementaiton, Now , we in Australia have consti- tutional limitations: the terms of our constitutional are such that we can only bring the tariff- aC,rooiiunt into forco thlrouù,h Parl.aont, That anrlss out of the vrJ-nciplo that in nittors bonr1nLG on tnxntJon Panrl.nr-nont shall r ti1ko t;' o laws, annd custom ùutios la.vu bcon rulocd by thc lagal pooplo te be a taxation raoasuro nri', tn.is cunsti-tutional provision affects thon., W .hnvc n furtlior consti tutional l-lu tati on wihIon says that a moasurc cloalnC vzita tnxantin slhahll dortl VI-ïth taxa- tion alona anncl nothiJng cai. That nocessl-tatos .in t1la casa of an aCrocr.iont really tito onactr:ionts: onc oncactu.lcnt to anprovo tho an;roor:ont - it i-s just n silpie Act cZ approval - .nd tlhe Inplomi:nta- tion of thi. atCrocii1nt ,ls 5upcnclcnt upon consoquential lOeC station. In thc past, lot us tn'.ce n s:1tuat3ion viloi'o you hl,.vc a Uilatoral agreement`.';e have sout[,t to arran[,e sarultancous publi-cation of thls agreeuont se that pûoolo in 'r.oth country es will know w!nt tho term of thec aLroement are, It oeî.;s to r.ue ti.lat you villi bo faced w,-th the snrao J esue on tho 16-si-0.od tgroci~.int, and I cannot concoivc of a situation i.n whlceh you cnn got sir.ultaneous publication of an agrco:ient, Thi-nk.InE 3.t dcown furthler, wh.lat is your situnttion lf one country alono ls not nblcl to conforri viwt tho Jldea or standls Gut and says: 'Jo must hl-.vesiiJultnaour, pLtbicat on of thîs? Mir KoKINNON (C->nacia) : DMir Chaia.'an, rmay I ask lr Flatceler a quosti-on? THE CHAIR '.il: Yos. I'Ir IMcKINi;ON (Canada) ':J'Yhat viould bc tholC f fforjnce iL Jt eLicl? If it stands out, Jt i5- out, If i-t 'rLeroly cannot 1mniplorlont bccnusc of constitutiornal matters for . cortaJn peri-od, surely it would d ba onti tlod te thlo UoncfJts thlat wo contorplinte oxtoncIJng i-n our discussion evon to non-mertibers, Icannot soc that l-t we:l îurfko *, bl.t of cljff- eronce If on our part vie raEVNIfJcd i-t in Fabruary, tho Not`,ierlands in June, the States In D.ay anCnd soL.lobody cisc in, Doceiu;ber. I do not th- rik it visll nrtke any d1i ffortnoo, Mr SHACKLE (UK) : You ui-lht have serie sort of provision ns to thc rati-fi-ca'tons boJng In by n ccrtai nti-ne or, alGernatJXvoly, by tho t3mo th.t a certain number of ratifIcatlons have boen rocclved tho thLng should, ceroe into force, There would bc n sort of data L-3 . . /CE/Pc/T/C.II/ by vAhiàh yowhich you would get your ratifici i;r iioKMr McON: , tltle wothat o nlJ1 re,all right, but I cannot see tha t n11 neucl to rn.tIfy ancl.brni,; .1nto forcc at onco, Soi-Io of ther cannot; but I cannot soc why thùy sh:).Ul0 not flt ,1uot as c:oocl troatî.lont in that rese)oct and bc gi-von thl sarno cletroo *;i tolorranco ancl lon.icncy ns vic arc contoï.lplat5n[ givn, , to non-ieor;'Oors, Pir FLETCHER (iiustralJ a) 'WC nrco clcarr vIl:Lat wvo il.àan vhen wu arcu clIscus- Jnln rnti-.f'catJon and .iplpcràcntnzJ on. You soc, I, an trou'olccl vilth tho f, tct thrt i-n the past thore vias a sort cf tlJ.o-honouroCi. pXrinciple that thoro Js a si-riultancous disc10suro OI' any ac,,rooer.int that contains tari-ff changes. T':E CHiAMiEN: V:ell, th.C idena is thirt vwe v7i-ll.hawv, if possiO-be, after our negotl-atJons, that anrooi.lcnt ott.clurcl to this riemooranaurm. Evory 1egation wJll thon sec tiat it is sont to i-ts Parli-muient or other boclJes cc)ncerne.c. Th`se wJ11 bo oeen, aïiC. thon we 'iave to rocoJve ratiffi-cations, anCL say that every country cannot .fulf-l -ts obliga- tions except uniclr the nogc;tJations and theo anoreient. Mïr JOHNSEN (NevJ Ze.n1) Now Zeancd * s ln exnct1y the sao eJOs -tJon as ALustraii-la: vie have no power except by !narllament, and we could not Jlrnplcmcnt an aUreenent, 1.1r M.cKINNON (Canacla): Are not you covered. uy tkia viords: "It shna1 bc brouL;ht Jnto foroc as seon as posi. lo? Dir JOHNSEN (New Zoalanc): Thât willl bc the posJ ti.on, Mr DMcKINiNON (Canada): That i-s the wordclnG. I ulo not thlnk vic can get everybody on the saime von ii-n; wlth regard te tno lriiploriiontatlon. THE CHWLIIUt,"N: In th'e Nothorlancls you fJnCd the snme thtint: our tariff rates have te be enforced by law, sa that wo havo te change thio law, MIr SHACKLE (UK}:. I think the posJtion i8 substantially the sam o in the Unlcd KJnGcdom, The only di-f ferencc i-s that we can ratif y a convon- tion by the Executive, but the tariff part viculCI have te be passed as logJslaturo, THE CKIBM.N: Yes.; andi then you would. hn.vu Parlnamont rmaka.n remarks and perhaps forcinE, you tc rnke certain clanE;os, Mr McKINNON (Canada).:. By Orclor-ln-Councll - thrt. is, action of tho Exccutivo - wc cen brinsj tarJff c1iani?cs nto offuoct, Tho full L-4 E/PC/T/C . Il/PRO/PV/15 agreement would be ratfied by Parliament probably later, Mr FLETCHER (Australia) : I was more concerned with the reasons that customarily acturtc pcop1o lrn callhnC ifor sinultanoous publioation of thio aC coracnt, 'HE CHIIilAN: You can hava the publication; it i-llfl not bc a secret document, :r FLETCHER (Australa) That Is j¶ugt thc uoint that struck no. HE CHAIRUiiiN: rt Ja soxtrçr.iey wilde. Wioe arc supposed to go dcown thero ancl ncï.otiJnte agrereemnts, ancl after that you conle home and say what -ou have "'one, and expect your people to enc1orse it or ropudiate It, I th1nk that J s tUe only p!Jnt. OtharwJ se thorc i.8 no point in goJng to negoti ntions, :r FLETCHE (iAustralia): No, I do not thtnk you h1ave ,aot m:iy point cloar: that you Co to this ne[;oti.Cat.on and carry it through as a boAy of off-cials, OrdJ&iiarly lf you lcJd that i-t woiCd not be known to the public until the day that you Introcluced it into your Parl-ament or proclaimed that Jt was comJng Jnto operatJon. Ir H1ieiINS (USA) It wl-il be known to everybody. .r FLETCHER (Austra.lla): That is the point I arn try-In. to cor.lo to: supposIng one country objoctoù to thls publication. HE CHiIi!;UL;N: It cannot. That lis why we havo this aMroerachnt, and mako it a iart therciof with that ri-Licorandui.i: 3o that avory'uotly wili know boforc ho arrIves in Goneva vihat I-s expected after we have concluded our noegotlations, That 1s t'rLe only reason why we male thlls neriiorandum now. Otherwilse we s.io-uld lbave al]. theso t.i inrs, but noçw everybocly can prepare himself, r McKINNON (C0:nada): I cannot sec that i t wou1d ;ie na iater ai point if one country ci-i- object, because, as ..Ir Hatvki-ns says, tho rmLoment aon publishes It, i-t being a sinWbo consultative schaclule, it i8- known to everybody else, .r FLETCHER (Austral-a): Yes.. ir HAWKINS (USA): That is truck of an ordi-nary bilateral agreement, r JOHNSEN (New Zealand): Ycs, but Mr Fletchor says thoro J s always an arranger.iont for simultanoous publication in a bilateral agroomont, anyhow, A7 L-5 E/PC/T/C.Il/PRO/PV/15 THE CHAIRMAN: Let me say this to the Australian delegate: you may say it takes you four or five weeks to get home; so do not let us publish until after five weeks, and do not let us publish it ias such In Ganova. Youùmlaymecp oct that whon wo lhave conducted our tariff nocotiatlons, we shan1 still havc to (,o on with tho Charter, for .¢crtaln points cf the Chartox v411 not hava boon cov¢radc, So that ccrtal.n .oribers of the dlolon.t:Ion ¢ould E;o homwc, put the thJnG In forri to t Covar Gov3rnrionts, so that whun thc tîr.lo coïtes for thc publi- cation of the vholole thl.nrS, thoy cou1d havoc ampl1 tl-rao to propare thor.isolvos. If wo Co .lo clo i-t Iil this way, I -Io hot seQ ho-;. vje can do it, N!r FLETCHE (iiùstrali-a): That l-s what was uorryin[ r.ic, e'Jli, lot r.mo put this si-tuati-on; suppjosJ-nC that at ,the conclusion of tiose rmultilatoral trade agroomont ngoti-ati-ons you have got your agroe- * ment written out, and six or soven of the partIcIpants raidl: wo do not vilsh this document contaJnln3 lot of alterations ln tariff rates pubhlIshod until vie iriiplement i-t oursolves. Could you dis- roUanrc the wI-shes of thoso pDedple? THE CHIJR1iAN: Veil, It woulj ,ust dlopiond on t1le state of affairs In whl.ch vie i'-nC ourselves after thoso no:otiattions, ,bcnuso every ccuntry has special CdLiff'.cult.os and we have to findl a corr.:on solution for those cll-fficulties; but I cannot soc that we can covor this point novw. Pir SHACKLE (UK): Thac thinn, will have to be Iull.shod, ln any vent, at the r.momant lt i8s Ce'ini to be put throu&.î. Ptariamont. THE CHiiIMI1'AN: You must l:r.ve a. certain tîlt;t; aItcr c.jnc..ud-nG thl.. provis- 1i0ns of tile iiÛciotl.at1ons '- let us Say one or tweo months - bl;foro you can publish the wlaeolQ thn,,. ln tho ieaecn time, the work on the Charter goods on, Aftor th.:t, every country i s freo to do xl:at it must do to impleïlent its obligc,;tJt.lns. Mr FLETCHE (Australia-): Yes, but I am StIill concerned with the point: SUppOSIlng you ran l-rto tIi s sl-tuat:on, what are your plans toicover 1t? THE CEiiI:KAN: I should prefor to'docicle that In Geneva, -m .---.--.--__- 48, L-6. E/Pc/T/C.II/PO/PV/15R MRSHACKLE (UK): Is not the normal procedure in a case of that kind that the thing is staged sometimes by initialling and thon after- wards signature, but r.moro of ton sI-gnaturo? Tho thing would thon bo published as an atl referendum anrgor.îent, an.. thie various parties could tako it to thelr Logislaturos for neoossary aplDroval, You would . hnvo an i.nterval for that to happon, You viould lay it clown that other by the tilme a cortain. number of ratIfioations comae into effect tho thJng comes i-nto forco, or you mn y lay clown a dato by which rati-fi- cations should besont In, and if you got the requisite number of ratIfIcations by that date, the thing i-s bincling, *lir FLETCHER (Australia": When you say "ratification" 'Ihàv no cloubt as to what you mean, Nornmally ratification is a rmeasuro which may tnkc place nany months afteo the aotualities have bocn gone through, Tho polnt I an. raisIng ia the putting i-nto effect of the tarlff rateg, That la the imrnplementation of the agreement, I.Ir SHACKLE (UK): To get overyboody to put the tariff changes into offoct at the sane moment: Js that your point? ?.Ir FLETCHER (Australla): Yes, M r McKINNON (Canada): You wJill never do that. Mr FLETCHER (Australla); I agreo; but supposing you had a situation where two or tree members ,gavc you the normal reasons why they do not wish a tarIff agreement mado public until they implement it, vihat provision have you made to covor that situation? Mr SHACKLE (UK): You mean it shall not. be made public until it is introduced into their Legislaturea, because it i8 to become public at that moment? .1r FLETCHER (Australia): That is the normal demand in a bilateral trade negotiation. Lr HAVIKINS (USA): Mr Chairman, what I do not see i- whore this differ from an ordinary bilateral agreement; what i- the difference? M'r FLETCHER. (Aistralia): I thl.nkthore is a vast difference between mnkJ.ng arrangements for two people to implement an agreement slmul- tanoously - and by implomont I rmoan put tho amended ratesof duty i-n force - and aski-rig or proposing that 16 countr1os'do' lt 5imultanoously, t | t ' ....~~~~ L-7 Mr HAWKINS (USA): Tho normal way in a bilaeral agreement is to negotiate an agreement. It usually contains a provision that it will take effort upon the exchange of ratifications and the exchange of proclamations for ra.tlfcation. I do not soe why you could not aclnpt 'that procoduro to a u)ultilateral agroee:ient; i.t vould, be the Lin ae tl-iing: it would bc wvhen instruments of ratli-cation are depositoc by a certain number of countries. -NMitrFLETOHER (Australina): I£zp not 'disussrnü the term of ratification, VIr HIAWKINS (USA): I am not either,. except that ls the usual *time at which an agreement becomoQç eofectlve. THE CHilIr:AN: You sometIimos asroe to postpone publicatIon for two or thrae or four weeks to glive the other party ti-mé to bring the thing 'before his government or before his Parli-ament in the most suitable wnay; you givo him some time; ,and so I thi-nlc that i-6 simply the polnt'of tho Goncva aSroomient, that there wlil be ofne or two 'months: it wJ1ll be effective in one or two months, I.r SHACKLE (UK): Of course, some ,Iournalists'may'have Got it and. publIshed i-t, THE CHjI'.N: Yos. I do n.ot think ve should bother too much about, that problem. If you have this i-n the memorandum, you hnve four or f1vo months to discuse tho position at home; ancL if you have any remarks to mako, you can put them in In the mean ti-me; but do not, lot us try to find a solutlor.for every contingency ,booause you wi-ll nover suceocli.-ndoJn; that. M r FLETCHER (Australia); Why I raised it at this point is because I thi-nk iîtis the second goal towards which we are timing. If wo have namod i-t as our second goal and des¢ri'ed It iln terms and we lator. dIscover it to bo impracti-cblo, we have got to have ah alternative - if wo are Soing to got anywhere c ^11; 'and I thlnk ,ust to post- ponc all consi-oration of the thing, dls-mi-es it and say there i-s no problem in it, would expose us to the danger that at some later stage wo may have to say:. Well, woy.'have gl'vbn more thought to this, and wo now discover that Qvon if we could rbach the goal that was. sot inWNoVembor, wo remain InClifforent, 50. , , . . . ' ' ' '~~~~~I L-8 E/PC/T/C.II/PRO/PV/15 Mr McKINNON (Canada): That would be all right. There is nothing sacro- sanct about those rules, Half of them may apply; half of them may not work out in practice, It Is only a series of difficultios, If the point you are raising, proves, after we have been at Geneva for three months, to be one of very substial.,. importance, we shall have to face up to it, I cannot see that we can now work out a series of altornatives that might suit the constitutlon or position and practice and proceduro of 16 countries. I would have to admit right away I do not know many of them. THE ChAIRmAN: No, a.nd I think when you take this document you can discuss the position at home; that is the idea. Mr, ALAmILLA (Cuba): ilr ChaJ rman,, I think we are embarking on an internationaladventure and we are all full of doubtd as to how the thing is Goi ng work; but we have the best intentions of making it work, I believe if is quite impossible at thls moment to say what is goIng to happen, We are going to encounter a lot of problems in our way, We will try then t o resolve them, and I think as we have been working here for about a month or 15 days on that particular thing, we all had the same feeling, that the delegate of Australia has. We are all full of doubts, but we are only trying to lay down some very very broad lines in order to see how we shall work this out, ,It .is absolutely Imposslble - to try to visualise ail the possibillties that will arise out of this. If we were attempt to do so, we should never get away from this table, We have to think of them one by one and try to solve them. With all the good will. that we have I think we may be able to do it, If at the end we find it is a. practical impossibilly then we shall Just have to abandon it,- THE CHAIRMAN,: I think we have covered it adequately,. Mr FLETCHER (Australia): Iwould like to deal with the point. It is one I am sorry to press, but I feel really uncomfortable. about it, lam thinking solely-in terms of mechanIcs, I am speakIng as one who wants to see this thing work, and from now onwards the degree of success that we shall have in April depends upon the thought that we give to the mechanical portion of this preparatory work, There is a vast 51., E/PC/T/C, Il/PRO/PV/15 amount of preparatory work to do, I should say every country is finding itself In the same position as we are, that 'the number of tochnieal personnel that you can utiliso for this is all too few, ; That necessitates that you should have the clearest possible under- s tanding, of where you are going,: Now, our preparation, if we are to go for a u.nultlateral agreement end1 nothing elsr, will be on very different lines than If the goa1 were a series of bilateral agreements, Ishould hate to find ourselves in a position that when wo , got to Geneva we said: Well, this multilateral business is just unmanagable; therefore we have got to resort to something else, but we have not planned to meet that. THE CHAIRMAN: Is this the position, that. you will in the first instance prepare for 16 bilateràl negotiations; you put. in .your requests andgive certain concessions? Now, we are only trying to give you certainrules which should facilitato your work, so that you should not apply ,for requests for all the commodities for every country, It is just to get a short cut to these problems, and what we are trying to do is just to help you in this mechanieal problems, If you did it in another way, you would have 16 bilateral negotiations covering the whole field of all thc commodities, Then you would certainly be in a mess, Then you would need at last 16 teams to negotiate at the same tIme, Mr FLETCHER (Australa.): Thora is really the same ground to be covered whichever way you taekle it, The only difference in the situation is that you finish up wIth one document instead of 16, THE CHAIRMAN: No, THE RAPPORTEURi: What do you do about your non-tariff provisions? Mr FLETCHER (Australia): well, I would be prepared to deal with them. THE RAPPORTEUR: In each bilateral agreement? Mr SHACKLE (UK): There is a very obvious point, that where you are doaling with proferences it iso really bound to be multilateral, it is really a multilateral negotiation, Mr FLETCHER (Australia): I fInd myself In the position here that I am more or lees called upon to agree with and support a rule and a pro- position which I feel in the bottom of my heart is unachievable. L-10 E/PC/T/C.II/PRO/PV/15 THE CHAIRMAN: Perhaps you could give us a better rule, but I do not see one. Mr ADARKAR (India): Mr Chairman, on this question whether the form of agreement should be multilateral or bilatoral l the Indian delegation have already expressed a view, The reason why the same issue was not raised here was the understandian that we in this momorandum are not concerned with discussion of the basic principles which are to concern the negotiations, but to work on the assumption that certain principles will be adopted, and we are to confind ourselves to questions of procedure. If basic issues are to be raised, I think the consideration of this memorandum will be a very protracted affair, So that it seems to me we might confine ourseives at this stage to the consi ceration of the precedure Which is to bo laid down, leaving the treatment of principles to be doalt with in the Repotr, except that the mention of the princilple is considered to be very important indcd. It seems to me that this question of multilateral or bilateral is so fundamental that the only way we can deal with it is by discussing it in the Report. THE CHAIRMAN: Well, I think we should torminate our discussion of this point new, bacause I cannot see that it brings us rmuch further, We work on a certain assumption and then we try to clarify it as much as possible in this memorandum. If that is not clear enough, thenw we shall have to improve on it; but if we put in all sorts of other assumptions, we shall never finish. I suggest we confine ourselves to this, basing ourselves on the first assur.,t.-ton, If that is agreed, we can then go to the status of preferential rates of duty, Are thera any remarkds there? Mr FLETCHER (Australia) This again is linked with the form of the agreement. THE CHAIRMAN: Yes. Mr FIETCHER: And it envisanges this multilateral agreement, Mr McKINNON (Canada): Mr Chairman, this wasadopted at the last meeting of the Committee and that decision clearly was the one said by the Rapporteur in the last paragraph, that it be left to the country concerned to determino which of the two methods indicated above. I do nots see that there is anything to discuss. 53. E/PC/T/C.II/PRO/PV/15 MR JOHNSEN (Now Zealand): I have a point I would like to clarify on the words "proferential rates still remaining", I take it that that is on negotiated itoms and is not intended to refer to items on which there have been no negotiations at all? After all, the schedules would only cover itoms on which there hava been negotiations. MR HAWKINS (USA): I thought it was to cover all romaining rates. It seems to nc they should all be included. MR JOHNSEN (Naw Zealand): If the agreement were made I do not know what portion or the various itoms night be subject to negotiation, but there might be quite a substantial number still remaining, and they can be retained in accordance with the provisions of the Charter. You do not need to re-publish a tariff. The agreements that are made should be in conjunction with cxisting tariffs disclosed. THE CHAIRMAN: There is this point. When when have that agreement then we have schedules of tariffs of overy country. They will covor overy item in the tariff schedule, I suppose? MR JOHNSEN (New Zealand): I did not visualiso that. THE CHAIRMAN: Why not? MR SHACKLE: If that procedure is followed, it will really mean in the casa of countries which have preferences that their whole tariff will have to be scheduled. I should have thought the rational plan was to includo in the schedules these rights which have been negotiated. As regards the remainder, it would have to be quito clear what they were; you would have to have some moans of placing it on record that it was your preferential duties cxisting on such and such a data which were your critical ones for the purpose of your agreement, but, having done that, I do not see the need of re-printing the whele of your tariff. THE CHAIRMAN:In that case you wold follow the ame l ecedure in ia proccd.ure in regard to tho profaronco? IR SH1=KLE (U.K.): eantt is what I m can. It is only, in tact, I think, as regards prcfaroncos that that point aneses ofethe non nagotiatod clearlyYou would oloarly hava to iako it publicle known were thosa me es v;ubted soola undoubtodd way, but I do not think eduling oleewholeadreferential tariff to your eeeeeeeeeeeeeeee agrcr.icr. Iv FLEMCHER (Australia): same e much the sriJi foolinereboue this. Thoro arc two, aldednatives provicle. As against tho firet, I have a nesentsat this prosonts ulties which are more or less insuperable in Australia's case ustrclialg casa 54 A2 E/PC/TC.II/PRO/PV/15 because of spacial preferential tariffs in which the itomisation is not parallel. We are familiar with the problem of trying to separate these things out and we certainly could not do the first of then. On the second, we might go very mush closer to that. My though was that as regards the conclusion that the Rapportour here shows each country should be left to handlc this question in the way which it finds most convenicnt to itself. MR McKINNON (Canada): I think that is what this means. MR FLETCHER (Australia): It says which of the two mothods". There are other mothods of achieving the same and. THE CHAIRMAN: We have to clarify it a bit because it leaves some doubt. THE RAPPORTEUR: I think the point raisod by Mr Shackce could be very casily taken care of simply by saying "proforential rates which are negotiated". MR MCKINNON (Canada): That is what I mean; you have undertaken an obligation not to increase the proference. THE, RAPPORTEUR: I think it might road, "The formulation by cash Member of a scheduled tariff concession which would apply to all other memberes raises a question as to the methad of relating to such schedules preferential rates of duty which have also been negotiated", and under "1" you could say, "The preferential ratos might be incorporated" or "Such proferential ratos might be incorporated", THE CHAIRMAN: I think we can leave it to the Rapporteur. MR McKINNON (Canada): We must remember that we shall not have this in front of us again. THE RAPPORTEUR; This is what I have befere no now: "which would apply to all othor members raises a question as to the method of relating to such, also schedules proferential rates of duty which have/been nogetiatod". MR McKINNON (Canada): I do not think that is quito the meaning you are attompting to put into words there, is it?eWhat you are concerned with ornod. with ferentialrofoes ntial ratsoreletm.f.n. tho i.Cn. rats eeat have bcon ngeotiatad. e eJOHeIMEN Zclan): Could not you put 4words inegotiated itomse te viordt inencee that sen? EUR: Uerehoro netpreferential cases in which that would be be e case?a? (At this point the Chamanlwas a calledota ehmeeting ig of mmitteeto Il.). M3 E/PC/T/C.II/PRO/PV/15 MR McKINNON (Canada); we have eighteen hundred items in our tariff and as a result of these multilateral negotiations twelve hundred of the ighteen hundred become invelved. Some of these - by far the great majority - will be negotiated at the request of some favoured notion. A certain number will be negetiated at the request of some preferential area. Surely it is not contomplated that we need schedule the 600 itoms that are not negotiated by anybody? In respect of those each of us will have already under- taken an obligation not to increaes the margin of preference. Surely that is cntirely up to the country itself as to how it shows that? I cannot see that any signatory to the agreement would be interested in knowing oither the preferential rate or the m.f.n. rate or the margin on these items which nobody thought worth while negotiating. THE RAPPORTEUR: I would agree with that completely. The only thing it would seem you would have to put into a schedule of some kind would be a rate which had been negotiated. That would apply both to m.f.n. rates where they are negotiated and to preferential rats. MR JOHNSEN (New Zealand): As long as we understand that, that is quite clear. THE RAPPORTEUR: I think the revised wording new covers only negotia cd preferential rates. MR MeKINNON (Canada): Your latest wording related to/negotiated preferential rate. That is the other side of it. I am not sure that the original wording was not quite all right if we understand We are talking only in respect of itoms in respect of which oither one or both rates have been negotiated. THE RAPPORTEUR: That was the intent but it was net clear befere, MR McKINNON (Canada); Mr Johnson said a moment age that if that was the maning ho thought we all understood it, I believe. MR JOHNSEN (Now Zealand): That is right. THE RAPPORTEUR: Would you prefer to have it clarified or left the way it is? MR ALAMILLA (Cuba): I think it should be clarified. MR McKINNON (Canada): We shall not haveethis document before us again as a Sub-Committee. Now that Mr Leddy has stated what ho takes the meaning te be and there seems te be agrement generally that that was intended, we could safely leave it to him to put that into words, I think. MR ALAMILLA (Cuba): I agree. 56 H4 E/Pc/T/C.II/PRO/PV/15 THE RAPPORTEUR: Yes, and the wording was: ". . raises a question as to the method of relating to such schedules preferential rates of duty which have been negotiated and preferential rats on products for which the most favoured nation rate of duty has been negotiated". MR McKINNON (Canada): Yes. THE RAPPORTEUR: Now, arw three any other comments on the "Status of Preferential Rates of Duty"? If not, the next item is "Procedures for conducting negotiations among the members of the Preparatory Committee", Are there any comments under "First stage"? MR ALAMILLA (Cuba): This is only a drafting, point and I am. not really authorised to put this up, but I think if you start by saying ":Each member should, transmit to coach other member" and then after that you have, to give thirty copies they will always be getting them; and I think we ougth to say that we are going to sond thom to the ones whe are interested and whe request them and to the Secrctariat. I think wec might leave it to the Rapporteur to clear that up. THE RAPPORTEUR: Yes; coach member in sending a list to another country should at the same time sond thirty copies of it to the Secretariat. MR ARAMILLA (Cuba): You do not want to have to give out seventeen copies and then after that thirty more. MR FLETCHER (Australia): We would like te see that paragraph end with the word "memberr" in the fifth line. I thienk of we are going to circulate those requests widely we are going to get into all sorts of difficulties of premature publicity; and, after all, the main purpose of this list is to assist the country making preparations for negotiations to get on, with their work, se that they will come to the conference prepared to get down to business, MR McKINNON (Canada): We discussed this provision also at great longth at our last meeting, and it was decided that as regards the lists of requests, whether you think of them as just the first one, which is a list commodities, or the second one, which is the one meant here, the list showing the requested rating, that publicity in these cases could not make vory much difference. There is no harm in asking for the sky oven if you hepe to get only part way there. The publicity will occur anyway. 57 H5 E/PC/T/C.II/RO/PV.15/ Presumably if only one copy is sent to the Secretariat it is going to be published in some way. I pointed out that we held to risk any disadvantage of premature publicity on the list of demands, and I did not think it mattered very much il they did got it. THE RAPPORTEUR: I should think overy country should be in a position to say "These are morely requests made to us; we have given no commitmetn whatsoover". MR ALAMILLA (Cuba): They are only roquests. THE RAPPORTEUR: Does that meet your point? MR JOHNSLN (New Zealand): It will give rise to a lot of high hopes, I an afraid, on the part of certain merchants. THE RAPPORTEUR: Does that meet your point, Mr Fletcher? MR FLETCHER (Australia): I dislike this ontircly, but, as Mr McKinnon says, it was discussed at the other meeting and I do not know that there is much use in my persevering now. I would have liked to see more emphasis placed on this question of lctting countries know what items the other country is likely to be intorested in. I do not attach as much importance to the rate request list as to the very carly reecipt the very carliest possible reecipt - of the list naming the commodities in which a country is likely to make a request for it. Bccause of staff limitations you do not want to be spending your time on items that no request will be made on, and if this notification were made carly on you could concentrate all your attention on it. The actual spelling out of the request is not so important. In the final analysis the country processing the list that contains the commodity has a first responsibility to make up its mind how far it can go. With this as it stands it is loft te countries to present their list by the 31 st December. Once a date is mentioned it becomes a date that people get in their mainds, and they say "As long as we get it through by that date it is all right". In Australia's case it leaves us with very little time to procoss the thing, and as we have to print large numbers it looks to me that it would be a natter of ship movement, and cven if we caught the boat which fits in with it I should think it would take four to six weeks. MR McKINNON (Canada): It says "preferably not later than". THE RAPPORTEUR: I think it would help some countries in trying to got it out as soon as possible if you had a date in mind, and I think the language is not tight. 58 58, N6 E/PC/T/C.II/PRO/PV/15 MR FLETCHER (Australia): No, but it gives a person an authorisation to wait until 31st December THE RAPPORTEUR: That is not waiting very long. MR JOHNSEN (New Zealand): I take it that these negotiations are going to take place in an atomosphere of socrecy? MR McKINNON (Canada): No. Cortainy as regards the request I share Mr Shackle's view that very soon there will be no secrecy. MR JOHNSEN (New Zealand): I can see grent difficulties arising in cormpleting negotiations if publicity is geing to be given fo those requests. I know what it will be like in Now Zealand if manufactures know that a request is made for a cortain concession. It is not so had if they know the item. right come up for consideration, but if they know a certain specific request has been made the reaction will be such that I am afraid the Government will be faccd with the greatest difficulty. THE RAPPORTEUR: Is not that unavoidable in negotiations of any sort? The other members of the Committee will have to know, it seems to me, how the negetiations and proceeding. MR JOHNSEN (New Zealand): On a multilateral basis I think that would be unavoidable; overybody would want to know what was going on; but in the past in bilateral negotiations we have alwayes found it possible to maintain secrecy in negotiations. MR McKINNON (Canada): It will be public knowledge very quickly. MR JOHNSEN (Now Zealand): I can see that, and I can see great difficulties arising, and I assure our Governments will have an opportunity of seying what attitude they will take up on a matter like this. I certainly would not care to commit my Government on it - and, of course, I have no authority to do it anyhow. MR McKINNON (Canada): I do not know if Mr Johnson was at the previous meeting, but none of us liked this then any more than we do now. We did not like the idea of the public circulation oven of the first list. We thought it was extraordinary to have to send thirty copies to the Srcretariat as well as to every other member, and there wore any things we did not liko about it; and above all we fearod the publicity; but it was discussed and discussed, and this is what emarged. It seems to me now, from the standpoint purcly of technicians, we were jealous of the seerecy that mustbe maintained, but we 59 H7 E/PC/T/C.II/PRO.PV/15 did discuss it and discuss it and eventually we arrived at this; and it seems to me, in the present attenuatod stage of the Committee, within no Chairman and the United States representative gene, we cannott very profitably discuss it. I think we dught oiher to adopt this or adjourn and meet again. MR ALAMILLA (Cuba): I think it should be made clear that we have divided it into two stages. Offers vill be made and they may or may not be published. That is the first thin. The second hing is that the articles which are going to be offered in exchange would only be known to those in the actual meeting in April. The thing is compleely divided. MR JOHNSEN (New Zealand): I would understand that, but I thought we should at least try to apply some measure of sececy during , the negotiations. I assure that would be the case thon, just as we have had, no public sessions here. MR ALAMILLA (Cuba): I thirk it would be unavoidabel, and we have to look at it from a practical point of view. we fel it was better that the countries should know i as soon as possible what would be requestod from them, and that we should have to take the risk ot anything bccoming public. We felt that was better thane going to Geneva in April and having to spend a long time finding out these things at that stage. We discussed it at considerable length and we decided that was the bast thing we could do. THE RALPPORTEUR: What do you want to do about this? Do you want to agree to the two paragraphs or do you want to postpone discussion of, them until the Chairman returms? MR McKINNON (Canada): I move the adoption of it as it stands. MR SHACKLE (U.K.): I had the most fiddling; little point on the second paragraph to bring up: I do not quite see why, when you are bonding your lists to cach of the other countries, you should not send a copy of the customs tariff at the same time. Why send then all to the United Nations and then to the different countries? It seems unneccssary. MR FLETCHER (Australie): It struck me that that was done aftor you made your roquest. You more or lois must have the tariff when you propare the request. MR ALAMILLA (Cuba): I would, like to answer that, because I was the ono who proposed it. The idea is that you are not going to sond your requcst directly to overyone - only to these who are going to request something and you send the thirty copies to the Secretariat and all your copies of your tariff, H8 E/PC/C.II/PRO/PV/5 MR SHACKLE (U.K.): There may be some, people of whom you are not making a request. MR ALAMILA (Cuba): To those you do not send any request, but they would receive in due course a notice that; a request had boon made to somebody else. Mr SHACKLE (U.K.):I follow; thank you. THE RAPPORTEUR: Is there any scconder to the metion moved by Mr' McKinnon? MR ALAMILLA. (Cuba): l second. MR FLETCHER (Australia): Are we adopting the Roport? THE RAPPORTEUR: It would be as a reeommendation to Committee Il. Anybody is free to raise any question on this Momorandum there. Now, are there any comments on the "Second stage"? MR JOHNEN (New Zealand): Yes, on the question of the practicability of sending these tariffs, I am afraid our tariff has not been printed since 1928 - that shows you how frequently we make afterations! c are right out of copies of the tariff at the moment and there is no possibility of getting other copies printed. MR MCKINNON (Canàda): I think this was thought to be a clause that might be honoured in the broach by a good many members. I believe another delegate suggested he was not sure that thcy had one in print at all. MR JOHNSEN (New Zealand): I think if we sont lists showing the duties on the items in which members were interested that would meet the case. Now, are there any comments on the second stage? MR FLECER (Australia): To what extent is this practical for coach country? I ougnt to be frank and. say that in our case it is quite an impossibility, particularly with the majority. THE RAPPOREUR: This would, have to be by the beginning of the second session. MR FLECHER (Ausralia): Yes, but when I consider it in conjunction with the plans of procedure this morning, I think that to put this in and to lead people to think that you will arrive at this Conference with this list is misleading overyone, and it may well bring about a chaotic condition at the Conference. MR McKINNON (Canada): 1 understand that the Technical Commitee's Report is through Committee Il, and that the feeling there is that possibly we might adJourn, as it would all be discussed again there. THE RAPPORTEUR: You mean without further action here on the Mumerandum? . . H9 E/PC/T/C.II/PRO/PV15/ MR McKINNON (Canada.): Yes. This is not an official announcement. THE RAPPORTEIR: We would simply submit this to Committee Il without recommenda- tion from the Sub-Committee on Proeedures? MR McKINNON (Canada): Yes. THE RAPPORTEUR: Then is it agreed that we adjourn now? (Agreed) Adjouned sine dic. 62

GATT Library

kj177fw9839

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the First Meeting of the State Trading Sub-Committee Committee II held at Church House, Westrianster, S.W.J. on Thursday, 7th November 1946 3 p.m

United Nations Economic and Social Council, November 7, 1946

United Nations. Economic and Social Council

07/11/1946

official documents

E/PC/T/C.II.ST/PV.1 and E/PC/T/C.II/PRO/PV/15+E/PC/T/C.II/ST/PV/1-3

https://exhibits.stanford.edu/gatt/catalog/kj177fw9839

kj177fw9839_90050509.xml

GATT_157

A. E/PC/T/C.II.ST/PV.1 UNITED NATIOSN ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIRST MEETING of the STATE TRADING SUB-COMMITTEE COMMITTEE II held at Church House, Westrianster, S.W.J. on Thursday, 7th November 1946 3 p.m. Chirman; Mr. R.J.SHACKLE, C.M.G. (United Kingdon) (Note: The Verbatim Roporters were not present at the beginning of the meeting.) (From the Shorthand Note of W.B. GURNEY, SONS & FUNNELL 58 Victoria Street, Wostminster, S.W.1) 1. 1 E/PC/T/C.II/ST/PV/1. THE RAPPORTEUR( Mr Armstrong):.........We think that we have set that out as clearly as we could . The purpose of Article 27 specifically was to cover the type of statc monopoly of an individual product which, under methods of tariff negotiation, would not be affected as a normal commercial enterprise not a state monopoly would be affected, We therefore felt that it was necessary to spelll out the k way in which a commercial enterprise which was a state monpoly in a particular preduct should be dealt with in terms of tariff negotiations, because the difference between the cost of the com- modity imported and the sale price is reprosented to sorme extent by taxes, to some extent by a prcfit to the state monopoly - something of that kind. The total quantity imported by that state monopoly is determined on the basis net solely of the prices of commedities offered but on the quantity which it is desired to distribute cf that commedity within the country, the quantity necessary to import to make up the difference between the domestic supply and the total distribution. We therefore felt it desirable to have a speciifc basis for negotiating on that particular type of enterprise which would be different from the regular commercial enterprise net a state monopoly which would be affected by thc operation of a tariff. Article 28 isagain an entirely different proposition. That has to deal with countries which have state monopolies of foreign trade, and since, as far as I know, there is only cne state in the world which does have a complete state monopoly of foreign trade,namelllly, the USSR, the purpose of that is to provide something similar that that country shall do to correspond to reductions in tariffs made by other countries; and that is the purpose of the inclusion of that. As was stated in our general discussion, we do not necessarily feel that anything particularly firm should be done along the lines of Article 28 until there has been an adequate opportunity for discussion of the matter with the country primarily concerned. I do not knew whether that is a full enough explanation. Perhaps it can be gone into a bit more. A2 E/PC/T/C. II/ST/P/1V THE CHAIRMAN: Thank you very much. If I understood the United States delegate's explanation correctly, it is that in the first Pace Article 6 is concerned with what you might call non- discrinination - the counterpaart of most favoured nation treatment in the realm of private trade. Article 27, if I understand rightly, is concerned with the limitation of pretection, and would therefore correspond to the provision for negotiation in regard to tariffs and preferencess which we have in Article 18 in relation to private trade; while finally Article 28 is meant to deal with the case of the country which has a complete state monopoly of foreign trade. The Czech delegate's proposition, if I understand it rightly, would consist in establishing a principle of equality of treatment and providing that there be a recourse to the I. T. O. as to whether that treatment should be appliced and to leave the matter there. I wonder whether we want to make provision for the other matters covered by Articles 27 and 28, namely, the limitation of protoction in the first place and the State monopoly in the second place.. First of all, on the limitation of protection, the counterpart of negotiation on ordinary customs duties, is it folt that we should do well to retain someting which is in principle similar to Article 27 or not ? I have a feeling myself that one does need something, becaue equality of treament not in itself amount to very much. You may have a very exclusive regime which applies with perfect equality to all countries and, in fact, no trade under i. is possible. That is a theoreticaIly possible case and I should have thought to deal with that one did need to have some provision dealing with protection as well as provisions dealing with diserimination. Has anyone anything to suggest or that point ? MR HAWKINS (U.S A.): Only to say that it does seen appropriate to the countries under systems of private enterprise that if they are reducing duties in order to admit more import, there should be soe corres ponding provision for countriess having State monopolies of buying and selling. In other wirdsm we think clearly in principle Article 3. A3 E/PC/T/C. Il/ST/Pv/1 27 is the counterpart of the provisions of Article 18. Article 18 requires countries to reduce duties. Article 27 is designed to impose upon State monopolies obligations corresponding to thu provisions in Article 18. THE CHAIRMAN: Thank you. I took you. I took it that theCzecheslovak delegates point was that a State monopoly may be designed as a meanss for raising internal revenue prinarlly, and that that constitute a difficulty in attempting to nogotiato the price at which it will offer the product for sale. An I right in thinking that was the ,position ? MR AUGENTHALER (Czuchoslevakia.) : There may be be different rcasons for that. The pure form of monopoly has existed in Czechoulovakia for a very long time, and it has been of a financial character. Some monopolies may have another character., I may have State control of exports, for instance. I think, in some coutries, they may intentionally raise the price so as to make it possible to restrict the consumption of certain things, though that is not the case in Czechoslovakia. I am thinking of alcohol, the consurtion of which May be restricted for social or health reasons. Therefore, I do not see how we can lump together all these various forms of State monopoly. We think it would be a more flexible arrangement te leave in the Charter just the general principle, and leave the details for negotiation between the counties concerned. Then, later on, we shall see what can be done under the International Trade Organi- sation. we have seen from the discussion that therc are various ways of doing these things. MR HAWKINS (US): I can fully understand the points and the reasons for the views just expresseed by the Delegate of Czechoslovakia. I should like to clarify a little what is the intention here, because I think it is possible to reconcile what we have here in the Charter with the views he has just expressed. I would start first with Article 18. The obligation there is only an obligation to negetiate. Negotiation will take place only f somebody requests nogotiation with respect to a E/PC/T/C. II/ST/PV/1 particular product in relation to state trading. There are quite a number of cases I know of myself where monopolies have been operated strictly and purly for revenue purposes. I think in such cases an that no request to negetiate on that margin is likely to be forth- coping; or, if' tho request werest made and the country, concerned oroxscurc that the monopoy was purely for revenue purposes and there was no danger of using it for protective purposes that would be an end of it. the Not, there may be cases and these are/ones we are trying to catch - in hich a country might doliberately establish a catablish a mnopoly protective pur[pses. creating a wide ,argom between its purchases and resale price for the purposes of building up or pretecting a competing domestic industry. In these cases, exporting countries concerned would certainly draw then to the attention of hte importing countries, and they would be entirely within would be entirely within their rights, if this charter were adoptod, in requesting nagatiations on these margins. Now all that comes down to this. I think there might be many monopolie certainly r number of them - which would never come into the negetiationlargely. for the reasons the Delegate of Czechoslevakia has indicated. There is one further point in connection with his remarks Explosives are a gereral exception covered under paragraph D of Articel 32. THE CHAIRMAN: I have a feeling there is one further point, and that is the case of what you might call the equivalant of a umptuary duty. The Czechoslovakian Delegate mentioned the alcohol monep ly a a poss- ible means of limiting the consumtion of spirite and so on by charging a relatively high price for then. That is perphaps a particular case where it could be considered Is there anything the United States Delegate would like to say on that point? MR HÀWKINS (US): Yes, I think the same thing would apply in the case of any monopoly as would apply in tho case of any customs tariff by a country where the reduction of tariffs would be significant. There is no obligation here in Article 18 18 for these countries to reduce every rate. There is a general obligation to reduce tariff substantially, but negotiations would be on a selective basis. In the case just cited, 5. G/. '(t ,L; i..'.'t . 1 if there were a reason for not wanting to reduce or to bind the state trading margins, the country, concerned would advance its reason for not wanting to do it. If the state trading, country attaches a good deal of importance, to it, the, other country in that case would simply have to forgo some benefits for its exports which they might have got if the other country were willing to reduce or bind the protective margin. I think the main point is that there is no compulsion here under this draft to reduce every rate in a tariff or correspondingly to reduce or bind every state trading margin. It is a matter for negotiation. 'THÈ CHAIRMAN: THank you aaany I now ak wether any Delegate wihess to express an opinion as to whether we should retain Article 27 in principal or not I would not at this stage raise an question of drafting butwhether in principle we think something in the nature of Article 27 is a. desirable thing to keep. Any I have further vies on that? MR JOAMSEN (New Zealand): I think the point is whether this achieves any useful object not covered else where in the Charter. I take it that in the absence of this particular Article a member could have recourse to other provisions of the Charter which would enable him to make representations and seek an adjustment in any case where he felt his position was adversely affected, through the operation of some state .nomopoly. I would like the view of the United States Delegate on that, There is one other question I would like to ask at this stage, and that is this: how this particular paragraph applies to a country with a complete state monopoly. would it mean that every item of its imports would be subject to negotiation in respect of margins? I am wondering whether such a thing would be practicable. There is a further question. In order to establish margins of profit I think the agreed basis was to take an average over a period. Having regard to the nature of the transactions that are likely to be employed under this Particular article, I am just wondering there it would be practicable 6. to apply it. It seems to me that in actual practice there would probably be a difficulty there. I know that in our case we have very few state monopolies.We import citrus fruits andl we have a system there designed to ensure equitable distribution of those citrus fruits at the most favourable price. THE CHAIRMAN; might I suggest that we discuss the New Zealand Delegate's pointsin order? his first point was whether the subject matter of Article 27 could not be sufficiently covered by the general right of recourse which member countries already have under other -provisions of the Charter; and there he has in ind the impairment clause, hich is Article 30. The question then will be whether we need have as detailed0 provisions as those, considering there is .the general impainment provision of Article 30. might I ask for views on that first of all? MR. HAWKINS (US) Mr Chairman, I would like to look at Article 30 from this point of view I think the New Zealand Delegate is probably correct that there would bv recouurse under Article 30, but it would have a rather less effect than if there were some obligation that could be invoked. 7.s E/PC/T/C.II/ST/PV/1 The primary purpose, or one of the main purposes, of Article 30, is that when an obligation, as all obligations must be is stated in somewhat general terms and a member does not consider that another member is carrying it out, there, at least, is something on which to base the complaint. Now, if you took out article 27, there would not be. article 26 covers a different filed from article 27. article 26 corresponds to most favoured nation treatment, yet a close reading of Article 30 will show you that it appplies even to cases which are not specifically covered. To that extent I think you have a point. THE CHAIRMAN: Thanlk you. I am bound to say I have a little feeling myself that there are a very great many matters up and down this Convention on which we are going to ask the Organisation to exercise a discretion. It will be all the more difficult for it to exercise that discretion in propertion as it as the less direct guidance in the terms of the Convention itself to guide its judgment on any particular case, and from that point of view my general feeling would be that the more we can give it general guidance and indications as to how it should exercise its discretion, the less difficult task we shall be placing upon it. Shall we pass on from there to the second point, which was the question as to the practical applicability of a provision in the case of a complete State trading monopoly, and whether there would not be so many margins to deal with that the scheme would be unworkable. Are there any commentss on that ? My own understanding of the matter is that the position of a complete State trading monopoly was ontirely reser- ved to be dealt with under article 28 red that Article 27 would not apply. An I correct in thinking that ? MR AUGENTHALER (Czechoslovakia): I have no special comments to make as regards Czechoslovakia's point of view on this Article. I think there is one single country concerned with it and that is Soviet Russia, and I have not the slightest idea how they feel about that Article 28. It is Article 28 about which we are speaking, is it not ? 8 E/PC/T/C.II//ST/PV/1 Mr AUGENTHALER (Czechoslovakia): The U.S.S.R. mauy agree or they may not agroec. I do not lkiow. LER HLWàIîINS (t. S, .): I unrntoo-1 just nov. that thC Neéw Zealand dûlègato vtaa reforrina to ,rticlc 27. 'M JOIUNÉEN (Novi Zoaland): Yes. It soeï.ied to ,.it there would be no reason wby a country hichli haüd a ccma1lc~to Statc r.onopuly swoulc be placed in any different position fro,.l a country whicli hado. ar.iunopoly only in respect of one or two things. !âS TUUNG (China): On rmn<irn k eticlc 27 I tliinl: it is is.iplicd there that a State trr.ndl enterprises miust bc lirofitable, but of course that is £oLuthlinî we cannot assLux.io in zil cases. It dous not aljl)ly to My owvn country. For that irvason I do not thinl: it is ï)racticable to take the pride À.uxr'in as a basi", for exa.ination. ity other point is that it is impossible for any country to su.»ly the whole world demand for a product, despite ilat it .ays at the cnd of the paragraph. THE C}IIfliJ: Shall wo coal îïith the points.ade by the Chinese delegate nov? I thi2ik his first point vas that the dole of this Article is bared on the asowxiption that stato trading is profitable, whereas that ruay not bc the case; ana, further ore, a state trading monopoly ia@y cven set itselP the task intentionally of losing :ioney and thereby fi'xing prices at a rcrtain,lc.vel; and his point, I think, was that in that case tho fixing of a profit margin is not a practicable proposition. hre thare any cor.Lments on that? MR WtLINEMS (USi.): lir Chairrunm, lot us takc the 'mase wiere a produot is not sol; in the doluestic markett at a price hibhur than that paiù for it. The only possible objcc.t of negotiations in that c-a-e wouid be, so to speak, ta bind a rate 'for the r.market; and even in that case I should thifri it v;ould be doubtful if anybody Nwould request it. They would look at the past history ot' the operation ol' tho monopoly and;very likely a.i^c it not the zubjuct of negotiatLon. THE CWIJRMtkN: This ii'àticlc %vau1d essunti.1.1y have in view the placing of ia A9 E/PC/T/C.II/ST/PV/1 an upper limit on the profit to be made; so that in a case where a state monopoly did not set out roadily to do that sort of thing agreement could easily be arrived at to fix a suitable margin. Is that your point? MR. AUGENTHALER (Czechoslovakia): As to the margin for exports, actually I do not see the necessity of any Article about that. There would only be an economic reason for that in case where the country concerned has a world monopoly, but not when it is an internal business, because naturally each country is itself concerned to export as much as it can. There might be a danger there of a state monopoly exporting at a lower pries than it would otherwise. That would be covored, I supose, by the part of the charter dealing with dumping . Really I do not see the necessity for this provision. I would like to may that on this points THE CHAIRMAN: Might I suggest that we deal first with this point bout export margins? Might I ask for comments on that? MR HAWKINS (USA): I think in general what the Czech delegate has said is correct. Let me illustrate the kind of case which could well come within the negotiations contemplated here. I do not think you need worry about negotiations in most cases, but this is designed to provide the analogaus case to that of an export duty. Let me illustrate it if I can. It would certainly come under negotiations. There are a good many illustrations, but I will only take one. There are some countries which produes what are called peeler lois, from which venecr is made - that is plywood. In this case there was a restriction put on the export of them, the purpose being to make the cost of the raw material very high, so that foreign vencer plants could not compete with veneer plants operating in the country that restricted the export of the raw material. That is the kind of case which is envisaged here. In the case I mentioned a country such az, say, the United Kingdom or the United States or a good many others might say to the producer of that raw material that the price at which the particular country is selling this product abroad is far in excess of their own purchase price, and the effect of it is that they cannot operate their plywood industries. In the subsequent negotiations they would seek to get the country producing the raw r 'terial - peelor logs in this case - to 10. A.10 E/PC/T/C.Il/ST/PV/1 agree that that margin between the purchase price and the re-sale price should not exceed "X",or whatever they could agree to. That in the type of case that would come under negotiation. Again, this is an analogy: it is the export duty as compared wit the import duty which the rest of the Article is analogous to. MR JOHNSEN (New Zealand): Would not the negotiations in that case start off with the neogtiation for the contract iri the first place to get the logs? MR HANKINS (USA): It would, under conditions of short supply. This is an actual case I have been telling you about, back in the 'thirties. If we had been in negotiation under this Article at that time we certainly would have been asking for a limitation or a removal of the restriction on the export of the product, because it was affecting our plywood people. Other people were affected even more so, bccause they had no supplies, whereas we did have something. THE CHAIRMAN: If I understand the position rightly, it is this: that you may have cases - comparatively few - where, though there may not be a complete monopoly position, there is something which has in it sufficient of the nature of a monopoly that it is possible for an exporting country to levy an expert tax, or, in the case of a state trading monopoly, an eoxport margin, either with a view to protection, the domestic industry or simply raising revenue. If I understand it rightly, this simply leaves it open for any country which wishes to to approach the country which has the expert tax or margin and to invite it to negotiate a maximm limit to the rate of that tax or margin, and it would be in the discretion of the country approached as to whether it would negotiate or not, and to what level it would negotiate. I should have thought that that perhaps did not seem an altogether unreasonable provision to put in. MR JOHNSEN (New Zealand): One can visualise making representations of that nature, and the obstacles that might be placed in the way. MR HAWKINS (USA): Mr Chairman, if we had put in this draft exactly what we ourselves would have liked, there would have been a prohibition of export 11. A.11 E/PC/T/C.II/ST/PV/1 duties and a prohibition of restrictions on raw material. This is in effect saying, "Well, we are ready to negotiate for it because we have to negotiate on import tariffs , and then somebody would make the logical remark that a protective export tax is also necescary for some people and is designed by them for the same purpose, very often, as a protective import duty, and therefore to be logical you must negotiate on that, too. THE CHAIRMAM: Thank you. I think there is perhaps one further consideration which enters into this, and that is that you may have a case of a country which produces the raw material of an industry, and they may see a risk that in certain countries which are not themselves producers of raw material there may be imposed custons duties which would protect the processing of raw that/material and would encourage the processing within that country. New, the country which is a source of raw material may find that it is justified in doing something to offset the possibility that by that means a processing industry may be taken away from it and may be established elsewhere. There may be a certain rcasonableness in the idea that a country producing the raw material should be in those cases able to defend itself by reserving the right to have an export tax serving to prevent the processing industry being completely taken away from it by an import duty in another country. Do I make myself clear? Haviag regard to that, I should be tempted to express an opinion that it would not be altogether reasonable to require the complete abolition of export taxes, but, on the other hand, there may be a good case for asking for negotiation. MR AUGENTHALER (Czechoslovakia): In Czechoslovakia we have no export duties and never have had them, with one exception, but I know there are several countries, especially in Eastern Europe and in the Balkans, which have export duties; but those export duties actually take the place of import duties, because they are unable to get the neoessary results in any other way. That is why they have been introduced. I do not know if it would be possible for those states to do without them or not. l2. A. 12 THE CHAIRMAN:One sees the difficulty that countries may have which rely on export duties. . I take it that it follows from that that if they are willing to negotiate and bind the right of those export duties they will wish to bind the;. at a conIiarativoly hijh rate; but I do not think that in necessarily an objcetion in principle, is it, to this pairvraph, because it ;ry bc that in consequence of that fact the country which relies to such -eot a large extent on exq)ort duties for its revenue rLaiy/h.ve very rmuch to bargain with, but that does not, so to speak, put it out of court. It auay nevorthe- less come into the negotiations ana i.uy negotiate te the extent ,h it feels to bo reasonable in the circuîistances. Tàyt i3 not precluded. On the other hand, it in not co.polled te noGotiate any given reduction aocordîng to this Article. Is not that the intention? IIR JOHNSEN (New Zealand): Onc can visualise thatthe case which co.ré up for consideration undor this article would bc very few in actual practice, m HlAWKINS (US): Yen. Where there in mn export tax it is very likely, f except in thue ace of a country with a monopoly, te be kept at a nodoræate level, in order te get the i2aximrLi revenue; but the number of casei of }xport dlutics is viry very mrali carpared with the number of casos 'a irnort duties. IZI JOHNSN (New Zealand): Apart fram that, the numiber of countries where representation could actually be m.ade would be relatively few. UR HW NS (USA) In ur -mmn experience it is only nov and thon. hI; may be that in halt a dozen cases you could say we have worried about the expert ,itx, and those have always been vwhero the tex vas put on and rxado vry h high te protect a doemastic industry by depriving foreign cocpeting. induc;tries et tLho necessary raw Liaterial. There i8n very little of it, though. Of course,' to keep our discussion clear, we are not talking about export duties in Article 26; we are ta!k:ing about an analogy. That rttole 26 allows for negotiation, but a cou=try might refuse te negotiate on expert dutic3, or, if thoy vere press& on it, they right say, "l7e will siLply nimake a staro monopoly of L".,. THE AIIRMAN: Thank you. If it perhaps a legiti:tte coarent on these Articles in general that they arc, se te speak, ineant toe produce the counterpart, if I understand it rightly, ibP state trading, cf the rules elsewhere la±d down for private trading; se that, Just as you have potentially negotiated limitations for import duties, with export duties you would have the corresponding negotiable limits upon the margins of import or export. Is not that se? 13. B. B.1 E/PC/T/C.Il/ST/PV/1 THE CHAIRMAN:Have we any further comments upon this point? Export margins. MR HAWKINS (USA): The New Zealand delegate had one point we have not covered, and I think the Brazilian delegate raised the question of average. THE CHAIRMAN:Yes. If I remember, the New Zealand Delegate's point was this, that in the practical administration of this Article 27 one would be unable literally to observe the terms of it in relation to particular consignments imported in the sense that you would not be able simply to add to the buying price your negetiated margin and sell at the resulting price, but that you would have to average it over a period perhaps in order to make the thing admiistratively workable. I seem to remember that we of the United Kingdom Delegation raised that point ourselves, and if x I understood the Delegate rightly it is not possible to observe a rule of this kind very precisely. He did raise the question whether it was worth while having it. may I ask for views upon that point? MR HAWKINS (USA): Only one comment. I should think that the period taken should be relatively short so that the average prices will reflect the current prices fairly accurately. You mentioned a period of three ye.ars. Just offhand that seems to me be a bit long. That is something that will have to be considered later in the light of other circumstances. MR JOHNSON (New Zealand): If, it went to negotiation would not you be nego- tiating on margins irrespective of any prices? MR HAWKINS (USA): I think the Chairmants idea, as I understood it, was that it is administratively impossible when a buyer is getting supplies at the best price, because there may he a dozen different prices. Which are you goin to take? The Chairman said an average. Then you have to compare that with your resale price, which presumably would be uniform to keep the margin which is the subject of negotiation. He did not mention that period as short and practical, but that is the sense of it and the reason for this suggestion. 14. B.1. E/PC/T/C.II/ST/PV/1 THE CHAIRMAN: Yes, it is a, question of administrative practicability. Then there is a further point which I made in Committee II, that for purposes of producing stabilised prices you might want to take a rather lower period, but I do not know. that we need discuss now just how long that period would be, I think the point with which we ought to concern ourselves here is as to whether an average over a certain period would be administratively necesary, but I do not feel that that neccessarily invalidates the usefulness of some point of this kind. Then I think there is one other outstanding point which is raised by the New Zealand Delegate, and that is as to whether it is really useful to contemplate a procedure of this kind in the case of a com- plete State trading monopoly. Perhaps Mr Hawkins would wish to comment upon that point? MR. AUGENTHALER (Czechoslovakia): Mr Chairman, I should like to speak on a point which was raised before, the words "full domestic demand", because I think again one has to remember that is is rationing and there are other restrictions on consumption in certain countries, so that I cannot see how a country should have an deligation placed upon it to import up to the full domestic deman. Of course, the demand my be very great, but for some other reasons there is a restriction on consumption at home. MR HAWKINS (USA): Mr Chairman, it is an application of principle rather than a mathematioal formula. The purpose of it is this, let us suppose, to take a harder case, that you have to supply the full foreign demand in the case of export duty, taking the case cited, of a prticular raw material , which is used by certain industries in the producing countries and by other industries in ether countries which do not have the raw material supply. Let us suppose that State trade monopolies were created in the exporting country and let us suppose that the other countries which have industries which use the raw material in question negotiate 15. E/PC/T/C.II/ST/PV/1 in the matter, and that it is decided, for instance, that the dif- ference between purchases in the home market for resale abroad should not exceed, say, 10 per cent or whatever you like. Then let us suppose that the export country simply withholds supplies from the market. The fact is that it will force that pride up or create a position of searcity which would have the same effect on the finish- ing industries in the foreign country. That is the purpose of it. The same wuld apply in reverse in the case of imports. Now there were one or two amendments - or at least one particular amendment - suggested in the full Committee, which I think help to meet your point. In the full Committee I agreed that they were desir- able. I think Mr Shackle himself suggested them. We qualify that where there is rationing or where thera is price control. Obviously in the case of imports if a country is rationed for supplies it cannot meet the full domestic deman, and that qualification I think is proper. MR JOHNSEN (New Zealand): Then there is the question of restriction, and you might have an exclusive commodity to deal with. MR HAWKINS (USA ): Whatever the reason any be, that causes an effort to be made to impose rationing in order to curtail consumption, although, of course, we hope that in due course, it will not be necessary to have rationing. TE CHAIRMAN: Is it right that the cross reference to Section e of the chapter, which comes somewhere towards the end of Aticle 27, is meant to cover at any rate some of these points, in the sense that just as under private trading, if you had an import control, that import control- would be linked with the balance, of payments or for other reasons which are specified in Section C with other thing, and corres- pondingly those exceptions would apply in the State Trading chapter, so that if you had balance of payment difficulties of the kind which would justify those restrictions -.say, for instance, you had State trading - if you could justify the need for restriction of trading for balance, of 16. E/PC/T/C.II/ST/PV/1 payment reason, you would not need to satisfy the full domestic demand, and correspondingly the other exceptions which are listed in Section C. I think some reference has to trinL in those exceptions. Is not that so? MR HAWKUMS (USA): That is correct. MR JOHNSSEN (New zealand): But Section C might not be sufficiently not be sufficiently wide to cover the whole of these transactions, and I an wondlering whether it wpuld not be better to alter those words to read "shall, if not in- consistent with any other provisions of this Article". and so on, because there is some question of regulation for other purposes; and one knows quite well that under Section C it is a question of indus- trial development. MR HAWKINS (USA): If there were other provisions permitting restrictions on imports, then there should be a reference also to those other provisions. MR JOHNSEN (New Zealand): Yes. MR HAWKINS (USA): But, you see, when to were drafting this we were re- ferrin only to the things we had put in, and if the exceptions in Article 19(2) were extended in any way under this language they would be automatically covered, because it refers to Section C and would cover anything that was regarded as legitimate in respedt of quantitative restrictions. MR JOHNSEN (New Zealand): We should have to bear that in mind in the case where there is some provision in some other Section in the Charter. THE CHAIRMAN: Might we ask the Reppoorter to note that point, and if any addditional ground on which import and export restrictions are permitted should be introduced in the course of discussions elsewhere in this Conference then a cross reference should be introduced to this Article, so as to correspond to the other purposes of State trading. Perhaps we could leave the point about export, and for that matter home demand, 17. E/PC/T/C.II/ST/PV/1 in that position I think we have now covered the points raised by the New Zealand Delegate, MR JOHNSEN (New Zealand): What about the State monopolies? THe CHAIRMAN Yes, the question whether the provisions of Article 27 would be wcrkable in the case of a complete State monopoly. MR HAWKIN (USA): As to that, I think that in the case of a complete Stato monopoly of foreign trade you do not have the same interna; conditions where you have an internal parket price. THE CHAIRMAN Your idea in effect is that if you took a wunnmkcc State trading monopoly it would be dealt with simply and solely by Article 28, and Article 27 would not apply? MR HAWKINS (USA): Yes. MR JOHNSEN (New Zealand): On the export side do you mean to say that a country heving a State monopoly could not adopt the practice you suggest? MR HAWKINS (USA): Theew is a possible point there which we ought to consider. THE CHAIRMAN: I do not know whether anybody is ingenious enough to suggest a way in which the export side could be taken care of under article 28; ?erhaps we might deal with that as a point to be considered and thought about further. MR HAWKINS (USA.): Could we make use of the Rapporteur and ask him to come in on that point? MR ARMSTRONG (Rapporteur): It is very difficult to contrive ways and means for inducing countries with State monopolies of foreign trade to export them if they do not care to export them. The purposes of Article 28 in this connection would be that you would ask the countries with a State monopoly of foreign trade to indicate, according to our draft, what they would buy for others and in terms of tariff concessions might buy themselves. Now, it might well be that this article should be extended to take care of artticles which other members might wish to buy from that member for one reason or another, and I think support might well be given to that. 18. E/PC/T/C.II/ST/PV/1 MR HAWKINS (USA): Yes. MR JOHSEN (New zealand): In regard to artifcle 27, the full domestic demand, it is subject to other considerations, and there are no such requirements in respect of a country having full State monopolies, and we would certainly negtiate with the as to the amount that they might buy, but that is not related to the demand at all. THE CHAIRMAN: Shall we leave it ask the Reppporteur to consider this problem further, noting no duubt that it is very much more difficult to get a solution in regard to State monopolies than in cases where there is not a complete monopoly? I think that brirngs us back, does it not, to the point at which we started this discussion, which is upon the Czechoslovak amendment as to whether it is desirable to retain anything in the nature of Articles 27 or 28, or whether we should. confine ourselves to having the principle of Article 26 stated in the records of the Organisation in cases where it was felt that the principle was not being faithfully observed. I think our discussion has so far been concerned with the question of whether Article 27 should be removed. Am I right in think- ing that the general feeling in the Sub-Committee is that perhaps on balance we might do well to retain something corresponding to the principle of Article 27? I ask that before we pass to Article 28. (After a pause): In that case perhaps we could pass on to Article 28. There is the question as to whether in principle anything of that kind is worth retaining, I seem to remember that we had a discussion in the main Committee about this in which it was suggested that perhaps it was not necessary or useful to keep the second and third sentences of this paragraph but that we might keep the first sentence, the general principle which is stated in the first sentence. Has anybody any point to add to the discussion which took place on that in the main Committee? MR JOHNSEN (New Zealand): The Canadian Delegate suggested something about that. It had reference to the question of practicability, and a am inclined to agree with what he said B.7 E/PC/T/C.II/ST/PV/1 MR HAWKINS (USA): I think the Canadian Delegation withdrew that suggestion. MR JOHNSEN (NEW Zealand): Did he? MR HAWKINS (USA): Yes. THE CHAIRMAN I think we should wait if there is an oopportunity to nego- tiate this with such a country as is contemplated in thlis type of Article. MR HAWKINS (USA): As I got the sende of the discussion in the full Committee, it was not that we adopted this Article 28 and recommended it firmly and strongly, but as we might have other things to agree it had got to be kept in until the Soviet Union had a chance of considering it, when there would, be some opportunity of seeing what their reaction was to it. Otherwise we had no basis for discussion with them. THE CHAIRMAN: Thenk you. In that case the question arises whether we the of should go straight on and consider/drafting/Articles 27 and 28 or whether we should elimdnate them and simply replace them by the Czechoslovak Article. Has anybody any further comments upon that question? (After a pause): In that case, think perhaps we had better go back and consider Article 26 in retail, .and then go on to Articles 27 and 28 in detail. I think we had already discussed to some extent the first sentence of Article 26. We have dealt with the question of what is meant by a State enterprise, and perhaps it is unnecessary to reopen that question; then we has gone on to the question of omitting the words "or services", and I think we had agreed that we could, omit those words. Now, may I asl whether anybody else has any further comments to make on the first sentence of Article 26, paragraph 1? MR JOHNSEN (New Zealand): There is that question of nor-iscriminatory treat- ment of which I think some note was taken in relation to non-member countries. THE CHAIRMAN: I think the Rapporteur has noted that. New would it be the desire of the Sub-Committee to adjourn for tea at this point and perhaps resuae at 5 o'cLock? (Agreed.) 20. E/PC/T/C.II/ST/PV/1 After a short interval THE CHAIRMAN: Gentleme, if we are all ready, may we now resume I have been asked to say that as a verbatim report is bein taken of the procedings in this sub-committee it would be very helpful to the reporters if members would kindly remember not to drop their voices and to speak clearly and sufficiently deliberately. I think we migt now go back to where we were which was the first sentence of Article 26. May I ask if anybody has any further comments upon that sentence before which exclusively imports and MR AUGENTHALER (Czechoslovakia): If any member establishes a state enter- prise, I suppose that means an enterprise which exclusively imports and exports? THE CHAIRMAN: May I ask the United States delegate to deal with that points I think there is a difference in terminology, as it were, between Articles 26 and 27, is there not, and while the word monopoly" does not seem to occur in Articlc 26 as far as I have noticed, it does cons into Articles 27 and 28. MR HAWKINS (USA): Article 26 would cover state purchases, even though there is no monopoly or an obligation on the state purchaser to buty in the best market. Article 27 refers to monopolics. The reason for that distinction there is that if Article 27 applied only to state "pur- chases where there was no monopoly the price disparity, or the trading margins which are mentioned here, would not have much significance because import by private traders would take care of the internal price situation MR AUGENTHALER (Czechoslovakia): In a special case like that where there are several private enterprises importing and exporting, would the state enterprises, which would be competing with other enterprises xporting and importing, be subsidiary to those private enterprises, and is this case covered by that point? MR HAWKINS (USA): That case would be covered by article 26. THE CHAIRMAN" In other words, the one obligation lying upon it would be to 21. E/PC/T/C.Il/ST/PV/1 observe commercial considerations such as priec quality, etc. MR JOHNSEN (New Zealand): There is one question I would like to raise, Mr Chairman, and that is in respect of preferences: I am notsure whether they are covered by some other provision in the Charter, but when we get down to using terms such as non-discriminatory treatment or treatment not less favoured it is necessary I think to consider the position in relation to preferences. In that respect I think that we have either te be sure that there is some other provision in the Charter or that there is some provision relevant to this Articlc which safeguards the position respecting preferences. I would also like to have some information as to the position regarding long-term contracts as affecting the price of a particular article that is a position that we would like to have safeguarded if it is possible. THE CHAIRMAN Yes. As to the point on preferences, that was one which I had in mind te mention myself. It seems to me that what one probably requires there is something analogous to what one already has in Article 8 (2) as regards tariff preferences. In Article 27 one would have negotiations about state trading margins which would correspond to thenegotiations about tariffs under Article 18. Just as negotiations about preferential tariffs are included under article 18, so I assure negotiations about preferential state trading margins should be included under Article 27; and from that I take it that it would follow that just as in Article 8 (2) you safeguared from the operation of the most favoured-nation rule tariff preferences as they remain after the negotiations, so here, and I imagine that Article 26 would be the appropriate place, you would safeguard the preferences remaining in state trading, margins after the negotiations. Does that commend itself to the Committee? MR JOHNSEN (New Zeeland): I think that we would need to go rather further than that, Mr Chairman. There are other types of preferences such as quota preferences in respect of certain products, and that is a subject that has to be discussed between a number of interested countries, and that is. 22. E/PC/T/C.Il/ST/PV/1 would need to be covered here. THE CHAIRMAN: I am wondering whether in a sense talking about state trading, one is not, so to speak, bracketing tariffs and quotas to some extent, because may not it be argued that a state trading monopoly to some extent combines both a tariff element and an import or export restroctopm element. In that sense, therefore, if you said that your state trader must satisfy domestic demand in the case of imports and external demand in the case of exports, you would then say that he would have to observe certain negotiated margins or margins to remain after negotiation, and you may possibly then have covered the whole ground Is not that arguable? MR JOHNSEN (New Zealand): I do not know that that would cover the quota preferences, having regard to the first sentence of this Article. THE CHAIRMAN: /Should we leave it in this way, that this question has still to be dis- cussed in another group, by asking the Rapporteur and then a conclusion might be reached in the matter of quota preferences, but due account should be taken in due course in draing up or attempting to draw up our final ideas upon these Articles of these points. Would that meet the case? I rather doubt if we can carry it further at present because I think this matter has still to be discussed elsewhere. MR JOHNSEN (New Zealand): Yes. MR HAWKINS (USA): A good deal depends upon the provisions which are adopted-regarding: quotas; and if this draft were adopted as we have it there would not be any quotas except in specified cases, for instance, as regards the exceptions listed under Section C. Now I would not think that any of those exceptions could properly provide for a preference; they are there for a particular purpose; and I should not think that, on a quick look at them, preferential quota tratment would be justified. MR JOHNSEN (New Zealand): We would say that it should be subject to negotiation the same as tariff preferences. That is a point that was made when we were discussion quota preferences. THE CHAIRMAN: Might I suggest that perhaps we could leave that to be dealt with in the first place, by the small group to whom the Chairman of 23. B.4 E/PC/T/C/II/ST/PV/1 Committee II referred it. If I remember rightly, the Australian dele- gate raised the question in Committee II and it was left that it should be considered in the first place, by a small sub-committee consistins of Australia, Canada, New Zealand, the United Kingdom and the United States. As far as I know, that small group has not yet met; it will be discussing the matter within the framework of the Article about import restrictions, and my feeling is that we had better perhaps leave the matter over for the moment, in the sense that perhaps we might recognize that this would correspond to the scheme of the Charter as it was drarted, but that if something fresh is introduced in the matter of quota preferences as a result of the discussions in this group, then we should in due course have t take account of it here. Would it meet the case if we left the matter like that ? (Agreed). Thank you. Then we come to the second poing of the New Zealand dele- gate as regards long-term centracts. I think that has been to some extent discussed already in the main Committee; I think the delegate for India raised that point, and Mr Hawkins then gave some explanations in regard to it. Would Mr Hawkins wish to add anything now? MR. HAWKINS (USA): Mr Chairman, I think this Committee might, at come stage, discuss that point rather fully. The question that arises is not I think a question of drafting in connection with these Articles; it is a question of the interpretation of phrase in Article 26, namely, the commercial considerations provisions. Your question then becomes: Is a long-term contract for a given quantity of goods a transaction that comes within the meaning of the terms "commercial considerations"? In the full Committee I suggested that it depends, first, on how much of a country's import requirements are involved in the purchases in a particular country and, second, upon the 1ength of the contract. I do not know whether you want to no into that now or not. I could elaborate this point here, if you like, but it seems to me that we might profitably spend some time discussing the point. If the theory that we have here is only a general principle, a principle of buying 24. L.4 E/PC/T/C.II/ST/PV/1 in accordance with commercial considerations, we, and I think every- one else agrees, think that that means that you buy to the best advantage as a private trader would do. Now, I would not suggest, for the reasons given by the Delegate of Czechoslovakia, that we attempt to spell out here the meaning of the term "commercial con sideration", becuse you can get lot of other questions beside this one, but I do think it is desirable on every occasion on which a specific case arises involving a question of interpretation that it be threshed out and that there be full discussion of it to the end that over a period of time you develop something of case law on the subject. Those are very general principles, but they mean no men can say in advance what is appliachle to all cases. It is only over a period of time after the Organisation has been functioning, maybe for some years, that we will be able, in the light of a precise exam- ination of the application of the phrase "the particular circum- stances", to get clearer and more accurate meaning of what the phrase "commercial considerations" really mens. By point is that we do have cases of long-term contracts which were made for purposes of record, but it is clear that at some stage they must be discussed to see if we can arrive at any sort of conclusion, or at least to see if we can bring, out all of the considerations. that are involved; but leaving it for the record and not for purpose of amending the text. MR JOHNSEN (New Zealand) : In other words, long-term contracts will not necessarily be inconsistent with this Article. MR HAWKINS (USA): Not necessarily; it all depends on ho long we have. Five years is excessive. Others think not, but we think ii excessive, as you know. MR JOHNSEN (New Zealand); Yes. MR HAWKINS (USA): We also think that the quanty by of purchase is tant; for instance, if one country purchased an entire suply from a single foreign supplier for on year we would have grave doubts about 25. E/PC/T/C.II/ST/PV/1 that, because we think that some competitors in other countries who could have applied on a competitive basis should have been allowed to do so, and , they would have been excluded from the market. I am only giving our view, realising that others have different opinions on this point. THE CHAIRMAN: Thank you Of course, a long-term contract is not a thing which is unknown in the commercial world. I remember such things as newsprint, which I believe is habitually bought on a longterm contract. I think our own feeling in the United Kingdom Delegation is that it would be a matter for which it would be very difficult to frame a priori general rules which would determine exactly how the adoption of commercial considerations of this type was to be applied to par- ticular contracts, and we fell very much, as Mr Hawkins has said, that it is a matter of building up case law as we go alone . Has anybody anything else that they wish to add on the subject of long-term contracts at this state? (After a pause): Perhaps we can pass on. We have already met the point about preferences under State trading monopolies. Now we come to the second sentence of paragraph 1: "No this end such enterprise shall in making its external purchases or sales of any product or service, be influenced solely by commercial considerations, such as price, quality, marketability, transportation and to of purchase or sale." May I ask if there are any comments upon this sentence? MR TUNG (China): There is one questionn I should like to ask on this, Mr Chaiman. Do I understand that Government purchases are to be treated as exceptions to the provisions of this sentence? For instance, it states here that these "purchases or sales of any product or service (should) he influenced solely by commercial considerations". Are Government purchases also included in this? THE CHAIRMAN : Well, if I understand it rightly, the idea is that we try 26. D.6 E/PC/T/C.II/ST/PV/1 down a guideline rule for government purchases. MR TUNG (China.): If a Government purchases a certain commodity from abroad it may be for military purposes or for other public purposes, and in such cases, especially for military purposes, they cannot closely conform to the commercial consideration mentioned. THE CHAIRMAN: Yes. I have to atumpt to give of sort of interim answer to your question, if I understood it rightly. MR TUNG (China): Have I and the point clear? THE CHAIRMAN:I think you have it perictly clear, if I may say so, but by understanding is this, that we have discussed the question of Government purchases for what you might call administrative use and for the use of the Government concerned and not for resale, on Articles 8 and 9, 9, and it was there decided that they should be excluded. I think, having regard to that decision in the Procedures Sub-Committee, it would be consistent if we here introduced a. qualification to this and used cross references, so to speak, to the decision already come to on Articles 8 and 9, so that Government purchuses for Government use and not forresale would be excluded from Article 26, x just as they would from Articles 8 and 9 I think that is how the metter as left, was it not? MR HAWKINS (USA): Yes, I agree with your conclusion, also that we will have that whole question that we had so much trouble with in the Tariff Preferences Committee back in this one. MR TUNG (China): I understand Mht.re j;s a spcific point in Article 9 as to Government purchases. There is no provision in Article 8. MR HAWKINS (USA): We took it out of Article 9; but I do think, Mr Chairman, in accordance with your suggestion, that we should make some qualification here so that this . to purchae for resale, which is rather important, because otherwise I think as the Chinese Delegate may have in mind, this language would cover, as it is, purchases for Government use, which is something quite different. 27. B .7 E/PC/T/C.II/ST/PV/1 MR TUNG (China): Yes. THE CHAIRMAN: Yes. We need cross references in fact here to what we have already agreed, or provisionally agreed, on Articles 8 and 9. Then there is a point about administrative supplies. Does the United States Deleation consider that that is covered by some of the general exceptions? you have. for example article 32, I think. mr hawkins (usa): yes, there is a general exception; the item is covered. mr tung (china): is that item (d), Article 32? mr hawkins (USA) No. the chiairman i dealt with (d) in article 32. mr hawkins (USA) Yes. THE Chairman That has a certain extension into (e). mr tung (China): That refers to articles for military use alone and not for other public use. the chairman i think we have covered other public uses by the amendment of articles 8 and 9 - that was my impression. then the second sen- tence of paragraph 1. Has anybody any further point to raise upon that? If not let us go on the third sentence "The .. member maintaining such state enterprise. r granting excluding or special privileges to an enterprise, shall, upon the reques of any other Member having an interest in the trade in the product or service concerned, or upon the request of the Organization provide such specific are detailed information as will make possible a determina- tion as tto whether the operations of the enterprise are being conducted. in accordance with the requirements of this paragraphs." Are there any comments upon that?, mr augenthaler (czechoslovakia): With reLard to the last phrase, which implies that State enterprises should be unly those which are monopolistic, not any State enterprise, we do not request other countries with private enterprises to give us information as to what they are buying; so that I think it would be fair to ask State enterprises only in this case where they have monopolies. 28 E/PC/T/C.II/ST/PV/1 they have monopolics. THE CHAIRMAN: Might i ask for further comments upon that point? mr hawkins (USA): I think there is one distanction to be drawn here, is there not? in the case of trade by private enterprise at market prices are established which are easily ascertainable, and the market situation is something which can be known by any interested person, whereas the operation of a State enterprise would not be known possibly unless the information were supplied. I state that some- what hesitanty, because I am not sure I have the point. THE CHIRMAN: It rather strikes one that if a State enterprise is not a monopoly it vvill not or less in the nature of things be compelled to behave as a private enterprise will. Is not that so, because it very likely wil be actually competing with private enterprises in the market, and in those circumstances it is very difficult to see how it can behave very differently from the way in which private enter- prises would behave. MR ugenthiler (Czechoslovakia): State State enterprisary come in in two senses. One sense means exactly as private enterprises, as happens in some cases in Czechoslovakia, where they act as private enter- prises. Then to do not see why any member should make a re- quest for any detailed information about their activities especially if they have no monopoly at all. Maybe there is another kind of State enterprise which intervenes only in certain cases, subsidiary buyers. Suppose that there shoul be some enterprise created by the State, just to maintain prices at a certain Level, those enterprises would not sell and would not buy so long as the market was normal, but they would intervene only at the moment when the market was too high or too low, just to maintain a certain stability of course, then that enterprise is not acting according to commercial principles because it is there for entirely different reasons, and I do not know how it would fit in. 29. E/PC/T/C.II/ST/PV/1 THE CHAIRMAN: Yes, it does rather seem to me on the face of it that it does in the case of monopolies where there is a risk of a possible breaking of these rules - that it is, therefore in these cases that one needs to provided for information to be supplied to enable obser- vance of the rule to be checked but it is a little difficult to see. that there is a case for requiring that in any instance here there is not a monopoly. MR HAWKINS (USA):. I an rather inclined to think that mr augenthaler has got a point there. The chairman: shall we leave it for further consideration by the Rapporteur and tht United States Delegate for the time being? (Agreed) mr. augenthaler (Czechoslovakia): I would. request that thees details should be considered where State enterprise any mean any State enterprise, I suppose that here it was meant rather as a state enterprise having a practical monopoly. THE CHAIRMAN: The wording is a little peculiar is it not, because the sentence starts: "The member maintaining such state enterprise", which seems to contemplate something in the nature of a monopoly, so that it looks as though one has here some things which are not monopolies, and others which are. MR HAWKINS (USA);. That was the point I was worrying, about, I am wondering if we did not go a little astray a little while in giving at least the impression that. this obligation to buy in the best market applied only where there was no monopoly. It does apply where there is no monopoly, but the obligation to buy where purchases can be .made to the best advantage would also apply to a monopoly. This language would cover any such purchases whether monopolist or not. THE CHAIRMAN: Yes. On the other hand, if you have a case where there is no monopoly such as, shall we say, some kind of State industry which is buying supplies of a kind which is also required by other industries, 30. B.10 E/PC/T/C .II/ST/P/1V it is very obvious, is it not, one, would require it to give up specali information to check that it is observing the rules of commercial considerations? In the nature of the case one would expect it to be observing those rules are or less automaticallly Is not that so? mr harkins (USA): : I would suggest for tentative consideration by the Rapporteur qualifying the last sentence to make it applicable only in the case of a monopoly THE chairman thank you. Can we leave that sentence non and come to paragraph 2 of article 26? mr hohnsen (New Zealand): Before .we pass on from it, would not it be covered by Article 30, which refers particularly to State trading oprations? I was wondering whether we might not delete that sen- tence entirely in the light of that. mr HAWKINS (USA): Yes, it specfically covers State trading operations in Article 30. 2. CHAIRMAN : Well the question is shall we agree that this sentence is unnecessary, subject to any further views which on consideration the Rapporteur any wish to put forward? mr. augenthr (Czechoslovakia): If I any mention it, Mr chairman I think there was one complication mentioned here, that instead of "specific measures of control" the wording should be "effective" in the second sentence? THE CHAIRMAN: Yes. MR. AUGENTHALER (Czechoslovakia): "effective measure of control" or some- thing like that was proposed by the British Delegation THE CHAIRMAN: If I might revert for a moment to this point about the last sentence of paragraph 1, may we take it that in view of Article 30 it is perhaps unnecessary to have this last sentence of paragraph 1? Perhaps we might leave that to the Rapporteur to coniider that further; but that our decision should be provisional¹ that, the sentence is unnecessary? (Agreed, ) Now we go on to paragraph 2, and there we have this point which we 31. E/PC/T/C. II/ST/PV/1 B.11 have already to some extent discussed, the question whether the words "substantical measures of controal" should be substituted by the words "a substantial measure of effective control" My own prefer- once there would be for the words effective control". On the one hand it seems to me that the word. "substantial" is ambiguous, and if you say "effective" you do not gain much by adding the word "substantial" measure. I should lik to get the views of the Sub- Committee upon this point. Any I just askl if the Sub-Committee would regard it as satisfactory to substitute the words effective control" simply? MR JOHNSEN (New Zealand): I see no particular reason to abject to that. MR HAWKINS (USA): The only thing is that if you have got control I think that implies it must be effective; it is a metter of drafting only; but is there such a thing as ineffective control? THE CHAIRMAN: Yes. Would it be good enough to say "exercise control directly or indirectly"? MR HAWKINS (USA): Yes. THE CHAIRMAN: That might be best. MR HAWKINS (USA): Yes. THE CHAIRMAN : Shall we provisionally agree to amend it in that way, so that it would read: For the purposes of this article a state enterprise shall be understood to be any enterprise over whose operations a Member government exercises control directly or indirectly"? MR JOHNSEN (New Zealandy: There are relative measures of control THE CHAIRMAN: It rather depends on what you mean by control, because if control means, so to speak, an element of power to direct the activities of an enterprise, then the word "control". by itself would be enough; on the other hand. if you are thinking, in the sense of, shall we say, shareholding and voting power, that is rather . different sense of control , is it not, and. there one night need to say "a predominatin measure" or something like that. I do rather imagine the word 32. B. E/PC/T/C.II/ST/PV/1 "control" was used in quite a general sensor and not in the senes of shareholding and voting control. Perhaps I was wrong. MR HAWKINS (USA): There is one case I can think of which might not be covered if you level out the words "substantial measure." It is a case where a government has five out of eleven directors, the rest being private citizens, and yet the policies of the organization are pretty well under the control of the government but it is not a nominal or legal control, but it is control in fact. I would be a little afraid if you left out the word substantial" that you would exclude a case of that kind. THE CHAIRMAN : Would not the word "effective" meet that, because if in fact, although there was not so to speak a majority of governmental directors on the board, and if' in fact the governmental really did control the activities of the concern, then surely that would be effective control. MR HAWKINS (USA): Yes. MR JOHNSEN (New Zealand): I think that "effective" is in fact more effective here MR HAWKINS (USA): Yes. In other words, "effective" in used in contra- diction to "legal" or nominal." MR JOHNSEN (New Zealand): Yes. We can achieve something through having "effctive controal" whereas if we had substantial control" we might not be able to achieve anything. THE CHAIRMAN: Can we pass on to Article 27? MR AUGENTHALER (Czechoslovakia): I beg your pardon. I think "control" in this sense means that at the end of the year you can say, "This state is controlling what happens here, " but then it might be too late, and I think the intention here rather is that the operations of the enterprise are directed by the State, or something like that. Of course,, as regards contral, if the State has some enterprise It has some control over it, and the State just says, "Well , you will buy this 33. B E/PC/T/C.II/ST/PV/1 or that," but I do not quite know how much it would affect it. Let us see. They might leave it to the enterprise in question to do it in its own way and they might buy wherever they thought fit at any prico, and at the end of the year the State would just take control by im- posing duty. Now, suppose that t you have in mind a case where the State would say exactly to those enterprises where they should buy and so on, where the operations are directed, that would be what is meant. MR HAWKINS (USA): That is what we are trying to describe. THE CHAIRMAN: I think there is a little confusion arising here. between what one might call the English significance of the word "control" and the French word controle, " which is rather a check or an audit; and I think it ble that there thought be a little doubt on that score. But I should have thought the word "control" in its English sense had a fairly clear significance here. MR HAWKINS (USA): The word "effective" helps that THE CHAIRMAN Yes. May we leave that sentence now, and if the Rapporteur has any further thoughts about it we can return to it, but provisionally we will leave it at "effective control." (Agreed) Then we come to Article 27, the first sentence, "If any member, other than a Member subject to the provisions of Article 23," and so on, down to the words may exceed the price for such product charged in the home market. " I think we night stop there for the moment May I ask for comments on the sentence so far. MR JOHNSEN (New Zealand): I did raise the question and I think Mr Hawkins agreed with it, that after the words "shall enter into negotiations,", there should be inserted the words, "upon request, " the same as in article 18. MR HAWKINS (USA): Yes, I think that as so. MR J0HNSEN (New Zealand) Could we add a little bit more than that, but it would need to be brought into line with the wording of Article 18 in that respect. THE CHAIRMAN Well, do we agree to that, to leave the actual wording to the Rapporteur. Is that so? (Agreed). Does anybody also wish to raiso 34. B. E/PC/T/C.II/ST/PV/1 any question? MR TUNG (China): In cases where there are monopolies of certain products, and the price of those products is fixed in contract or in agreement with foreign governments or with foreign firms, we have to sell those products according, to the terms of the contract, the price and cost of production and the price in the home market, but we can never tell what is likely to happen, because sometimes prices rise much higher on the home market than prices on the foreign market, and in that case the Government concorned is losing money. Then we could not fix any profit martin or price margin to conform to the provisions of this Article. C. fols. 34A. C.1 E/PC/T/C.II/ST/PV/1 MR HAWKINS (USA): I think in a case of that kind it would have to be scttled by the negotiating process if any country requested that A specific margin be agreed. The formula would have to be constantly kept in mind It merely keeps the question open for discussion between the countries concorned. MR TUNG (China): Is a member to country to enter into negotiation on its own initiative or is it bound to enter into negetiation? MR HAWKINS (USA): I am not sure I understand you. MR TUNG (China): I think according to this any state monopoly is bound to enter into negotiation with other members. According to that you have just explained, it seens to me that any member is from not enter into any negotiation in such cases as I have just mentioned. MR HAWKINS (USA): I would say they are not free to refuse to discuss the matter. I think it would be an obligation here. if any foreign country were interested in raising the question you could discuss it with them, but you are not required to take any action. MR TUNG (China): That means they object object to any margin which was fixed? MR HAWKINS (USA) Yes. The' thing that makes it practicable is that the forcign country may then give you less than it would otherwise have given. It is matter of negotiation, but it in worth while for you not tg do it. They mighjt make it worth while for you. The only obligation here in to discuss. I think that would be mandatory. THE CHAIRMAN: It is in fact an almost exact counterpart of what you look at in the tariff negotiations, is it not? MR AUGETHALER (Czecheslovakia): I feel that this is one of the more difficult points. I have already raised the question of status monopolies of a financial character. I leave that now. I think it was our Dutch colleague who raise anotherproblem. If you have a monopoly for cereals, for instance, and there are certain prices fixed to protect the small farmers, and then you got some offers from abroad, are you under an obligation to discuss the selling price of those cereals in the home market, if the country asks you to fix a certain price which would be below the price you pay to the home producers? . 35. C. 2 E/PC/T/C.II/ST/PV/1 THE CHAIRMAN: ls that intended to be governed in any way by this Article, do you think, Mr Hawkins? MR HAWKINS (USA): I think it is involved. I think it presents a difficult case. I think you would be obligated to discuss it. It may be that the system of agricultural protection employed is something that would have to ceme under discussion as to whether it is because or not. I think that is all involved in it. It would certainly be true in the case of the United States if attempts were made to maintain price stability for agriculture. THE CHAIRMAN: I am not sure whether I have fully understood the question. I thought it related to tho case in which the monopoly sell to consumers in the home market at a price lower than it would be willing to sell at to producers abroal ; or at least that is part of the question, is it not? MR AUGENTHALER (Czechoslovakia): No, I do not think so. I think it is rather like this, Let us imagine certain country which is in an inferior position as regards conditions of production in a particular industry. It cannot close this production down, lot us say, because of the social effects entailed.- the population has to live. I am thinking now of agriculture particularly. Lot us imagine that to make this agricultural production profitable the government introduced a kind of monopoly, paying to the home producers a certain fixed prisc, just to make their existence tolerable. Then might come certain offers for imports from abroad, at very lowe prices. If the price for theseimported good is to be the subject of negotiation and agreement, the result might be that it would entiroly upset the policy of creating the state monopoly for the purpose of protecting the people. THE CHAIRMAN: May impresion is that that is a case which is somewhat analogous to what is done in this country as regards agriculture, where we have a systems of guaranted prices (I am not an expert on this subject but I think this is the position) for various staple agricultural products. My understanding about this - and Mr Hawkins will no doubt correct me if I am wrong - is that the obligation under this Article '27 relates to the margin between your buying price - speaking of imports - and your. first-hand 36. C3 E/PC/T/C.II/ST/PV/1 selling price in the home market; it is not related to the price which you pay to home producers; and so I think there is an analogy with subsidies under private trade, because in the subsidies provision, contained in Article 25(1), you have a provision which allows of the paying of general subsidies to your home producers as distinct from export subsidies, and which are subject to consultation if it is held that it is doing serious injury to other people's trade. In state trading also, if you are paying a subsidy to your home producer, you are not precluded from doing so by the terms of Article 27, but you may run into a check under the terms of Article 25(1) if it is determined that serious injury to the trade of any member is caused or threatened by your subsidisation. Is not that how the scheme is meant to work? MR HAWKINS (USA): I think that is involved. However, I think Mr Augenthaler has a point here, and I think we ought to look at it very closely, and if we could be allowed to think out aloud it. maybe we can final a solution here to this problem. I would like to get the case just as clearly as possible in fron of us. My understanding is that you visualised a situation in which there is a domestic monopoly which buys from a local farmer and sells, we say at price of 100. Then the foreign suppliers come along and and let us say that a given period they offer their goods at a price of 80. Now the foreign company says this, "We would like to negotiate with you on this we want a price spread of 10 making the price at which our product would sell 90, and thereby pulling down your stabilised domestic price 100 to 90." Is that the came you have in mind? MR AUGENTIALER (Czechoslovakia): Yes. MR HAWKINS (USA): I think may reply to it would be this - again keeping before us the analogy of tariff negotiations. The United States and many other countries have attempted to protect agriculture to maintain a given level of prices by a tariff. In the case of the United States, for example we have a modect rate of duty of 42 cents a bushel on wheat. Foreign suppliers do not like that We say that we have got to stabilise this internal price for the American farmer. Now, the foreign 37. C4 E/PC/T/C.II/ST/PV/1 supplier in that case would say, "But you are maintaining that level at such a height that it is stimulating production and creating competition for me and diminishing my market. " A still better case, whiclh is, I think, more nearly in lino with with you have suggested, is this. We are an exporting country and that is is confusing the issue, so let us take the United Kingdom; lot us imagine the Unitetd Kingdom were attempting to maintain a high internal. price through an import duty; suppose they wanted to maintain the internal price at 100 and put a duty of 20 per cent on. Now, a foreign supplier would say to the U.K. "We would like to have that cluty reduced. We do not ask you to destroy your domestic market, but we think your rate of protection is so high that you are cutting unduly into the market for foreign suppliers." I think the case you cited is a paralel case to that last one, and that the foreign supplier would. approach the other country concerned - the one that has this monopoly - and would say, "At 100 you produce a certain amount and reduce imports correspondingly. We would like to have you make that 90, which would result in some. less domostic production and give a little larger market for foreign suppliers." I am not saying the foreign country. approached on this would necessarily agree to it, but I de think it is a proper subject for negotiations. It is the level at which you stabilise and the extent to which that market is supplied for domestic production as against imports which is the important point of controversy between the two parties, and which would have to be worked out in negotiations. I think the analogy to a protective tariff follows pretty closely there. Having said all that, I would like very much to hear some critical observations n it, because I think it is important that we try to think these things out. THE CHAIRMAN: There is the possible analogy with a protective tariff and there is the possible analogy with the subsidy to home production. If it is regarded as analogous to the protective tariff, there is an opportunity to negotiate hbout it under Article 27. It does not necessarily follow that the country approached will agree to any particular reduction or binding, but still it is more or less committed, I take it, to disouss the possibility of doing so. If, on the other hand, it is regarded as analogous with a subsidy, then I take it paragraph 1 of Article 25 would apply, and if it were complained 38. C5 E/PC/T/C.Il/ST/PV/1 that serious injury is being done to the trade of any member, there would then be a case for a discussion, under the last sentence of that paragraph. MR. HAWKINS (USA): I think that is right. We are on the first sentence of Article 27. MR JOHNSEN (New Zealand): There is really no other type of case to which this could appIy. MR HAWKINS (USA): No; I think Mr Shackle has covered the points. One can easily think of a case.We visualised an internal price maintained at 100 to help the agriculture of the country . Supposing that country said, ."We are going to make it 200, that is of natural concern to other countries. In other words, tho price at which it is f ixed is of definite concern to other/exporting countries. The country with the monopoly will naturally be reluctant to deal with it, but the question in this, at what level are you going to stabilise the production of that product? How much of that market are you going to reserve. for the home producer? MR. AUGENTHALER (Czechoslovakia): Another very important point on that is this. Our pre-war experience was that may countries which were operating these monopolies just f fixed prices by law, so as to be quite sure aboutit; they passed the necessary acts in their pariaments. I do not know how you would negotiate in that case. I know cases where the countries concerned preferred to buy abroad, and if aomebedy came and said, "Well, I am hurt by this", they would buy a certain quantity from them, even if they had no use for the particular commedity; but in that case they refused categorically to negotiate on the price, because they said "The price is part of our policy and we cannot negotiate on that because it is laid down by parliament". MR HAWKINS (USA.): I at once admit that where a price is fixed by law it is much more difficult for thle country to deal with it. On the other hand, the fact that it is fixed by law should not render it immune. In the case of the countries relying on tariffs, the law has got to be changed under negotiations. Again I recognise the diffieulty of it. It may be specially difficult in the case you cited. 39. C6 E/PC/T/C.II/ST/PV/1 THE CHAIRMAN: So the position is that in a case of thatkind the country which had fixed its price by law might not be willing to negotiate and it would not be compelled to negotinate, but if it were not wiIlling to negotiate its bargaining power would by that much reduced. Is not that the position? MR HAWKINS (USA): I would say that any country which in the spirit of this section or any other section here talks about negotiations is absolutely obligated to discuss and to consider it After all, the question would not be raised unless the particular act, whether it is a tariff or a high fixed price for domestic producers, were affecting the economic interested of another country. Wherever it is within the general spirit of this charter the very least that should be shown is willingness to discuss it and to consider the ways in which it is advorsely affecting the other country; and the two countries concerned shoud try to work out something whiich will be at least a little more satisfactory to bath. It dues not mean that you have get to reach agreement. Maybe you cannot. But you are under an obligation to negotiate. THE CHAIRMAN: It is a point which a little bit resembles the point in, I think, Article 18, Where it is said that prior international commitments should not stand in the way of negotiation about a preferential rate. By anlogy here I suppose you would say the existence of a prior national commitment in the shape of a law should not preclude discussion of the particular rate, which would imply that the country concerned should, as it were, be willing to consider the possibility of modifying its law. Is that the correct way of putting it? MR HAWKINS (USA): Yes, that is my view. The whole spirit underlying what we are trying to do is that countries will not take national action in complete disregard of the injury it may do to other countries. It does not mean to say they modify every action they have taken, out they should consider sympathetically the problem it creates for the other country and see if some mutually satisfactory arrangement cannot be worked out. is I said, maybe it cannot; there is no compulsion to arrive at an agreed result; there is a compulsion to try to do it. C7 E/PC/T/C.II/ST/PV/1 THE CHAIRMAN: Before we proceed with this discussion, might I raise a point about the the time of our next meeting? I do not know how far we can hope to go tonight. It is now noarly ten minutes past six. I take it we cannot expect to finish those Articles this evening, unless we work quite late. It is suggested that we should meet again on Friday morning to continue and finish on section F, State Trading, and that then we might meot on Monday again, at a time to be fixed, to recaive and consider the report of the Rapportour. Does that commend itself to the Sub-Committee as a programme - to meot tomorrow, Friday, at, say 11 a.m., to continue the discucussion, and then on Monday, at a time to be fixed, to consider the Rapporteur's report? (Agreed.) Shall we adjourn now and take it up tomorrow again at the beuinning of Article 27, or continue for five minutes longer? I think we might ask the Chinese delegate to make the point he wishes to make, and when that is disposed of we might adjoura. MR TUNG (China): My point is very brief. What should happen in the case of no outcome of the nogotiation? Do we just let it go? Is there to be any coercion? MR HAWKlNS (USA): There would be no coorcion in a particular case - though coercion is not a very good word. However, we will stick to it. Now, if it turned out that in every single case in which there was a request for a tariff concession or where there is a state trading operation there was a failure on the part of a country to make any concession to the interested of other countries concerned, I think that is when you get the case where there might be an obligation under paragraph a of Article 18. There is not and should not be - I would say must not be - any sanction or provision which compels a country, we will say, to reduce that price of 100 of which Mr Augonthaler was spearking. There would be special cases where you could not possibly do it, and there might be cases where you could do it. You have to look at it on the average - the general action taken by the country. THE CHAIRMAN: Perhaps we might adjourn now and resume tomorrow, at 10.30 a.m., on the first sentence of Article 27. The meeting rose at 6.15 p.m. 41.

GATT Library

fs916vr0502

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Fourteenth Meeting of the procedures Sub-Committee of Committee II held in Room 243, Church Westminister on Monday, 18th November, 1946 at 10.30 a.m

United Nations Economic and Social Council, November 18, 1946

United Nations. Economic and Social Council

18/11/1946

official documents

E/PC/T/C.II/PRO/14 and E/PC/T/C.II/PRO/PV/13-14

https://exhibits.stanford.edu/gatt/catalog/fs916vr0502

fs916vr0502_90050507.xml

GATT_157

UNITED NATIONS E/PC/T/C.II/PRO/14 ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FOURTEENTH MEETING of the PROCEDURES SUB-COMMITTEE OF COMMITTEE II HELD IN Room 243, Church Westminister on Monday, lBth Noveraber, 194,&6 at 10.30 a.r. CHAIRMAN DR. A. B. SPEAKENBRINK (Nethernalds) (From the shorthad Netes of W. B. GURNEY, SONS & FUNNELL, 58, Victoria Street, 1. B. 1 E/PC/T/C.II/PRO/PV/14 The CHAIRMAN The meetig of open. we must now try to finish our study of the Rapporteur's document. Yesterday we stopped when we had reashed the section of "Generl Agreement on Tariffs and Trade", Which refers to the paper which is annexed to this document giving parial drafts of a general agreement on tariff s and trade just to give an idea of what it is proposed to work out in Geneva. I think we are supposed to roach as riich agreement as possible in regard to those procedure matters when these tentatve parts of the draft have been studied, but I do not think that in adopting this paper we must seek to reach definite conolusions. what does the Delegate of the United States think? MR. HAWKINS (United Statos): Off-hand I should not have thought it neceasary tp get agreement on every line, or to get it definitely settled. I think we should try, however, to get soe conception in our minds as to what, in general, we are aiming at. I think it would be desirable to discuss it to see whether there are. any points not understood; if so they should be annexed to the document. THE CHAIRMAN; We have here, then, the paragraph about the general agreement on traiffs and trade. I mayself have only one observation here; it is that perhape it should be made clear here that tariff schedvles have been agreed in the first instance. Is it after the world Conference, this agreement? No? It is after the first meeting in Geneva: So I think we should put in here "This will porvide an opportunity for an adjustment. of the tariff schedules as may be considered desirable," Is it net the cano that the first review will come at the world Conference? very Clear in my mind, because here we have 17 or 18 countries who do dertain things; we leave open certain points, perhaps because the principal supplier is a non-member. Non-mbers, if they come in, may have certain conceassions to ask and others to offer, and that rnay give rise to certain change in the original agreements, MR. HAWKINS (United States): I should think that thia is the outline of the agreement that should come out of the negotiating meetings next Spring. -2- B 2 E/PC/T/C.II/PRO/PV/14 As to its effectiveness and legal validity, I should think that we might, as one possiblility, bring it into effect immediately, but provisionally and subject to a decision of the full meeting. The reason for brighging it into effect immediately is a practical one. If you have agreed upon schedules of aotual tariff reductions, they simply could not be kept secret; they are bound to leak and cause all sorts of difficulties. Therefore the only thing it is safe to do is to put them into affect provisionally, subject to the outcome of the World Conferenco, which way reach decisions which are pertinent to the application of htese concessions to other contries. THE CHAIRMAN: I quite agree, I only think that that position is not made olear in this part of the memoratndum. I do not know what other Delegates. think of what we see here: it is not covered in this part of the paper. It just gives one thing, and that is the World Conferance. THE RAPPORTEUR: Do you think that at the world Conference you would under- take to revise these sohedules, cone agreed upon, in order to cover countries not members of this Committee? THE CHAIRMAN: In my opinion, we should ortainly leave open the possiblilty the Rapportur: At the Conference itself? THE CHAIRMAN: Yes. MR. HAWKINS (United'States): That is provided for in Article 18, "Treatmènt of other countries". In other words this provisional agreement would be ( generalised, initially to all countries, and then the question of whether generalisation should contnue in respect of any particular country would depend upon whether that country, given adequate opportunity in time, would comply with the provisions of Article 18 to bring about substantially equivlent reductions by negotiation. THE CHAIRMAN; I entirely agree there, but I would like to say this. Suppose that. have certain, important countries still to en-ter into the agreement, They may come to the World Conference and ask for a roduction in a rate which has been fixed temporarily at out first meetings in Geneva. That change in the tariff schedules will then apply automatioally to all the -3- /PC/T/C. 11/PRO/PV/ 14 B. 3 E/PC/T/C.II/PRO/PV/14 other countries. That is a change of the original agreement, in my opinion. MR. HAWKINS (United States): A change made at the World Conference. THE CHAIRMAN: Yes.' MR. HAWKINS (United States): I do not think it would be practicable to negotiate tariff rates at the World Conforonce. THE CHAIRMAN: Later on. MR. HAWKINS. (United States): It would bo later on, The country concerned may be disappointed because a product of interest to it is not covered in thess original negotinous, and hence the generalisation is not of as much value as itt might be. The remedy of that country is to invoke Article 18 and negotiate with the country concerned to bring about a reduction in that rate which is of interest to it. THE CHAIRMAN: Yes, but my only point here is whether we say in the second paragraph of page 19, "The Gencral agreement on Tariffs and Trade should be signed and made public at the close of the tarif? negotiations. The Agreement should be legally independent pt the Charter and should be brought into force as scon as possible after its signature and publication. Countries should be free to withdraw from the Agreement, on sixx months' notice, at the end of two and a half years. This will pro- vide an opportunity for a review of the Agreement and any adjustmnent of the tariff schedules which may be considered desirable." That is the point I raige here. MR. SUCKIE ( United Kingdcm): Where you talk about withdrawing form the Agreement could you not introduce the alternative of substituting the concessions contained in the Charter or whatever it is that emerges from the World Conference? If the parties are included in a larger agreement, the larger agreement would supercede the limited one. THE RAPPORTEUR: I think there are t.-o possibilities there; you might put into the paragraph, "(1) either of negotiated bilateral agreements between the members of the preparatory Committee and the members of the Organisation which are not memters of the Preparatory Comittee, or (2) setting up a mechanism within the International Trade Organisation" which would be the Interira Tariff Committee- hereiby other countries could be brought in on the same multilataral basis. B.1. E/PC/T/C.11/PRO/PV/14 In other words, the now a agreements could preserve the muttilateral schedule and each one of the earlier mobers of the Committee might underake to revise its shedule so ax to ensure the inclusion of any produots not alredy included. there could something to cover that point as to how the Preparatory Committee tariff reductions are to b. tied in with' the gaseral ones. MR. GUERRA (Cuba): I think something of that sort hight be useful. There is a reference n Article 56 to the effect that the Interim Tariff Cammittee to be formod by the original mebers may include other members if they comly with the proviso about having "completed negotintions.. Comparable in scope or effect to those completed by the original members of the Committee." I think all tha is needed here is to contemplate the other possibility that the agreement will riot be f ixed in the sense that the incoming members will have to comply with everything that has been done and also give the alternative, that what has been done may be altered into a from which make it possible for the incoming member to enter. MR. SHACKLE (United Kingdom): I do not think, from a legal point of view, that you achieve any object by writing into the Draft Charter things which are to happen beforee the Draft Charter itself comes into force. Until the Draft Charter has come into force everything in it is forceless, therefore if you want to make arrangements for things to happen before the Charter corns into force, they have to be in a separate document. THE CHAIRMAN; This document embodies that part of the agreement. MR. SHACKLE (United IKingdom): The Charter, as such, will not be in force. THE CHAIPMUN: We have more of these parts of the Charter, which have to be put in later. They have already been discussed. now and are subject to review at, Geneva, but we have worked their. out in this document. I should say that at this moment we are not concerned with Article 56; it is more for Committee V. It is one of the articles which will have to be definitely decided upon ini Gneva. Still referring to the Rapportur's ramarks, - 5 - B.4 B.5 EP/PC/T/C.11/PRO/PV/14 I still wonder whether the bost procedure - perja[s we cam leave this also for lator on - which a new member country comes in will be to conolude bilateral agreementts wtih all the countries concerned? In that case every tine a new member orps up each country will have to send a Delegation to negotiate. As there are certain countries still to come in we shall have to multiply our staff if we have to that. I should very much like as a practical possibility to have the Tariff Committee negotiating with members and keeping Goverments informed, in one way or another, ON important points where there is a concession, asked for in their country. That will be the only way ie oan work this thin. MR. GUERRA. (Ciba): Then can we bring the referene to Article 56 into a separate part of this document? THE RAPPRORTEUR: I wonder - 6 - OM 01 E/PC/T/C .II/PRO/PV/14 THE RAPEORTEUR: I wondor whether the way should not be left open for either or both of the precedures; that is, for negotiating for bilateral agreements between Members of the Preparatory Committee and non - members, and for multilateral, and to cover that by an appropriate reference in the procedure Memorandum, as to the two possible methods by which other countries can be brought into the. tariff reduction Arrangementsv. THE CHAIRMAN; I am agreeable to that, if we can study it again after Geneva having regard to points/that may appear. THE RAPPORTEUR: I mean, describing the multilateral method of doing that, we can say that would be done by the Interim Tarifff Committee, which would be in faet this Committee after the Organization is. established, THE CHAIRMAN: Then if it is agreeable to the committee we .could ask the Rapporteur to change tha draft accordingly. If there are no other remarks to be made with regard to this part of the paper we will come to the tentative draft of General Agreement on Tariffs and Trade. MR. McKINNON (Canada): . Mr. Chairman, it was suggested in this memarandum that certain parts of the Oharter.may come -inta force .along with the tariff agreements baforè the World Conference. Iam not quite sure what lhappens- if those parts of the Charter are changed at the World Conference - the ones that are put into the tariff agreements. What happens then Will the old part. of the Charter'continue to have legal effect among the Members viho signed originally, or will they' be adjusted in, the light of what is decided at the World Conference? MR. HAWKINS (US) I think they would be subject to adjustment in the light of anything doas at the .orld Conference. MR. McKINNON (Canada):. It would have to have .then the agreement of ail countries tho signed it originally . It couid only be adjusted in-that event, because it' would affect the rate of 7. E/PO/T/C.II/PRO/PV/14 concesion both ways MR. HAWKINS (US) : That is right MR. McKINMON (Canada) : Is that the undorstanding? MR. HA KINS (US) Yes. I do not see Mr. Chairman, that there would be any serious dificouldty on that. in offeet, all we are providing is that these provisions shall besubject to change by agreement among the mombers who negotinated them, and if they are all agreeable to it there would be no difficulty, .; MR. MoKINNON (Caneadn): But they muet all agree. That is the pointe MR. HAWKINS (US):. I think so. THE RAPPORTEUR: Maybe it would be wise to put a point on that in the Momorandum. MR. McKINNON (Canadn).: I think it. might be borth while explaining that in the Memorandum. MR. HAWKINS (US): I take it we are goingto say this is a provision- al agreement depending on the results of the Wiorld Conference. That is almost implicit in that, that any changes made by the World Conference.would offect changes in this document. THE CHAIRMAN: Yes MR. SCHACKLE (UK): I think the members of the Intorim Agreement, the countries which subscribed to it, would have to take stook of the position after the world Conferanoe and decide what they were going to do. They would not want to accept it automatically in advance. They would have to take stock of the' situation then the World Conference is through. MR. McKINNOiq (Oanada). Yes, because it/may affect tho various con- cessions ..hich have been made if some changes are made in the Charter; .-hich may upset the relative advantages or disadvantages members have got.. MR. HAWKINS (Us): If, for example, there should be a provision that by agreement at the world conference the provision regarding quantitative restrictions is changed or taken out, 8. E/PC/T/C.II/PRO/PV/14 the schodules then beoome worthless. MR. McKINNON (Canada): That is the oxtrame case. MR. HAWKINS (US): Yes. On the other hand, it is conceivable that the 18 countries might agree to contnue on the besis of sthe original provisions, as among themselves. MR; GUERRA (Cuba): The only thing I have to say in that csnnection, hioh may help to make the point clear, is that if in the third and fourth lines of the second paragraph on page 18 -to take out "either by reference or" and put "by reproduction the pertinent parts of the different Articles of the Charter", as referred to here, and maybe als put in "incorporating the provisional agreement", that will covor both things. Everything that is safeguarding the tariff concession aill then be reproduced in the agreement and also it will indicanto the agreement is provisional, subject to any changes that may omade at the World conference at some later date. I do not think it is absolutely necessary, but it may help. THE CHAIRMAN: We can leave the point open that will be better, I tthink because we can judge the whole position at Genevas MR, McKINNON (Canada): Yes, I should favour leaving it open, se that the orginal 18 countries may continue among themselves something they have agreed upon or may adjust it in the light of what happens at the Confence. THE GAIRMAN: Yes, but if you say "provisional" and then agree to continue it, you just continue it and make it permanent. MR. HAWK INS (US) It is not that thay agroe to continue it; it is subject to any changes that may be made and agreed to by the original negotiators at the ..oirld Conference. No. that leaves the tray open, for example, for thom to continue te keep these things in effect or te change them in the light of' the agreement at the World Oonference. 9. 04 E/PC/T/C.II/PRO/PV/14 MR. McKINNON (Canada): That is hat I would prefer, Mr Chairman; THE RAPPORTEUR; Could we not simply put a sentenee in here saying the agreement should contain a provision whereby the signatories may change the provisions in the general agreement in the light of what is done at the world Conference. It does not say they have to, put that they may, MR. SHOCKLE (UK): They may either change them or agree to the whole thing being superseded by the document which comes out of the words Conference. You may have an untidy situation if you have a Charter on the-one hand and an agreement slightly different on thè other hand, wiithout clarifieation by the people who are parties to both. THE CHAIRMAN; i think it would be useful if we put something in the Memorandum. MR. GUERRA (Cuba) It will not do any harm, I think. MR, SHACXLE (UK): Before you loave page 19, Mr. Chairman, I have a very small point on the second paragraph. It is:the 7th line: "Countries should be free to withdra from the Agreement, on six months' notice, at the end of two and a half years" 1 take it that the meaning of that is just the same as that of Articlo VI on page 3 of the Draft Agreement in the annexe. Artilole vine the annexe says that the duration of the Agreement shall be initially three year and provides for vithdraval by any country on six month' notice after the initial threa-year poriod. Well, I take it thorax is really no olash theyre although there appears to bo, and that the real situation is at that / the and of two years and six months somebody can give six months' notice, so that at the end of the three years they get out or they oan of course give six months notice at any lator time and get out, on six months' notice, but perhaps it vould be better to get the wording of thoso two passages cleared up. THE CHAIRMAN: Yes. 10. . E/PC/T/C.II/PRO/PV/14 MR. ADARKAR.(India): This is only a point for clarifioatopm, Mr. Chairman:, is it in order for this Committee to recoommend that prvisions suoh as these relating to national treatment of internal taxation and regulation or quantitative restrictions or subsidies, which arc not boing considered in this Committee, should bc brought into force in advance of tho rest of the Charter? It seems to me that we may be taking a decision which ought progorly to be taken by othor Oommitteos. Are the Committees dealing with these provisions aware that there is a danger that the provisions they are workingg out are' intended to be brought. into force in advance of the rest of the Charter? MR.HAWKINS (US): They will all have a chance' to consider it in Committee II and later in the Plenary Session. It seems to me appropriate for this Committee to recommend it, because if it is recommending tariff negotiations it must necessarily raise 'the question regarding other provisions which are indispensable, if. those tariff concessions are going to mean anything; so I thin it is wirhin our competence to recommend it. THE CHAIRMAN : We have to put it in that wat in the Report of this Committee, and re can beforehand have the Seoratariat give to the different Committees some informaticn that we are proposing this. MR. ADARKAR (India): But we do not kno., sir, what is going to be the final shape and form of the provisions on these particular matters. So far as Article 8 or Article 26 or Article 29 are concerned re know what the form of the provisions of these Articles should be, but we do not know what is going to bs the content of the Article on Quantitative Restrictions, which is still. being considered, and without knoring the content of that Article I wonder if. this Committoca an say that the bringing into force of that Article is indispensable to the affective working g of the Tariff Agreemont? 11 . . 06 E/PC/T/C .II/PRO/ PV/ 14 MR. HAKINS (US): All are saying here is thet you cannot nogotiate tarifs without regard to provisions relating to internal taxation and quantitative restrictions and se forth. . we must establish that inevitable relationship. If there should be different provisions than a contemplato horo, then we might hava to make a different provision. MR. GUERRA (Cuba): Or negotiato in a difforent form THE CHAIRMAN: Yes. ; have boon asked here to propare Momorandum and if we have any points that we think ought to.be included it is our duty to make them, and it is for tho Preparatory Committee itself to accept them or change our proposals. We are not deoiding anything. A11 that a do is to formulate proposales to Committee II, and in the end, to the preparatory Committee. That is the reason why all our reports will come under discussion in Committee II, and, later on, in the tall Preparatory Committee. MR. ADARKAR (India).: If that is the general sense of the Committee I have no objection. I meraly folt the technical difficulty. MR. GUERRA (Cuba).: I would say this, to make it more clear, that always the willingness of any country to grant -tariff concessions will be conditionded what what is finally adopted with regad to quantitative restrictions and other things. we may have at the moment an ides of what the provisions may be on these. matters, and an idea of how far we may go, but if in the other Committees these things are changed in the sense that there will for any particular country mean less safeguards in tariff concessions, then we may not bo able to go so far as re are contemplating at the moment. At any rata, however, a relationship rrill have to be established, whatever the results of the regulations on these other matters may be, and therefore I think it is only proper that weshould make clear our recommendations. THE CHAIRMAN: Then I think, gentlemen, re can leae this pint now, and perhaps it would he better that -c should come to the draft of the Goneral Agreement on Tariff a and Trade. 07 E/.PC/T/C.II/PRO/PV/14 MR. SHAOKLE (UK): Before we loavo this passage, I am sorry to hark back but there is a list of suggosted schodules on page 17 and at the top of page 18 At the top of page 18 you will see one sehedulo numbered XVI for the Unitcd Kirigdom, Nowfoundland, Southcrn Rhodcsia, Burma and colonial dopondoncies. That ,:ould bocan enormous schodulo, and there are certain territories comprised -within it which we think would probably need to have separate schodules of their own. I morely wish to call attention to that point now before we paso on - that all these territorics may not actually bo covered by one single schedule. It is a clumsy method and there may be a casa for soma d tho torritories having schodules of thoir orin. THE CHAIRMAN: Yes, There is the same difficulty ,,ith regard to and the elgium-Luxembourg and athorlands Customs Union because there you would find that the Belgian Congo and the Belgian oversoas territories formed no part of the Customs Union, so you mould have for the Netherlanda, for instance, one shedule es being a Oustoma Union and having comrnon tariff; perhaps for the time boing the Nethorlahds and Belglum separatoly, even though tho tariffs arc the same. 13. D.1. E/PC/T/C.II/PRO/14 MR HAWKINS: Mr Chairman, I think it might be loft in this way I certainly have no objection to any country adding other schedules as might fit in with these conditions There is no point of principle or substance really involved here. THE CHAIRMAN: You can say the same thing about the French Emprie perhaps MR Lecuyer (Frence) (Interpretation): I thinnk we. should make it Schedulo A, B, C and so on. THE CHAIRMAN: I think if we put that in there that would cover Mr Shacklo's point. MR SHACKLE (UK): I do not know that we neod give a formals decision about this, and I am not sure whether a sub division is in itself cnough, or whether they might not be scparate schodules, but it is not a.mattorof any importance. THE CHAIRMAN: we will put in both . MR SHACKLE (UK): Yes. THE CHAIRMAN:: The only question I still have to ask here is this We make special montion of cortain countries and I would ask those countries that are represonted here whether that mention is all right. Is "Francc and the French Empire" satisfactory, for instance? MR LECUYER (Franoe) (Interpretation): No - it should be "France and the French Union, instead of "French Empire." THE CHAIRMAN: so my won point here is that we should have Bolgo-Luxombourg- - Netherlands Customs Union, but not including tho Belginn Congo, because thorq should be a separate one for the Belgian Congo as woll as for the Netherlands Oversoas Tcrritories. I think that would be aIl right, and I think that, for the time being, that is the bost formula. As regards the other countries are there any difficulties there? MR SHACKLE (UC): I think perhaps so far as the Empire is concerned we may need to put in a footnote which would say that is is not possible at present to say how many separate schedules. right possibly be necded for certain territories of the Empire. THE CHAIRMAN: Yes, I ngrec; but is this list correct - United Kingdom, Newfound - land, Southern Rhodosia, Burma, arnd Colonicil Dependoncios? Ta that the MI 2 PPC/T/WC.II/PRO/PV/l4 Is that the right.fermula prophpas we right ask you to consider that MR. SHACKLE (UK): Yes, we. will do that. MR GUERR. (Cuba): That would be the most practioal thing, that cach country should do the same thing. THE CHATRMAN: Then we go on to the draft agrement and perhaps, as this is an important paper , we should discuss it page by page. MR GUERRA (Cuba):. There is the question of the relation of the general. agreement on tariffs. to the Intcrnationrul Trade Organiztion, and to a certain extent that covers tha point already discused about the Tariff committee and the possibility of other mombers coming in. I think that has alroady been discussed. THE CHAIRMAN:Yes,' but I think it is, something we shall. have.to return to. We have now the, draft general agrement and then we come on to the other parts of the papor. "The Governmonts in rospeot of which this Agreement is signed: Having boon namud by tho Economic and. Social, Counoil of the United Nations to prepare, for the consideration of the United Nations Conference on Trade and Employment, a draft Charter for an International Trade Organization of the Unitod Nations Having as the Preparatory Coxnittee f or the Conference, recoirniiended to the Cunfoirence the pro- visions of such a Charter, the text of which is set forth in the Report of the Preparatary Conmaittoe dated. . . . . . . . 1947; and Being desirous of furthing the objoctives of the Conforenco -by providing an example of concrete achievement capable of goneroalàation to all countries on equitable terms." Are there any remarks upon that? I think it gives the idea; "Have, through their respective Plenipoten- tinries, agreed as follows" and then we Set all the Articlos.that have been mentioned. Is it necessary to have case rore Articles here? THE RAPPORTEUR: I thinle that perhaps the drafting committee might, consider whether there are an other articles that ought to be referred to. THE CHAIRMAN: Shall we leave that to the drafting cormittee to see whether there are some more Articles to be included here? (Agreed) Then we go on: "2. Functions entrusted to the proposed International Trade Organiztions 15, E/PC/T/C.II/PRO./PV/14 under any of the provisions of the draft charter incorporated in this Agremen by virtue of paragraph 1 of this Artiols shall pending the establishment of tho Organization.tion, be carried out ty means of counsul tation among the signatory . Government s." That is ohangod now, is it not? THE RAPPORTEUR: Yes; I think it was agrced that provision should be made in the Procedures Mcmorandun for setting up a provisional organisation consisting of members of the Committee to exorcise any suoh functions, se that this would have to be amended accordingly. MR. GUERRA (Cuba): It would be all the member of the Committee THE CHAIRMAN: Yes. Then we go to Article II "With regard to Articles 18, 27 and 28 of the draft Charter, which relate to negotiations for the reduction of tariffs and the elimination of tariff preferences and for parallel action by state-trading enterprises, the signatory Governments declare that they have, by virtue of of Article III of this Atroement, ful- filled the obligations of these Articlos in respect of themselves and. that they stand ready, in confermity with the spirit of these Articles, to undertake similar negotiations with other Governments which become members of the International Trade Organization. " MR McKIMNNON (Canada): in rogard to the provious Article I was in a little. doubt as to whether the interim committee set up to carry on pending fuller development meant, or did I understand the Rapporteur to say, that every member of the Propcratory Committee would be represented on that conmmittee or every member which onters into the temporary agreement? THE RAPORTEUR: I should think the provisional organiztion here would con- sist only of the members which make affective the agreement. MR McKINNON (Canada):. That is what I wanted to be clear on Supposing only nine make an effective interim agreement, then only these nine should be represented.? THE CHAIRMUN: Yes. That is a go;.d point. Thon we have to change the wording here. THE RAPPORTEUR: This is on the assurtption of aximumrl suocessi. 16, B/PC/T/C.II/PRO./PV/14 MR. GUERRA (Cuba): There is can things, just a quostion of drafting in the fourth lino it says, "parallel action by state-tracinr. onter- prises." The expression "parallo" would give the idea of olinination. I do not think that is required by stato trading enterprisos, but it, might be interpreted in such a way as that. To prevent that, I would say only "actionon" MR SHACKE (UK): "Parallol" is all right; it is parallel reduction of tariffs and parallol but not elimination of tariff preferences, beeause it is negotiations for elinination or reduction, That is all right. As regards tariff preforoncas, is it not a parall.l roforonco to tho wholo of the preceding reforence, and that is how I should think it would be interpreted. MR GUERRA (Cuba): Well, the question is - and Ido not want to bo too insistent about this - that whon we draft it we should be caroful to cover all possiblities of meaning in difforent languges. In Spanish if you put "parallel" it would relate very closely to the action of elimination. That is rq doubt, but it is only a drafting matter. MR SHACKE (UK); You cuuld put (a) in front. uf negotiationss for" .nd (b) in front of "parohllel action." That might do it. MR GUERRA (Cuba): Yes, you could sc-porate thon out. THE CHAIRMAN: : If you lut in little (a) and little (b) that would do it? MR. GUERRA. (Cuba): Yes that will separate them ,proporlry. THE RAPPORTEUR: I should think it ouZht to be "(a) parallel action or negotiations for parallel action." THE CHAIRMN: Yes. . 17. E/PC/T/C.II/PRO/PV/14 MR. HAWKINS (United Statos): There is another points in the next line or two. It says: the signatory Geyernr.anis declaro that they have, by virtue of Article III of this Agrcernont, fulfilled the obligations....." I suggest the first negotiations might net completely fulfil the obligations. They are a stop towords fulfilling them, and subsequent negotiations of the same kind bright carry the process further. I do net think it all ends with the next negotiations. You could say, "have taken this stop in pursuance cf tho obligations." MR. SHACKLE (United Kingdor1): 'ou right say "as between themselves" instead of "in respect of themsclves." MR. HAWKINS (Unitcd States): Even with "as between themslves " , would they be all through? THE CHAIRMAN: No. If you have accepted an obligation to reduce preferences you still have to discuss the method of fulfilling your obligations with the othar members. MR. SHAKLE , (United Kingdon): But you have to fulfil the obligations as between yearselves. You sue, it gees on to say and that they stand ro, dy, in confermity with the spirit of these Articles, to undertake similar negotiations with othe Gevarnments." Surely you have covered the whole thing when you hava dcne that?. MR. HAWKINS (United Statas): I think thera is still scmething missing. I had not assumed the negotiations botweon the 17.or 18 countries, or whatever it is, next spring cempletely fulfilled the obligations which might be expected of then under Article i8, Lator it right be possible te ge further. I do not want it to appear. that this is -absclutely everything that is going to be done. For all practical purposes it may be as fer as they go for a long tire, but you should envisage the possibility of further action. I suggest it Nvould maet the point if you simply say "'oy virtue of Article III of this agreerment have ta!con this stop in pursuance of tha obligations." towrards MR.McKINNON (Canada): Or "towards fulfilment" ? MR. HAWKINS (United States): Yes, that would be all right. E.2 THE CHAIRMAN: Then it reads, "taken this stop towards fulfilmont of the obligations." MR. SHACKLE (Unitod kingdom): It says: " similar negotiations with other Governments which become members of the International Trade Organization." The International Trade Organization will not be formally in existence at the time so how can any Government beceme a member. I an sorry to raise a formal point, but 'I think it ought to be mentioned in order to get the drafting right. MR. McINNON (Canada): You Mean by that it might read "to undertake similar negotiations with such othor Govcrnmonts as maybecome members"? MR. SHACKLE (Unitcd Kingdom): Yes, or "as may desire to become members." THE RAPPORTEUR: we do not undertake the negotiations until they do, do we? MR, McKINNON (Canada): woll), I wonder? MR SHACKLE (United Kingdom)): You might say desiree te become members of the contemplates International Tradc Organization." THE CHAIRMAN Perhaps it is as well to make reference to the conference mentioned in the first part of this draft. MR, GUERRA (Cuba)': You light call another conference in future. So long as we contemplate an international trade organization that will be all right. ' THE CHAIRMAN: Now we pass to Article III. It says "Each signatory Government shall accord to the cormmerce . , ," I think we can go further than that, Perhaps wo can put in a date in Geneva. But for the timne being I think that i5 enough, to giv' the principle. MR. HAWKlNS (United States): I think it is open to suggest there should be changes. This is m erely a samrpla of how it would look. MR GUERRA (Cuba): I understood we would insert sorei other provision on this point - which we discussed before in relation to modification of the agreement. This would be a proper place to put it in. THE CHAIRMAN: Yes. New we corne to Articles IV, V and VI. Article IV in. would give the general exceptions frx/Article 32 of the Draft Charter. Article V would reproduce the provisions of Article 33 of the Draft -Charter relating to territorial application, Thosb can only bd decided 19 E//PC/T/C.II/PRO/PV/14 later on, because Article 32 has not bcon adopted by the Tochnical Sub-Committee, MI. GUERRA (Cuba): This provision will have to bo put in acording to the way in which this question is solved. It will have to contain provisions on territorial application. THE CHAIRMAN: They are mentioned here specially and put together in the other Articles. THE RAEPMRTMUR: The exceptions from Article 32 apply to the sachodule, I believe, as we'll as to the provisions which you might incorporato in the trado agrement of the tariff sehedules. I think it applies. It is an exception from the whole agrement and not morely those parts which you incorporate either by reference or outsïdo this bePoro you spoll the all out., MR. SHACKLE (Unitcd ICingdoi.1): Thoro is an ambiguity in Article VI. I think it appear also in the oxisting draft of the Charter in the last Article of all, Article 79.' Thora ocour tho words withdrawalal by any country on six iionths nAtioo aftor the . initial threc-year pariod)." The ambiguity is: is it that the wihdrawal can talce place at the end of three years, six months prier notice having been givon; or is it that when you arrive at the end of the hroe years you can then give six months notice se that. you can get outat the end of threo and a half years? I think the intention is the firat, but we could get it clear. MA. McKINNON (Canada): Yeu vrould give notice. at the .end oe two and a half years and get out at the und of three years? MR. SACKWi (United Kingdm.): Yes. THE CHAIMAYN: I think this will have te be changed then. MR. SHACKLE (United Kingdom): Might I suggest that that ambiguity should be brought to the notice of Commitee V with a viow to their considering the text of Article 79 in the light of that. I think the text of Article 79 is ambiguous ln the sarme way at the moment. MR. ADARKMR (India): Have we now finished consideration of the general form of the Article? 20 THE CHAIRMAN: We have finished the memerandum . MR. ADAMRKR (India): Our acceptance of this forrn of the. agremtnt is subject to the doubts we have already expresed, whether an altogether difforent form of agreement may not be more suited to the need of developing countrica. That is to say we accept this form of agremen on the assumption that the Government of India eventually accepted tho principle of multilatoral agrocment. THE CHAIRtMAN:Yes, we understand that. MR. GUERRA (Cuba): That in the position of overybody. MR. ADARRAR (India): No, We raised the question that the developing countries might tind it more suited to their needs to ontor into bilateral or tripartite agreements which are multilateral in ottect, but not in their legal application. Any modification of this agreement should require the consent or or negotiation or discussion with only a snall group oe countries and not with the Organization as a whole or with a large number of tho members of the Organization. That is a alight variation eo the plan-propos- ed in the draft Charter on economic deovolopmont. It was a question we left open yesterday, on which I was po. mitted to make a reservation. MR. SHACKLE (United Kingder.m): Does tho Indian Delogato refer to agreements under tariffs and preferences, or to bilateral or trilateral agreonents governing the wholo oe tho subject-natter? MR. ADARKAR (India): Only tariffs and prefcrenccs. THE CHAUI1ILN: Due note has boon taken of that point. MR GUERR (Cuba): \When tho Cuban Dologation came to this conference our Government had only the proposal put forward by the Amorican Government in the proposed Charter, and the Delegation had instructions and idoas about the position of our country in that regard. However, we are in a different position in regard to the memorandum in goncral. I do not think our Delegation will have any difficulty in this; we think it is all right and covers the idea of procedure nnd the method of carrying out the negotiations. However wc want te make it clear that our acceptance of this is conditional ,upon the finaal acceptance of our Govermniont. Our position cannot bo interpreted as accepting this memorandum as it is now. 21 THE CHAIRMAN: Everybody is in that position. We make no final commitment here. There was another point mado by the Heads of Delegations, whether we should provido for an instrumont should there be important points to be raised by Govornmcnts before we meet in Geneva. MR. HAWKINS (United Statos): Might I sag that this momorandum was prepared by the Rapportour. The American Government have never seen it MR. GUEMRA (Cuba): Than I tako it you are in the some position? MR. HAWKINS (United States): Exactly the same. F fols) E/PCT/C.Il/PRO/PV/14 21 (a) F. 1 E/PC/T/C.II/PRO/PV/14 THE CHAIRMAN: We come now to the Interini Tariff Commitee. I have a very small remark on the last paragraph of page 19. perhaps we should add here the formula provided in Article 56, "with the couhtries councerned". Or perhaps we might just refer to the Article.: I do not think it is important. MR. GUERRA (Cuba): Do you net think that even the number of the Article ray be changed in the general working out of the Charter? THE CHILIMAN: Yes, we could leave it opein, and say "Article ..,"and fill it in lator on vwhen w. sec the,whole thing. Then we come to page 20, In the firet lines, thore again I think that for the sako of clarity we should say "after acooptance of the Charter by the World Conteronco shall constitute the original mernbors of the Interim Tariff Conrnittec." aust to make every stop clear. If there arc no remarks on the first paragraph, we will pc.ss to paragraph 2. Herc toeo ornay introduce saorething about "after the acooptanco of the Charter by the World Conftrence. ." and so on. We will lbave the exact wording te the Rapporteur. He might like to put it in a different place, but I think it Would go here, In the second paragraph, hare again for clarity' s sake I think we should put something in. "The interim Tariff Conmaittee would have the function of determining whether with respect te further negotiations after the initial negotiations, any membor of the Organisation'had failed to live up te its obligations ..." Hére we do net mean tho initial group, we have in mind othor members of the Organisation who enter provisionally and then have the obligation te negotiate with the 'first group with regard te the obligations they will hava 'te fulfil to become a member of the "low tariff club". I think'that should be put in hore as well for clarity' a sake. MR. SHACIM (United Kingdam)t There is a possible complication, ie thorax net, in this sense, that supposing that after the firet revision sema member who had withdrawn some of his original concessions were net te negotiate what was regarded by the other' members as a satisfactory revision agree- mont - A satisfactory new agreement - then presumably he would become - 22 - F. 2 subject to the same .considerations as a country which originally had not negotiated satisfactory tariff cenoasions. I do not think we need look to this possibility here, but I think it is a possibility. MR. GUERRA (Cuba): If we start form the assumption that the Interimn Tariff Connittee vili bo made up only of the memibors which live up to thoir obli- Cations, we ray covor that point and say "Where any non-momber of the Tariff Committee". That would include members who were not originally moeebrs C*' who had. eased to bc momibers cf the Interim Tarif? Committee. THE CHAIRMAN: I do not think that will cover it because we first have to say whether they have fulfilled it. They would sill be mernbers but later on would case to be nenembers if they did not tulfil the initial obligations. biR. S9mCIm (United Kngdoei): I think that meay be the answer. THE RPORTEUR: I think that point is fully taken oare of in Article 56. I suppose some provision should be added there to the effect that the C=raittee - ray declare any nermber a non-menber, in other words, put himn out of the Comrdittee, in the event of failure to raaintain the obligations originally assumed. MR. UCKINNON (Canada): I do not think this mermorandum need go intô that, THE RAPÈORTUR: No, I think it should be dealt vwth in Article 56 itself.. THE CaIUIMANs Perhaps we should dravw the attention'of Comintte V to that point. Will the Secretary do that? MR. GUERRA (Cuba): Then do you not think that the proposed agreement should have a reference te Artiole 56? THE CHAIRMAUN: Yes, that was the idea, That wha what I said. It ia not mentioned at all here. THE RAEPORTEUR: It is mentioned, I thought vwe had agreed to put in a reference ta "The Draft Chairter provides in Article 56 that the countries which make effective the general agreement on tariffs and trade". So there is a reÈerenoe to it.. ; THE CHAIRMN: The question was, do we mention alse the agreement. Now weoome to a f ew points Yith regard to the Interim Tariff Comittee. E/PC/T/C.II/PRO/PV/14 F.3 E/PC/T/C II/PRO/PU/14 Point (a) is: "The Committee nay not corapel a.member to withould tariff benefits form another member it may only authorise the neinbor to do so. If the benefits are in fact withhold frorm a member, that member may withdraw from the Organisation." This is ail aftor the Charter has come into effort, after the orld Conference. 'Point (b) is: "Amariber oa the Organisation may be adiitted to membership in the Coraiittee when the i.iomber has completed tariff nogotiations oem- parable in scope or ettect' to the negotiations already caripleted by the original riewabers of the Connittoé. Thus, what is aohievoed by way of taritf action in the Gonoral 1,grcerAcnt on Tariffs and Trade wïll become the standard to which zis:ibers of tho Organisation will b. exp.ectoc to conf orm in order to obtain inembershi.p on the Coroeaittee." I have only one question here, Ou,;ht we not to have sone kind oa. .provisional mbership, because you will see that better thé lorld Conference, ,if that LS a success, a number of countries will al-so be prepared to negotiate and will already ho members, having fulfilled sore oe the obligations 'e the Charter. The vcry important point of to.rift negotiations will then be taken care of and later on we shall Judgo whether the momber haîs fulfilled Lts obligations in that respect. It rmay be of importance that it is already considered as a member arnd expected to act accordingly vrith regard to the other provisions of the Charter, Ulé only say here "a member may be adcritted to membership". Here it only refera. to the Ccm- mittee should Lt not be'a proviciaonal znerer of the Organimation? MR. HIi.WKNS (United States): Is it not conceîvable that you caan hatve a meriber who i8 in tact a i'ull rieraber of the Organisation but is not getting' the benefits of the taritt reduction? THE CHAIRMAN: What I would like to cay here, and it is an important point, is this. Suppose a country is admitted as a meoner, ar;d later on you have to expel hiLi. Or, suppose a country is a provisional iemiber for a certain time, during which he La supposed to fulfil his obligations. That would not be as severe as to have to expol a member. I do think Lt 's a point worthy oa study. - 24 - F.4 E/PC/T/C.II/PRO/PV/14 MR. MCKINNON (Canada): There is no provision in the Article, as I recall it, for the expulsion of a member. MR. Adarkar (India) A member is free to withdraw. THB CHAIRMAN: He can only himself withdrav;. Perhaps it does not mattor- but it is a question which is, not clear in my mind. MR. SHACKLE(Unitod Kingdom): You may have rather a confused situation. on this sort of assumptiono A oountty becomea a member, fails to negotiate satisfactory tariff reductions, and the Organisation dedides in those ciroumita.nos that it shall not be oititled to cort.in obligations under the Charter. But suppose it thon doos not decide to withiravi, but simply to rarain in the Organisation which not enjoying sone of tho bonofits. If you have o. number of countries in that position you miïht have a vory confusing situation. You would have a sort of' partial :.J.icberahip. MR. ADARKAR (India) Unless it is loft opon to a moembor in that position to dccide vihothur it vrill remain in the Organisation or got out of it, I think it will bc very difficult for us to consider paragraoph 3 of hrticlc 18 at all, vrithout considoring artiolo 31. Bocauso thon tho moraber boccns a non-moribor. Ho gots out of the Organisation. The result of any rnoinber failing to rcach agreonent in tho r.atter of tariffs with othor ror-bcrs would bc that ho bccomos a non-r.ioiIbor. j. MCKIONON(Canadr.): That is right. ILR. EDPKAR (India): Yos. Thon we raist know oxactly what ho consoquoncgs of expulsion aro, and for that wo must roter to iLrticlo 31. MX. GUERPk (Cuba): I think thoro in another qu%.stion. Tho Charter contcmplate; Wany tims tho possibility ofa ornonbor not l±i3 1,;- ti certain obligations and othor rielbors withdraNving concossionsgivçn to hari, an& yct I:ho Original morbor m raining inside the Org.anisation. Theo. wholo spirit of tho Charter is that nobody. is roqu4rod to fulf il ovory ono -of tho obli- gations ho ri-y ha-ve originally contractodi Thloru iay bo noiïabors who are complying with obligations regarding tariff s or quotas or othor things vho yet, in regard to other roiboers, in a bilateral situation>, aw not fulfilling certain obligations. That othor mmcbor has tho right to with- -.25 F.5 E/PC/PRO/PU/14. draw same concession under the procedure and rules of the Organisation. I think we may now be able to discuss whother, a meribor has to fulfil very ono of the obligations or elsed get out of tho Organisation. MR. HAWKINS (United Statos): I think thore is a good deal in tho point just stated if I understand it correctly. It is an argument in favour of theso provisions as they are. That is to say a member might have benefits with- drawm frm him bocauso ha did not comply with the tariff agreement and yet still rotain normborshii. The argument in favour of that is that if he stays vfithin tho Organisation thorc is hopc of working out the difficulty but if ho gots out that hope diminishes MR. GUEMRA.(Cuba)L That i8 what I meant; I think that the whole Charter js drainn in such a way that nakos it possible for sume members to within the Organisation who are only complying with cortain obligations. - 26 - . E/PC/T/C.II/PRO/PV/14 THE CHAIRMAN: So in any casa ho is a mombor. MR. QUERRA (Cuba): Yes THE CHAIRMAN: I. that isoloar we can leave it. at this. MR. GUERRA (Cuba) : The only thing is, I want to got some olarifica- ion of The Committoo may not compol a Mombor to rithholid tariff benefits from another Mombor". Doos that rofor to a mombor . of the Oommittee? THE RAPPORTEUR: No, a Mombor of tho Organization. .,hat it providos is that you release onoa Mcmbnr from tho obligations of tho most- favourod-nation clause in rspoct of another Mormbor of tho Organization. THE CHAIRMAN: But I agree 'itlh you thoro, Mr. Quarra. MR GUERRA (Cuba): It appears to rofoa to mombors of tho Tariîf Oomnmittac. THE CHAIRMAN: I agree eou got somo confusi.on. THE RAPPORTEUR: Well, "may not compel any mombar of tho Organization: te withhold tariff bonofits from any othor mcmb.r of tho OrganiaLtion undor paragraph (c);'. That rvould cover it. MR. GUERRA (Cuba): Ycs, that vould covor tha Intrim .Tariff Oommittoo mombors alsu. MR. ADARKAR (India): Mr. Chairman, I r::ish to havo somc morc clarifioar ti'on of this second sentonoc hçro: "Thus, v'hat is aohiovod by may of tariff action in thc Goncral Ag.rocmcnt on Tariffs and Trado vrill bocomc tha standard to which, Mombors of tho Organizat- ion rill bo cxpoctad to conform in ordor to obtain marùbarship on tho Oommittac". I baliov<. soma amplification isncocssary here , and this is the reason to describe the whole procose ve start nith a distinction botnaon mcrembnrs of. tho original nDgotiat-. ing group and tho mombors of tho Intorim Tariff Oommittoo. Tho Interim Tariff Committee .will not nocossarily ba oomposod of all tha mombors .ho 'rill participate in tha initial negotiations; it will be composed only of thosa. mombors viho fulfil thoir obligat- ions undor Artiolc 18 and tho givo offoot te this agroomant. Thorofor¢, tho first point to bc docidad is, -nhat is thco, criteria 27. G2 E/PC/T/O.II/PRO/PV/14 which will be used in decidig whether tho mobers of the original negotiating group hava fulfilled thoir obligations? Thon the second stago of the procose begins .hen we admit now mombors, and thora ro havo to docido whether any member who not in the orignal nogotiating group has fulfilled his obligations or not . for that a oritorion has been suggoested here name what is achieved by way of tariff action by the original group will be the standard to trhich now mon-bors eill have to conform. That is to say, which we have set a standard for tho second process, wo hava sot no 'standard- hatavor for th¢ first sta'gc. For tho second stago ro hava a standard hare, but for tho firet stagc, for dooiding rhether any mombar of tho original group has or has not oarriod out its obligations, r:o havo sot no standard. You find on pago 2, for example, "Procodurc inecvontz.f failure to nogotiato". That is certainly different from.failura to oarry out tho obligations. A country may not havo failed to nogotiato; *it may hnva negetiated, but it may havoc nogotiatod on its aon torms; it may have failed to carry out tho obligations ';.hich arc expxeted of it. -Near it is. for this roason,. sir, that it becemes necessary that we do not dispose of this particular sub- paragraph (b) without t first considoring this draft mossago of thc Joint Committac, or, if v7o i.-rk through to tho ond of this particular section, r"à should comc back to it, THE CHAIRMAN: YCs, ro tyill oomc back to it aftoxdvo hnvo finished this papor. MR. ADARXAR (India) Tho only further comriont I tould liko te mako is that it is quit in aocordanco r-.ith tho principlo that tha ncgotiations-should precoQd on a mutually advantageous bass that, so far as tho ncov mombars are concornod, the standard suggested horo would bc a fair standard; that ie, if.tho nogotiations are really to bc mutually advnntageous thon surely a no, mambor. must ondcavour to sec that tho concessions it iB 28. E/PC/T/C.II/PRO/PV/14 going to offor are in fair proportion.to the concension that it recoives but while that is fair and that la truo and logical, it is certainly not fair to ignore the further consideration also, that -hatever may be the gonuino dosire of the member to come up to that standard, it may not be cable to.do that because of the peculciritios of..it.s o.n coononio position. Thco.raforo, "hà1 ovory Ondoavour should bc rmado by avory m r2lbar of. the organization to fulfil this principle on a riiutual.ly advantangoous basis that isle to Bay, to offor concessions .hich arc comnonsurato to tho conoassionseit rooivos -- thc Intcrim Tariff Comrnittco should takc into account tho economic dovolopriont of tho mrrbjr conc:rncd in casa tho mcrnbor fails to comc up to thnt standard, and for that agAin it is naocssary ra should consider thc mossaga of.,thc Joint 'imnittoa before c finally dispose ofthis particular portion. THE COLIMIAN: I -ould likc tha Coormiïtt'c to dcal ',ith'ovory part of tho 'papor nnd thcn have thc r.iosstgo.of tho Joint Oor.imittcc opon for discussion. If thcre arc no othar rcriarks pçrhrtps thc Rapportcur r:ould likc tô. conraon:z on this point -ith raganrd to mam.ibors .rho do not fulfil thoir obligationsG MR. QUERRA (Cuba): It iÉ only to maka thc change suEgostad in another part - instead of saying havoco fulfilled, to say "has trnkon stops torards the fulfilment of its obligationse . THE CHAIRMAN: No, I do not think so, bocauso in tho Agroament you start at a certain point. Tho .;graoomnt .'!ill -ork for a certain timc, and it ina' tako somo tirî bcforo tho r;holo, Trado Orgnnizatior has boon sot up. Tho Tariff Oommittoa v:ill go on ':;ith its ;î;o'rk for perhaps t7o ycars, and in tha moantimo tho original group may hava, in half a yoar's.tiao, fulfilled its obligations. MR. QUERRA. (Cuba): That raay ba so., but ca must contomplato casas in rhich tho settingg up of tho.organizntion .rill tako a certain timo, and tho roal point. is that cou;itrics hava tnkon stops to-rardE tho fulfilment of tho obligations I think that comos iii rrith thc 29 . G4 E/PC/T/C.II/PRO/PV/14 other mandnont we made before. THE Chairman : Parhaps we can get that in point (o). THE RAPPOIREUR Yes. I suggest you simply add.the .,wordo sinco it is agreed that tha original macibors of tho Intorin Tanriff ornittoo' havo takon adoquato stops' to.-nrds fulfilmont of tho tariff 'obligations". MR. GUERFB (Cuba) Yos, that is tha idoa. THE CHMIRMAN: Thon,.:o came to point (o), gontlDr.in, Haro ngnin thora arc n afo roanarks ta rnoko, I think. MR. MoKINNON (Canada) a It is (a) '`7 nro an... 'THE OHAIRMAN: Thora io onq½oint haro, that "tho Committec may not authorizo ona original timbor'of tho COriraittoc to withhold tariff concossions from another original momibcr of tho Coim.ittoo.". I is lait opon QB ta who should authorize it. MR. GOURRA (Cuba): Thon if that is so, tho v'ording in tha previous paragraph (a) rofors only. ta mombors of tho Organizationv;hi'oh ara not members of thCOommittotea THE RAPPORTEUR: No;, it may authorize a non-mambcr oaf tho Oommitteo ta vrithhold tariff concessions from an original membor of tho committoc, MR. GUEMRI (Cuba): In paragraph (a) it says thoa Ommittoo m only authorize tho Mombor ta do sa, and r.hon I askod vrhothor.tho member referred ta vras.a moi.nbor of tho Organization or a mombor of tha Committee you said thcy vaora mombors of .tha Organization, and thon I askod you. tho second question, ras it undoarstood by * ^ "mombors of tha organizntio.n" m¢mbors al8o of th Oaommittoc, and I thought that you ansv:orod Yos to that. You hLvo norr a rulc that tha aommittoc may not authorizo ona original mombor of tho C oamittea ta withhold tariff concessions from anothoraoriginal mombér, sa therc is a contradiction thoro, THE RAPPORTEUR: Thâ first point, (a), ras simply to mako it.oloar that rhatovcr action vas takon riould not ba oompulsoa, but it v:as morcly an authorization., you soa. 30. G5 E/ PC/T/C.II/PRO/ PV/14 MR. GUERRA (Cubc); Woll, it says in (a) it may only authorizo, and in (c) it says it may not even authorize. THE RAPPORTEUR: I do not quite follow that. (n) says "'The Comriittoo may not oompol n Mombor to withhold d tariff benefiltas - may not compel nny Mcmbor of the I.T.O. to withhold tariff benefits from any othar moibor of tho Ooninîttoo. It nay only nuthorize a mombor te do seu MR. GUERRL, (Cuba): "n mombor", :hioh rill not bo a'momb¢r of the Committee, because a mombor of thc Committoc is nto authorized to *-ithhold, undor (O)- THE OHAIRMAN: You sec, in (n) you sponk of nll mombors of tho Organization - "it" nay only nuthorizc tho Mor.mbor., That covors. eVorybody., No,. you corc to (a), vhoro you say "Thc Oommittoc may not nuthorizo ono original momber cf the Committoo to withhold tariff concessions from nnothor original mombor of the Corimittoe.1, 0se horo you got into difficulties, Horc you say it nncy nuthorizo, nnd horc you say it may not nuthorizo. That is tho point, MR. GUERRA (Cuba): Thatmcans para. (a) doos not oovor a mombor of thc Tariff Committoe. THE RAPPORTEUR: It docs not cover n case of withholding by an original mombor of the Tariff ¢ommittoo against another original mombor. MR. ADARXAR (India): Mako it I"Subj cet to (c) bolor". MR. SHACKLE (UK): Yos, you can simply say in (a), "Subjoct to tho provisions of (c)', THE OHAIRM.Al:, Any difficulty? la that oovorod? THE RFLPPORTEUR: That is nll right, sir, I think. THE OHAIMIAN: Noe ":hat is tho amondmont ro put in horo, Mr. Loddy? THE RAPPORTEUR: Tho Ohairman thought that point (o) noodod somo ' additional clarification te manko -it .cloar that vhilo tho Oommitteo nas net nuthorizod te permit an original mombor cf, tho Oommittoo te withholdd tariff concessions from another original mombor, tho Organization as suoh undor Articles Z9 nnd 30 and othor oscape 31. E/PC/T/C II/PRO/PV/14 clauses oould do so. Was that your point? THE CHAIRMAN: Yes, MR. GUEFRA (Cuba) : Assuming the Chahrrtor is in of offoot. THE RAPPORTEUR: Yos, assuming the Chartor is in offoot and the Organization is catablishod, nnd some oaso arises undor Art. 30, thon of Coursc another member whether or not an original monbor of tho Co.rittoc, could bo authorizod to withhold concoassions. THE OàIRUAN-N: My point :ns thot via had bottor add it horo, to provont any confusion. Is it etgrccablo to change tho draft cocordingly? MR, ADARDA-R (Indin) J hat exactly is tha addition? THE 0EAIRM^N: It is just the point that thoy may not authosizo, but that tho Organization itself may authorize it, MR. MoKINON (Canada) : In certain c.ircumsttanpos. THE CHAIP U.NN: Yos, having regard ta Articlos 80 and s0 and B0 nnd 80 of tho Ohartor. . H.1 E/PC/T/C. II/PRO./PV/14. THE RPPORTEUR: I think that maybo a footnoto would bo the casiost way to handle it.. THE CHAIRMAN: It is for you to docido how boat to do it. Thon paragraph d. Is there any question raised thora? Mr GUERR1L (Cuba).: Tho only question is that in rocard to that tlar.agrn.a;h, at first sight, it is difficult to undcrst.anc thc rotson, but finally vo thuught vo undestood tho reason. But in re opinion that nocds sumn clarificeation, sorno redrf.tinr:, bcocauso thorc seons ta bo a contraz- diction to 3oy that a "non-member of tho Comon.Littec" (canc "uithholcl tariff bonofits frora a ;nnbor of tho Committee. MR SHACKLE (UK) Whnt ialces tho confusion is that ono talks, in fact i'f o "non-memnbor" viho is ;. lembcr of tho Orgniz.ation, :rand iftlhwt wore r-ldc flocxr at tho beginning, thc wholc thin, vvould bocx,w undcrgtcind,.blo. MR GUERPI; (Cuba): As I understood this, th..t rmcans that tho ro.eson.for that ij that a non-mrorber can do sitrtthinr,, or r.iay want to do somrtothina, or hoe rmy vant to fot sourthinZ, n.nd ho rîxLy offor sor.lothing in return, but if a nombor of tho corr.ittoo is not vrillinS te r;irvc hiris.r.n con- acesion thon thc situation mirht rriso in i7hich a non-ricr,,bor vzishinr to cone in cannot po3sibly ect in. Tho wholo thing le pretty confusing, and it is most difficult to uKl.orstand. Thore es an apparent contra- diction botvmon this p'r.,ra)h (d) and tho provlieus onc, nad I on not cloar which ivay it would havc to bc intorprotcd, TH RAPPORT'EURf: Paragraph (c) dco.ls with thc situation botwveen an original member and another original no-ibor; (d) deols with tho situation bot-ocn an original inomebr and a country which is not a Tmombor of tho coTImittco. UR GIJRUIi (Cuba): Yes, but rVr point 1e this. Paragralph (d) scys: "Tho Conmuttce may ciuthorizc a non-.r.iorcnbr cf tho Comniîttâo to withholdd tariff bconofite frari a moribor if tho Co..uiittoc.," IApparcntly thora has to bc a ¢ood .nd cl.oar reason why- thcy ir-Vy authorize a non-mombor to do that, and that is nry point. At I say, I thought I unccratood tho season, but the draft is ccnfusod. Porhaps tha roason should bo put in tho first part of' tho pas3rarph, giving soî;u sort of cxllanation, 33. H. 2 E/PC/T/C.II/PRO./PV/14 THE CHAIRMAN: Paragraph (D) deals with members of the Organization in reference to other members of the Organizaticon. If we chancd the Crz'taccordingly that would rregardit broader. In (c) wc make nx exception .vçith .regard to r.bcmibrs of the Organization. THE PPORMEM: I think maybe the v;.V; to handle it is to recast (a), but the only point involved in (a) is that action is not compulsory, it is moroly p.ermissito; ncnd I think it ou.3ht to.bc rc-statod in order tu avoid all. this confusion. Thnt is the only point. MR MeKINNON (Canada): Wtether it is contradiction or .:rc cecundancy, it in certainly conrfusing. M.R HAWKINS (USii): I think you vmould clccor it up if yau oast it diffcrontly, if you put in a Soneral clause soriovhc±o to the effect that if there is any lJatec occasion for action aCainst tho rmr.ibers of the Orgenizaticn, whether in the Corunittec or out of the Cor.imittoe, or vfhatevor it may bo, that action shall not bc mandatory, it shall, be permissive. That is what you are trying to say. MR McKIMNON (Cgmdaa): Yes; but the employment of a lot o? negatives makos foi confusion as bctifeen the fouxr paragraphs. M}SR GUE. (Cuba): I could suggest that, if possible, tho Ranlorteur should re-dreft this paragraph (d), putting: the ro¢son first, bec.-use that would then help us to understand the rule. As it is, the explanation - comes later. That is the rcez* reason, nnd I thinc if' we put the e xTlanaticn at the boginnhing we wvuld .axvrid all this confusion. It is a .question of the ordor of? drafting. MR HâLWKINS (USJ.): Yes. I think if you put this particular part last and sa;y, "If there is .y occasion for ivishholddirn bonofits errnm metobrs it shall not be r.i=ndatory but pcrmissi4ta, ." that would meet the point, and you imuld eOxplain tho viholc thing. MR SHACKIE (UK): I think the last sentence in this paragraphh vants some clarification, does it not, boc.1use it is extremely confusing as it stancls..It scys: "in xyq ment, thc extent to vihich a non-aier.iber might vfithhold tarief benefits frobi a moriber wvoulci bc limitcd only to tariff 34. H.3 E/PC/T/C. II/PRO./PV/14 concessions which the non-member had. already mado ursuant to Article 18" and so on. At first sight it is a little diffeicult to imagine how a nor-momber could have mado concessions still still be a non-mombor; but 1 tako it the idea is that thc non-nombor might have noaotiatud- con- cessions with 8Omc. member countrios and not with others. THE CHLURMAN: What I do not uniderstantcl hero is this. You have a moimber and a non-member - a non-mrnobe' of thc Corvarittoe whoa vrnts to pct into the Organization. You soy: "All right, now you enter into aortion negotiations. " The whole idea of this is that it is multilatoral. How can a member of the Cormiitteo viho has alroncly oxtendod his concessions to everybody vrithhold thoso concessions f rom othcr non-mombors. oa the Committee. and, as such, fulfil his obligations, because that is tho only reason why you vrould authorize. him to withhold concessions front a -aember of the Cormnittee? I oan not at c1l clelor on this. MR HAlWKINS (USA): I think that it does need discussion, but rey undor- standing is this. The original rmombcrs have negotiat:sd an Ap'eetnt amongst thenselvos reducing tariff rates, Other members have not yct participated and othar members have obliSations under Article 18,- namaly, ts ncgotits.in ordor to bring thoir tariff lovel dowvn to tho standard ,et by the original merbers. SuMose that ono non-meomber, but not a, member oa the original group, though a :neraber of .thc Orgonization, a.pproachos, soy, for the sake ai cx.rguz-mnt, the United S.tatGs, !and BOY9, "We would like ta negotiate with you in ordar that wic may brings. our tariffs down to the level a of yours," and supposing the United States scys: "We do notvwant to ncgotiatc with you. The product in which yOU are interested is not covered blore, and vo do not vant to negotiate about those products," thon he cannot qualify bocauso thc original membor will not negotiate with him. Therz;foro, thcy have' to gvc tho member trying to gct in sorea sanction, a right to withhold. Hc has to have some remedy thore.' MR SHAOIE (UK): Y0u envisage that these negotiations would not bc on a nultilateral plans as would the original negotiations, but that thoy 35. E/PC/T/C.II/PRO./PV/14. would be a scrios if bilthoreal nogotictions between the original member and the group of countries wanting; to cor.in , so that you have to make sure that tho series would be coumplted in that sense? MR. HAWKINS (USA): Yes; I vruld not proclude the idea or multilateral negotiations but you must cnvisage possibility, if not the probility, that they will be bilateral. THE CHAIRMAN yes: that if it g;os on in that rc'..sonini vwc could oven iraginc that vehon vu have rcaclcd uur first Crcoraent vic shall find exceptions bac.use certain countries can svY: "This and this I have to offur, and for that I ,rnt that cnd that, but I conasidor that ono cf this f iret negotiation group siînly 'oes not Nmnt to negotiate certain comaodities in which I axa vitally interestod." Arnd thon you *ould have the samc thing, that the first group woula havo cortaïn concession not mltilatoral. bR GUEPRP (Cuba): Yes; ard thoen you veuld havc the right, as is given here, the fight for the mrober to ithdravi f rom the neg-tiations. THE CHAIRMAN: Yes; you would have in your vihole system c itariff certain concessions only applicable to certaincountrios, not to all - oven in your initial neSotiations. MR MOKIMNON (Canada): NJot in the initial roup. MR HàWKINS ( S;): This kind of case of which we arc spcokins horc weuld not arisc if the country vhich had ba on prarticipatirwg in the original group were interested in cxporting only products which hal ponocl to have been covered by the original narecment. Thcroforc, it %muld be » re gener.l. In return, for that ho would bc oxpccted tu reduce his tariffs; but in this casa it is a product of sreat iUqmrtance which is not included, and ho hat to opt that down somowhere. He therefore negotintes to Set it down. BÉu. on:e f the original members refuses to do that, and therefore blocks his avenue to comply with .t.ticle 18. In that case the member that is trying to comrily, o. nun-member cf the original grouP, is given the right to takc action against the icmmbor cf the original group which fails ta coooperato with him in his nfforts to Cet into the 36. origîna1 group H.5 E/PC/T/C.II/PRO/PV/14 MR McKINNON (Canada): This, is to prvnront an obstructionist attitude on the part of a nomber whe of for rcasan râCht vittnt to koop out ai non-.onor. 1Ifl }IEKINS (US&): Yes, that is it. le GUERRA (Ckba): That is my point, that sor.nc clarification is ncoossary. THE CHW'PIRMN: So that in the and you vnuld hvc all cithteon countries haviag a real, mltilntoral systn. wiith rogord tu othor nao ra.rs you would have thcsc oxocjtions? MR GUE.RA (Cuba): Yes, that is the idon. It is thc a.pplio,.tion, in this caso, f' tho goncral rifht givcn throuZhout thc Chartor tf vrithdrovuinr conoosuions frorn mermbors v.ho do not coril-Zy vrith thoir cbliro.tions. MR HAWKINS (USA;): Yos, exactly. MR GUERR1. (Cuba).) I still thi9nc thrit Soi.C clc.rificoti.)n is n.coossory, ripybo by c. changc in the order of wording. MlR SHMCKE (UY.) I rather havc the. fccling that thc poar.rzviih' rould bc maoe rmorc intelligible if, in tho rirst 'lace, wo said "non-rnocibcr cf -thc COomnittcc" boonusc that would mLok it clcomr th.;t it is a hcicibr of' tho Orgraniîztion but not a noriber of tho Cirr.littec, Ùccr¢.us in thc cosoc o a country which is noithor n. member of tho I)rganization nor a ocribor of the. Comnittec thcrc is nan Dccl fur the Corr.-ittue to authorize azythine. A country in that position cran do what it lilcos. MR 1L'VKINS (USA): In rfcet, in one dr.ft you would have . different situ- ation, because therc the action miîht be randantory if' you took action against hiî: MR GUERM (Cuba): If the r.ioer vwho ls trying to cet muthorizfttion is not a member of thi Orgoniza.tion ho vill rio' bc able to withdra. ' concession, so that 5f we put horc "non-m.ncier of the Conraittce. n it ,ould Mkcz it .irpler. TnE CHLfIMW'N: W 4 wïll ask the Rpportoui to studyg tho dr.ft asain and. sec hovi wu, can cover thoso v=riuus points that havc bon risro. If thoro are nothCer comtents to bc modw e conc don- to thi entry.into force of the Charter: ".Articlo 78 cE thc draft Chictcr provielos thazt in special cix -umstances tho Chartcr mpy bc brought into force among the countries 37. E/PC/T/C.II/PRO/PV/14 which have made offective the General .Agrcement on Tarif'fs and Trado. This provision will tond to assure tho ctabt. ostablishmont of international Trade Organization nt an carlior cLbte th.an iirdht othxowiso bc possible." - MR. SHACKLE (UK): This is really ' rmpotition of a jiaint I maadc bcforc, but anything. that is put into a docum:cnt that is nut in rorco is itaclr forocloss front a lea l point v viovr. It 1as to bc put in a separate document to havo rnny lgcil force, a. sacarate document boinr brought into forme previously .ndi indcpenaontly. MR MoKINNON (Canado): This is only. a state2mnt, for what it is worth, is it not------ MR HA.C= e (UK): Yes, it is just a declVration of intention, justing iho draft. just for putting out thO idea. MR MoKIMQN ( Canada): Ycs, thalt is right. THE CHMIEN: la tho point clcar to tho Rapporteur? RAPPORTER:R No, Sir. MR SMULG=I (UK): Thc point is this. Y;ur Chcarter is a draft: thercforo it has no logal forco: therefore no provision th^.t you iut in âiout things whioh afb to happen before the CIiartci cocs into force ccn hevo .y effect at tho prosont tiUe, a.nd the fact that you hrvo j1ritton it into your drat Charter can ialco no di:Porencc; nothing can rnake the draft morG than a draft, .an thorcforc .2rz nrtinC that it saya about what is to happen before tho Charter coiar intcn forco con cf itself havc any affect, It aon only be docloratozy; it h:s no force in itself. 38. . E/PC /T/C. II/PRO/PV/14. THE RAPPORTEUR I with that. MR, MoKINNON (Canada): The memorandam as good without this paragroph, In relation to what Mr. Shacklo says, a. n separato instrtunent and arced to by thoso concerneid. The Chartie w have to speak for itself in duc course. THO CHAIRMlN: The Rapporteur will.study this point and see whether we can loave it out or not. THE RAPPORTEUR: It can be left out there is no question of that. It is just a reference to what is in tho draft Charter, that is all. THE CHUAILiAN: Thon we havo conplétocc our ±irst stuc¢y of the draft,: and the Rapporteur will have to redraft it accordinàly. At the beginning of our discussions we discr"qbc iuostion of the imtually advontageous basis in the first four pages. I wonder whether soothing should not bc put into the draft birng prepared now in that regard, beoausc that vras a very important potibn Tha qualified a numbor``f othor point in the document. Yesterday wc had, sowxe cross rofercnces to certain points in the firat pages cf the memorzandun. MR, McKINNON (Canada): Is that boforc page 5? THE CHAIMAN: Yes. 11R. McKINNON (Canada): I .thought we were going to drop everything before page 5. THE CIAIRMAN: That was the idea. I onIy want to be quite clear whether e should drop everything in thor -ages Perhaps we' can leave that tohe Rapporteur. If he feels he should put something in ho can do so. Provisionally ho vrill start viith page 5. 'ie still have the important point of the draft message frorti the Joint Coioittee of L andII. I have not discussed it with Dr. Cocmba, but I understand we arc supposed to doal with that. Wc have before us a proposal to maice provision in Article 18 of the chapor dealing with Ccr.avrcial Policy, "so'that in relation to tho undertaking to reduce tariff s and to eliminate iriport tariff preferc-nces, the Organization and other Moibers should, wthcn considering the contribution which a Member can make to a reduction in tariffs, talck into.-account the height of the tariff of that etoinber, and the neca, if .ny, of that blomber to use protective measures in order to promote industrial and general economic dovelopmnct." 1 2 That is the request we have from the Joint Coluittoo MR. ADARKAR (Indai): I suggest the most convenient way ta disposal af tsie issue is ta inoorporato tha wrholo of thc portion Ueginting "in relation ta tho uncortaking ta rocluco tariff's" and onding generall ccononic devolopement", as a soparato provision in Articlc 18 either as a soparato provision or as part of paragraph 1 of Articl, 18, and alsa ta ropoat tho snrio portion on pagc 5 of tho arnmorandui - that ie, in the introductory roimarke ci' th r.icionrandwu - and r.ko a roforoncoe ta it under (b) on page 20. THE CHA.IIfMAN: I think yoatordayro docùdud ta lcnvc out the introductcry reraarks. bât .ÊARKR (India): 'Wo are starting on pago 5. Lithur rmake a roforcnoc ta it on page 5 or. in (b) on pago 20 of' the ro.ar.iorandui.i. We shall havo ta make Ueo of it twice, first ta o%.plify paragraph 1 of irticle 18; in order that vo ry fulfil the wishes of the Joint Comnraittue somo ammondr.iont of paragraph 1 of irticlc 18 would be roquirod, and thoroforc that portion will have ta be insertod cithor as part oP paragraph 1 or an a soprate provision in Article 18. Tho scanc portion will havc ta bo ropeated in (b) on page 20 of the nenorandu; ancVor in an: introductory rermarks that mapy be under "Goneral nature of negotiations" on page 5 of the miemorandum: THE CHAIRKMAN: Before WQ do -that I woulcl lice ta ask the Rapporteur and Ivîr. Hawkins their views with regard to the other clauses we havoc adopted, which can be drafted accordingIy " auggoestod by Coaraittees I and II. ME HAICUINS (Nnitod States): I ma. not surc I roally understand the. question. There are points of substance hcrc that noed ta be discussed, 'I think. They ara drafting points in a way, but thoy are of vcry considerable importance before we consider the exact tect. TMi MHAIEWAN: The only difficulty vw have ij that ve do not know whether it hae been adopted in full Cor.Eii.ttoes I and IL. THE RAPPORTMUR: It is heaaded'"Draft iaosseau to Coi.Littec IL." THE CHAIRMAN: But it has been given to us ta deal with. THE RAPPORTEUR: It requires consideration by Cmmittee II. I think we should make appropriate recordannations to Committee II on the subject of what our vicers are. THE CHAIRMAN: Everything we do has to bo adopted againrby Coanittoc II. I think tho substance of' it in a question imore or las3 for a'dratting committce of Ceanittocs I and IIi on which I understand tho cUnitod Statos, Unitod King- don, India, Brazii an% Franco ar. rcproccntcd. MR. HAVM1INS (Unitod Statas): This nub-coaiittco is involved in that it involvcd rnionicnt oa iirticlc 18. TIE CHAIRMWN: y question in wrhothcr, in thc light oa thr change a wc havc rmadc in Article 18 and subscquunt ilrtio)xo with which wc hava doalt, we oan draft pn Article, or vrhcther it vrould r.isc csrtaih 'diffiiulties. lR. iDRKAR (India): May I drav;' youw attention to note 1 of tho Rapporteur's report on Articl 18? "Conaents on proposcd revision of' ïrtiole 18. It is understood that the .xtic1e is subject to rocnsiduration in thc light of the action takan by thc Joint Coritdttud on Inélustrial Devolopr.icnt." IV. GUERRL (Cuba): That 'carac to i.y point. ïVould it not bu ràaru logical ta wait until tho Joint Cor.iiLittcc takea action on the rooora.indations of tho drafting copJittec? 4R. ADARIAR (India): This is action takcon by thons MR. GUERRA (Cuba): No. This was adopted by tho drafting cor.mittca of the - Joint Coramittoc. I unmt,.rstand thc Joint Cormittee i.s meeting this afttr- noon. It may bc morc logical to vinit l'or their decision, r& soc what tho Joint Cornittec closes virth thc rocorii.indations oa the ct.iatinÉ comiittoc. Thon vc will hb in a better position ta came to a decision. MR. McKIHNON (Canada) I think tho Cuban Dclcgatàla's point is 4uita correctly taken. Thora is no reason for U3 to assure that the report of the drafting sub-committe .a of tho J oint Coi;a.ittee *iàs beon approved by the Joint Coemittae, much leas sont ta us for action. If, however, wc arc proparod ta procccd on thc aosunption that it i3 se forwarded it viiil coam to Us in tho end, and I soc no reason N7hé Wc should net go ahcad and discuss it! 41. E/PC/T/C.II/PRO/PV/14 . MR. HAWKINS (United States) On tho asstmuption that it is adopted MR.McKINNON (Canadn): On the aùsunption thftt it is -adoptoed and probably sont tomus to doal with. I see on rcason why we should not considor it. However, I agrce with tho cuban delegate that it is not properly before us, and cannot be on our agenda in a formal somse THE CHAIRMAN: I agreu. I only sco one pranctical diffîicuity for the Joint Coirttoo. If they have rucuivod no report fror. `us with regard to what we havo done uith regard to Lrticlc 18 and su on -- they woulcl expect advice fror.m us wheithor thcy could aaopt it -- they would have so'e ditficulty. Therciorc, I think wc hacl bettor diseuse it. 42. fols MR. LECUYER (Franco)(Interprotations): I would liko :to put n. prodsal on procoduro concorning tho decument which has bean subrniitted. herc front. tho drafting cournit too and the General Coammittee. I do not think that we should change our memorandum bucausc of this docuiaont. As we havo dxnrftod it lzrtoilo 20 in incledod and vm havo dcait ;ith it in our iuclcorandul2. I think wc should leovo tho rztnorandua as it is, and I think wc should study it, I do not rmind vhothor haro cui nov or after it has boon pa.ssol by the Genorcrl C Cr.ittoe. I rather think vw should do lt r.t once and perhaps r.uo czwasafll suppior.ontary report to bo sent directly to the Ccr.mittcC II. It would bc a kincl.of addonlum to our rn.iorandul, not incorparatoed in thc report of this sub-ocormiittou. MR. GUEPMà, (Cuba.) .I think tho first thing te do d Yould bc to teke thè,second paragraph vhich. it is not apprapriato tj doal with hare. It would. be a nattor to bc dealt with in the sub-coî.uittc un quantitative restrictions. Tho second point is that I think vo should try, if it i:s the general opinion of the Corrittea, to discuss this nov ana tonastriot tho discussion to articlee 18 iteolf. It will bc incorporoatad in the general report of this Cozaittea to Comra.tteo II, but nmt the v&hole of this discussion on the r.moorandun, bocauso that will roproduce theu dseussion anid wu should try ta avoid that. W0 have discussed toloe erurcndudi erd if this question is te bC discussed it should bo in regard te the inal1 drai't cf .Î tilee 18, not in connection with this part of the re.orandu. M.. HAWNS (Unitod Statos pt .'hothe- tho raariorandun is involved or not dopends. upon what is done vith Article 18. THE CHiàM£AN: When dealing with Ae.ticlo 18 we have tu kocp in md.nd also 29, and the conclusions thore. It wauld be appropriate ta do lt in the first instance only in connection with article 18. arc therc any observations on this? Or does the Cemîittee prefer first to diseusa it with other naiobors ct Dolegations? MR. HAWXINS (United States): I have dclne annd I aum now te tako up a position* on it. In the first part of this wo arc considuring tho contribution a moi.bor can nmko taking intu account tho hoight of thotariff of that nioaber. That is takcon care of alroaly. Therc is provision on this subject, se I do not think *w nced consider it further. Tho roforonco thon iîs "and the nedd. if any of that mamber tu use prDtecti4z ,zotsuros in order ta przaote indistril scnd J.2 P/T/C.II/PRO/P/14. general econonic development." I think that in the normal course of nego- tiations those considerations and needs will naturally be advanced, but i do not think it is dosirable or appropriato or equitagle to introduce them into Article 18, which relatos to negotiations. lig provision tho effect of vwhioh is to tip the negotiations so to spoack in the direction of a particular country, to givo thema clauso.which they can invoke to casape form or to mako lighter, corritronts hich ray othoriwso bc justifiod, should bo insortod. You have, and you must c:nsidorp this provision iînI:.lfttion tc what tho Joint Ccrani.ttec arc recormcnding as rczards r.moasuros to promote industaiQl dcvolcpmont. The essence of that ropuirt is tht' whdre warranted thoro can bo roloaso fr.î thc dbligati ns und¢rtaWcon in rospect of tariffs or any+tIing olso for purposes of industrial dcvcleorent. It sooi.us to m.e that that is all that ought to lie provided in that respect. If you put this provision in here the total cteoct $s that you arc not only giving an opportunity to escape from camlitLmnts under the provisions put fonrard by the Joint Cormittoo, but arc not expected to raake runy comitu.nts, Our ilositicn on it is this. W8e would put this provision in horse if the escapes are talen out of the Joint OCUMÎtteols report, or ve would accept tho provisions of the Joint Co0mittee's report if this provision is loft out herc. Wi0 cannot accept both. Ife vouZd accept sithort TÆ CL'VIMLtNS: You rcfor te thb escape clauses. MM1. HAWXINS (Unitod States): I ami roterring to tho escape olausos prepared by the Joint Coemittec. Tho essence of ther.î iG that where stops are justifiable for the sake ot industrial dclevXlopilont the organisetîon riay foster negotiations to obtain release from cc;tiitmionts or oven oct asid oon ceritmonts that have been undortaken, J.3 E/PC/T/C.II/PRO/PV/14 THE CHAIRMAN: Yes, but it goes there. Ought there to be a cross- reference to Article 18? Mr. KAPKA (Brasil): May I make an observation? It seem to -.me that Mr Hawkins position is quite logical except that we need.some such provision as this for the nr-notiations in April, when tho Ormnnisation will not be ini existence yet, anCL thorefore tho esCapo clauses will not funrtion. TiE CI-DtIRi.'N: *Yos, but should. ittoin the mineoranduil or-not? AIR. KAPKA (Brazil)s You malzc. it ïqorc practicaL1 to have tho oncupe clauses as soon as the Or-anisEation functions, but beforo it functions you also nood soinothinr. i:iR4 DEUTSCH (Canada.): You will niot walco any troïenci.ous changor in the Oraanisation in the course of thrao or four miionths. MR. KAPKA (Brazil): -fV dO not Imow how soon thoOrganisc.Ition will be ofiXjctive. i.R. HA.WKINS (Unitod àtatu.s): .iy position would ba that logically e ;ould object ;;hun tho Goint CoinLiittoc report CwXfi. Up latur. THE CHAIRiMUN: As, ua ar% appar.'nt1y to hava sona discussion on this I think it vould bc profcrablu ta hava another mooting this aftornoon. As -;o hava no miting oa Cooinnittaoc II this aftor- noon it should bu possible to asci Dr. Coombs to ba prosont, bacausc he is Chairnan of tha Draftin,; Comniit'too and can porhapc doond tha proposal. I w-iould prcfur ta havc it in that way. If that is a&rocLblo I propose that ;wc adjourn until 2.30. Thora is a inceting of thc Hcads ot Doi.ayatioiis at 4.30 sa I in any casc should have to love. But I :;îll ask tha Secrctary to invite Dr. Coombs to gomn herc f'or 2.30. Tho Committce rose at 12.55 p.m. Por Vorbatïin Roport of afternoon session, sec E/PC/5Y/C.II/PRO/PV/14 Part 2. 45. J. 3 E/PC/T/C .II/PRO/PV/14 (part 2) (The meeting resumod at 2.30 p.m) THE CHAIRMAN :Gontlonon, I reepen the meeting, We have now to discuss the draft chapter on Economic Develop- ment, caspecially paragraph tjereof together with the Draft mcssage of Committecs I and II, which, up to now, has only becn a draft message frcri tho Draftire Commnnittoe to the Comibincd Comràittecs I and II, and which sugsasts a certain addition to Aarticlo 18. Before wa do this, I nruuld likc to havo tho adlvic -of Dr Coorba, who h;s agrced to bc harc, for vihich I thank hir, as to in vhat wVr vi oug ht to deul with this question novi, bocausc it is -. question of a draft moos,-go to wC=3rittcc II as we arc only a sub-coi;rattce on proccduro haro, and vc arc in soma doubt as to vihat we ought to do. DR COOMBS (iautraia): I-tr Chairmnan, I rmst confoss I u.i not cntiroly clar about vihat is a strictly rropcr procedure rWsclf, except that it is quiît definite that this draft roasgo to Ccmrdnittec Il has not yct bcon approved by thc joint co.o.ittce; it hau bcon approvod, I belicvc unanimously, by thc draftin cornmitteco, but it has not bcon approved by the joint body; ancl t+iircforc it is not formally before Corm.itec II at all. On tho other hand, I suppose, socing that it has boon I bolieve unanimously approved by the drattingr corimittec, thorcm is ssca reason to anticipate that it will bc appvoved by the Oornittee itself, and I vould regard it thoreforo as *;ithin their competence, and if it docs com on ta ComrLittec II it vould quite clcarly fall within thc sco;o of the work of this drafting sub-committac. So that I %vould say that, whilc obviously this drafting sub-cor.u-4ttoc cannot do anything final on the basis of this draft, therc v*ould bc no. roasonable objection thnt I cm soc to their taking it lbrovisionally into account in thoir work so tiat thcy do not have to go back subsequently. On the othar hand, if, vfirn this draft message goos to the joint committoc, it is rejected or armended, thon you would be advised accordingly, and you could drop any changes which you had introduced to rieet this nessago. I vrould suggest, Mir Chairman, that if you have reached the stage. wherc it is proper, to consider this it wuld bc rcasonablo to consider it in a provisional woay8 on the full undcretanding that if it is not in fact ,arlplroved by tho jàdnt comoittec, and. theroforc docs not rcach you, yuu will bo ablc to retrace your stops. 46. E/PC/T/C.II/PRO./PV/14. THE CHAIRMAN: We had a certain point hare, Dr Coor.bs, that conocrncd us, and we anticipated that with regard to Coanaittoc Il they would say, "well, we would likc to hava the .advice of the sub-committee" Thcrcforc, I think there is perhaps amother reason why we should disouss it here; other vrse perhaps thc ricatinc of ComLittces I and II vruuld roach no prolor results at all. DR COOMBS (Austrclia); There is one thilr I vruid s.y which I think may be of sonn assistance to you, and that is that I notice that this massage from the Joint Committee does suggcat a way in which you coula doal with this matter, or hova Conmittac II should cial with it. Now, I would sumest that it is not naccssary for Cor.aittec II ta do.,l with this matter in tha vicy that has becn sugostcd by the Joint Comiittec. Tho function of tho Joint Coraîrittce is to rwc.ktc rccoi-iz.ndations in rol.ation to industrial dcvolopmlant, ndl it is proper I thinlc for thcra to sand a message ta Committee Il asking thcn ta inçorporatc certain provisions or to r.iakc provisions for certain types of action if thcy consider that proper, but, on the other hand, vicn that mcssaec rcachos Comrmittcc II, it sco.- ta nc to bu quite proper for Cor.amittoc II, while accepting tha substance of thc rnassagC, to dcal v7ith it in moather pla¢c or by sono different provisions from that orIrginally côntonplatcd If I can Zivc you an illustration.of thb Sort of thing I hava in mind: thorc was also a. message from the Joint Corr.Littec to Cam-ittec II doling with quantitative restrictions in relation to the balrnac cf payrx2nts, the second part of this m:ssaag. That vaDs considered pravisionally by the sub-coaammttco dealing vrith quantitative restrictions this morning, and thcy ex.uninod this request and decided that thc situation oontemplatcd in this request was ddoquLctly dcalt vith inr thair existing draft, vehon you took two soparata provisions into account togoi;har, and they prcç- pased., if this draft mn5ssag is racoivod, ta rcply ta thc Joint Comiuttec painting out that this situation il coveroad by a combination of two of tha draft articles which thcy at prosont have incorpormtod. So that I makc thc point that it is quitc compotant for this drafting comnittoc 47. L3 E/PC/T/C.II/PRO./PV/14 to doal with the situation posod by the Joint Coittee in a way other than that suggested here by the Joint Committoo, if thoy wisg to do so. THE CHAIRMAN:Gontlomon, this quostion is then open for discussion; Perhaps I rrey first ask Mr Havwkins, whq made some conrnents. at an carlier stage this morning, so that we can get the whole thing very clear before us to report his comment or to add any other commetns. he might wish to make having had further time to studay it. .UMR HAWKINS (USA): Mr ChairmnLn, as I said this morninr3, it does not secn o m. dosirablo to insert a dicturi of this sort in on krticlo which loy, down a rulc or a procoduro th .t a reduction of tariffs, when dealing vi*th preferonces, is t bc a natter for negotiation, ,fter all, what are negotiations? Thcy are proccdurcs whereby considerations which are p¢rtinont to tho quc3tion ofa rcducinr a duty and to. vehich a county nttachos importanoc, can be put forward and considorod. Ay attornpt to .tell negotiators that thay should. bc influenced by auch ond such oon- siderations thoreforc tends in advance to projudico tho question, TIat is not ta say - and I would likc to roko this vcry cloar - that it in rryr view that consideration should not be given to the need for the dorveLop- ment of under-dmovlopod countries. is I think has bean froquontly stated by the United States delogr-tioni vre focl very strongly that it is in the intorcsts cf the Unitèd Stb.tes that such developront tr*lco plaoc. W0 think, however, that thc wholc suù ject has becn adoquately dcalt vrith in 'tho Joint Cormnittou's Report, and it provides, among othor things that tho Organization con sponser or assist in negotiations for thQ relcaso from coromitmonts and, in somc circunwtancos, as I urdcrutond it, actually set thom asido. i folia. 48. M.1. E/PC/T/C.II/PRO/PV/14 Now, from our point of view, one ffeeot of those provisions in the Joint Cormitteo's Roport, or one important advantage f it, is thut the undovelcped countries con, givon that way out, bo ruh fror in the taking of oorîitmants to facilitate tariff negotiations, for oxaplo, if provisions such as are contained in tho Joint Comittee's Report were agreed to, becauso in taking the comiitments the undovolopod country can assure itself that if there is noedl for protectivo action, the way is providod for taking it. The effort of the two provisions together, if the one proposed hore were put in Artiele 18, would seem to me to be this:' tho way is not only open for getting relief froa oormitments, but thorax is alJost a sanction of not taikdnv any, or taking vbry fow. Therefore, I foel that we could take either oe these provisions.. We could put the provision in here, as suggested, vrhich would ncan that tho coriraitmonts taken would not be very extensive, or we could take the Report of the Joint Cominttee which provides a relief trao co uitnents, but wo could not tako both. I do not knaev whether I make rysclf very clear, That is all I have to say at the moment on this particular subject. TUE CHAIML2Ns: Aftor those remarks.by Mr Ha.wkins, may I just ask lir Adarkar to give us his point of vriev? Mil J1hDMUC (India): Mr Chairan, ve have been trying in our own mimds to consider whether the amendment suggosted by the Dratting Croïtteo of the Joint Conmittee is at all indispensable for our purposes. After very great delberation, ve ha, cme to the conclusion that it is indispensable. I will give you the reasons for that, The negotiations (at least, in the initial stages) w±LU be on a purely reciprocal and mutual.,y advantageous basis, without there beiag any machinery to supervise the negotiations. There will not be the Organisation in existence at that time. The negotiating countries, in oonduoting the negotiations, vill solely be gùided by certain prinoiples whioh are embodied În the Charter, to which they have given their advance acceptace, and which vil. therefore rule the whole course of r.egotiations. As I mentioned this morning> Sfr, not aIl the principles of the originalnegot±ating group, but cnly thoso et them who will have carried out the obligations involved in paragraph 1 of ürtiole 18'vil. be qualified to boeonoe the mombers of the Interim Tarift Ccmittee. It is therefore mount important to know what exactly is the nature ef 49. E/pC/T/C.II/PRO/PV/14. M.1. N. 2. the obligations. Tho point. will come, during tho course of nogotiations, whan a difference of opirdLaon may crisc as to whether a particular member has or has not carriod out tho obligations that. are expocted of it. In answering that question, one group of countries any hold that the particular member has failod to carry out what are here described as "sùbstantial reductions of tariffs". No definite guidance is available on how that word "substantial" is going to be interpreted. No definite guidance is available on that. It will have to be decided whether each 'country has made concessions which are comparable in scope and affect to the Concessions it has received from all other countries taken together that is to say, there will be a pool -benefits to which each country is supposed to make its contribution, and each country's performance will be judged by what it receives in return for what it gots out-of the pool. It seems to me most important to have a clear notion to decide as to how each member's contribution to the pool * of benefits is to be assessed. la it to be assessed exclusively on the basis of a corparison of what it gets and what it gives, or in any consideration at all going ta be given to the peculiarities of the economic position of the country concerned? are we going to give any consideration at all to the fact that, as the Joint Committee has put it, the corparative developments of member countries are unoven? In paragraph 14 it says that since the exparative devolopments of member countries. are uneven, that different countries have different levels of tariffs, that different countries hâve different needs for maintaining tariffs at particular levels that certain countries are undevoloped and noed the use of tariffs for attaining a higher level of development; in order that they should attain that development, they have to reserve a cortain measure of freedom in regar' to their tariffs. Are considerations of this sort going to be taken into account at all in -nance"' assessing the. parfot of each individual country, or are we going to declare the country to be a defaulter merely because the performance made by it does not came up to the performance made by other countries which may be in an entirely different position, in n entirely different state of economic development, or because tho performance is not what can be described as 'subt antial"? It is true, sir, that a provision has been made whereby binding of low tariffs is' going to be regarded as equipment to a substantial reduotion in high tariffs; but what is the 50. E/PC/T/C.II/PRO/PV/14. N. 3. E/PC/T/C. II/POR/Pv/14 balance in regard to high tariffs? It is quito possible that even high tariffs serve a certain purpose. Some guidance is required to decide whether a particular high tariff which is being objected to by other countries sorvos any purpose or not and if it.Xs docided, In the light of the principles, that it does serve some purposek than the member against whom the complaint is made shoüld be excused for not conceding a request for reduction in that tariff. it seems to me, sir, that in the absence of an amendment of this sort, there will be no principle at all before us to guide the negotiating group in the resolution of tho kind of deadlocks that I anticipate THE CHAIMAN Thank you.. Are there any other members of the committee who would like to add to the discussion? MR VIDELLA (Cuba) As a country With the same objective, to develop our industrial resources, I would like to say that it is a general a prinoiple of general econony that is accepted, the that in developing the industries in country you also inorease or improve the international trade. We are a common world in this Conference, and .we cane here invited to study and resoive some principles In order to develop the industries in countries which are not yet devolopod. For instance, I can roster to tho speechof etr Marquand, tho Sacretary for Ovorseas. Trade, on wednesday November 6th. He said.: " In the present internatic El trade organisation talks going on at present in.London, no discussions were taking place on detaïled tariff bargaining, and there was no question of bartering preferenoes against tariffs. Discussions were being hold on general principles which should cover international trade, commodity and commercial policies, tariffs, quotas, subsidies and industrial devélopment in undeveloped countries", Therefore, I am not wrong whon I say that this is the most important, or one of the most important tasks of this Contereno, Another point I want to bring up is whethor we are not taking this ror granted,, and whether we are not making or adopting a resolution in orderato put into operation these ideals, and therefore walking on 's" log; because we have already accepted certain escape clauses for industrial countries For instance, I would reter again to letter e, No. 2, Article 19, where agriculture in thè industrial countries is protected. I think this is the counter-balance of the object of 51. E/PC/T/C.II/PRO/PV/14. this Conference. Therfore, if We to 'o malk on two logs, I ask you to move this proposal made by the Joint Sub-Committee as accepting a general principle covering the issues of the undeveloped countries represonted here, as well as the undelveloped countries which are not represented here. Thank you. O.fs. 52. PAE n-l E/PC/T/C, II/PRO/PV, 14 M. LECUYER (France) (InterpretatSon): Mlr Ohairnian, before I say what I can say on this subject, I want to ask you t.wo questLons, FIrst, It was said this morning that we should choose between two documents; the draft message which was handed on this morning and the proposals of-the Joint Committee or Committees I and II. But what is the document that embodies those proposals of the Joint CommIttee or Oommittees I and Il? le it document 17? If it is 17, then I do no think it responds to the desire which was expressed by a certain numoer of younger countries, India and chile, for Instance, Does it respond to the request submitted by the' Cuban Delegatlon? If this document No. 17 does not respond to the desires and requests expressed here, we then have to refer to this morning's document. But I wonder whether this morning's document referred to the Spring nego- cations which will be conducted with a view to lowering tariff's or to a later stage, that is the. stage when the negotiations being over, then a certain number of countries may wish to increase again those tariffs whlch they will deem to be' lnsufficlent. As I refèr to the second phrase of paragraph l of this draft document, It sems to me that it leaves room for certain ambiguities. For Instance, it says: within the general frame of the undertakings which would be accepted with a vi-ew to lowering tariffs, members In the Organisation will envlsage the contribution of Members with a view to lowering these tariffs and so on, So that obviously in this case the document speaks of tarilffs Then it goes on and speaks of the necessity, if any, to employ protective measures. Be that here this later phrase obviously.refors to the later.stago which h I mentioned a little while ago. .So that I wish to have some clarification of this question, Mr Chairman. THE CHAIRMAN perhaps i may replyto the points raised by the french delegate because theyare points of clarification and not so much of substance. I would say that I understanf this dcraft message as embodying principles in document 17 and a kind of addition to Article 18. So that one of the pointe might be whether this clause as 53. PAE E/PC/T/01II/PRO/PV 14 N-2 proposed by the Drafting Committee of Committees I and ii really ombodies what is in paper 17, so that if i am right, there should not be a difference between paper 17 and the draft message: they would have the same principle, The other point raised by the french delegate is whether there is not a certtain ambiguity jre wjem we talk about the Spring negotiations or later negotiation I think the answer hero is that what we have put up till now into Articles 18 and 8 and so on has been adp[ted again in the memorandum on procedure as guiding principles for the negotiations in Gèneva, So that it still remains of importance that we should cover that and the Articles of the draft Charter, even If the draft Charter would have to be adopted after the Geneva Conference and later on formally at the World Conference, Then with regard to the last point made by the French delegate, I agree with him that when we in this clause speak of the use of protective measures, we are broadening the scope of Article 18 which up till-now only speaks of tariffs and preferences, so we have to be careful on that point, Mr. GUERRA (C- Mr Chairmen, regarding this question, Cuba- I do not mean the Cuban delegation but our country - has a position In many ways similar to that confronting countries like Indla. Yet our situatioon is not exactly the same. The position of our import trade is sùch that we have no fear that we shall. be able to make substantial reductIons In tariffs; that instead of hampering our industrial development, it wIll controbute to It, It will be a- real assistance to our Industrial development to lower tariffs on fuel conl and oil of different kinds - and a lot of. raw materials, Indeed, It may be more effective than any other measure we could. take to facilitate the industrial development of the country. But. still we are confronted with the need to diversify our agriculture and industry for domestic consumption; and therefore we have introduced an amend,emt also directed to the end that in the negotiation of tariffs dueregard should be given to the need of the country to proceed with the task of developing the internal industries. 54. PAE E/PC/T/C.II/PRO/PV/14 As we see the problem now rogardIng these Articles agreed upon by the Sub-Oommitteo of the Joint committee, there are two different questions, As we see them,. those Artcile offer an escape clause in the sense that countries which are confronted with that need may, throught with that need may, through the 0 procedures or consultation with the Organisation set out in this Article 3, be released. from any obligation that they may have under- taken in the negotiations, That is one point, and from the point of view of an escape clause we think that will be quite satisfaotory, Butthere is an entirely different point, not that of an escape clause for releasing Isiembers from obligations undertaken In the negotiations, but that of taking into consideration the needs of each country In the negotiation as a criterion f'or judging to what extont countries are tocomply with, the requirement to make substantial reductions in taritfs As I have said, I do not think this question of substan- tial reduction. should worry Cuba very much, because we shall be able to make substantial reductIons, taking our impor:à trade as.a whole and yet do it in a way that will preserve the tazrIffs ofemany existing industries as to which we are interestod.in giving a certain Measure of protection, while, at the snMe tme, thle lowering of tarIffs in regard to. many other items wlill contribute to the Internal develop- ment of the country i;;stead of hamperJnglt ; but still Mlr Hawkins, when he referred to t.he question of putti-ng some prbvisJon intihe, Charter to that end in the sense of taking that situation into account in riegotiations, and. rightly, that that will prejudice the negotiations, We can say that that is the real fear we have, that if- that provision :is not inserted, the negotiations will be prejudiced for countrIes that are in a position like ours, lf the peculiar needs of such countries are not taken into account where normally we should be expected to make reductions in taroffs to a much greater extent than will be possible in the case of countries which by doIng so wouid be endangering their industrial position. However,. we must frankly say two things, first/of trying to reach some compromise .55. N-4 E/PC/T/C.II/PRO/PV.14 taking into account the just pre-.occupation of tho American delegation and some others which are in the same position. I ask myself whether it wlll be possible to do either onr of these two things: not to put any particular provision in that place, but, it may be, making reference to it in Article 18 it may be in the introductory part of Article 18, or it may be adding a paragraph (o) to the principles set out by the Joint Committee. if in the preedure memorandum we are going to clarify the product by produt .basis of the negotiations that is already in the draft preparod by the Rapporteur,' that in the case of countries with a low tariff tho maintentance of such low tariff will be considered equivalent to a .reduction in tho hlgh tariff of other countries, I think that may be a proper place in the Report to put a reference to that provision. A thing that should be taken into account Is the actual level of the tariff; I. mean tho relative height of the tarIff and the need of the country. This is only a suggestion directed to seeing if we cannot reach a more common ground than any that we have been discussing so far In summarising the Cuban position, I would say this; when we came to this conferance there was nothing in the Charter In. any place whatsoever that would take care of our pro-occupation in the sense that i have explained, not in the sense of making substantial reductions, because I report we think we can make tham, but in the sense of' making it possible to retain somo tariffs either at the actual present level or even to increase some tariffs in some particular cases where it would be justIfied in view of the need for sound industrial development. That is not to be found in the draft Charter, though..we find some different things: we have this entirely new section with regard to Industrial development, thls escape clause, and We form some princi- pls which contemplate In a general way the noeds of countries like .ours, and also in these different parts of the procedure momorandum which make it clear as to the product by product form fo tghenogotia- tions in the consideration of the lower level fo tariffs for any given country. E/PC/T/C. II/PRO/PV/14 Therefore, we must say that we consider and we real:' se the difficulties of putting in some very specific form this question in tho. body ofthe Charter, but. at tho same time weare not in a position right not to withdraw from our instructions, from the position we were instructed to take when we came here. However we think that there are many now thing that nay be studied and .considorod by our Government in the light of the necessary protection we are seeking, and in that senso, while making a rosorvation about the amondmant we introduco in this part of tho Charter, we are ready to put this mattor before our government to have it discussed in the lightof the now provisions which have been put forward by the Joint Committee, and in the light also of the fact that the original five-year term of the obligatio: has been reduced to three years, -We think that three years is net .suoh a long time; that if thee. is any possibility of furthering industrial development, three years will be a three years loss but will not really be a vory grave thing to be afraid of. There- fore, our position is, that while realising the difficulties of reaching an agreement on this, wa want the comittee also to realieo the difficulty we have in the fact that our country attach groat importance to this and to have definite instructions, and we declare frankly that in our opinion there is now ground now, with these other provisions put in tha Charter, for discussing the matter again - with our Governmont and socing if we can roach a satisfactory solution. THE CHAIRMAN: Thank you. Perhaps in order to facilitato our further discussions I might just make a few comment on the romarks which hava already been made. I think that there i an important point' raised by tho Indian delegate, that in Article 18 we specially discuss the question of binding of low tariffs and so on as.being an adoquate concession. Now why did we have to put that into Article 187 - because in no part of the Charter is there being discussed the position of 'the special countries, so we had to put that in more explicitly in Article 18, Here we have a now part of 57. 02 E/PC/T/C .II/PRO/PV/14 the Chartor giving. cortaîn.-principle, so therefore at first sight I think there is.no need to be too claborate on that, but we could perhaps and here again I am taking up one of the points of the Ouban delegate we could perhaps do enough if we make a cross- referance to that part of the Charter, because there these principles are discussed and there is no furthor point raised, only this whole proposal is simply the result of what is in the first part of the Charter. I think if could come to a solution as to that we could combine various of the remarks made proviously and still take adequate consideration of the needs of the undor- dovoloped countries, I just put forward that suggestion to facil- itate further discussion. MR. VIDELA (Chiel) : I think we could introduce a.now paragraph in Article 19, after letter (e), because the .two things are intimately rolatod., when you say here "Import restrictions on any agricultural product, imported in any form, necessary to .the onforomont of governmental measures which operate (i) to restroct the ntiutics of the liko domestic product permitted to be marketed or produced, or (ii) te remove a tomporary surplus of the like domos.tic product by making the surplus available t.o certainn groups of domostio consumers free o! charge, or at prices below the current markot level", this is exemption in favour of the industrial countries, such as, I suppose, England, in order to develop their agricultural products. It is to protect their agriculture. I think if .o are going to be fair there is room here to put the countorbalanco - to help give/to the agricultural countries who are anxious to develop their industries - and I think *we could make. here a special para- graph. Tonight we are going to discuss again Article 19 in the Quantitative Restrictions Sub-Committee . .THE CHARIMAN: On that perhaps I may remark.that I think changes in Article 19 are not our province, but nevertheless, if we reach a certain kind of solution, as I indicated, as to a kind of cross- reference to Article 18, I think the committee on quantitative Restrictions could consider the possibility of having the same E/PC/ T/C .II/PRO/PV/14 ro ss-rof'oronoo in Artiolo 319, because one doals ith tariffs and proforonoos, and we would not like to mix up these two things, and tho othor doals with quantitative restrictions MR.McKINNON (Onnr-dcn): Mr. Ohaïrman when you first drow the attentic the comminttee to the draft messago from the Drafting Committee had not had before Us either Documemt No. 17 nor Document no. d. In f'act, I think at that time we did not even have copies of nj message. No since that, we have been given yesterday docum 'and this morning.Document 18 was distributed, which is the All. Draft Report cmbodying everything that is in document 17 v1 having annexed to it also this draft message to this committee have studied the Roport and therefore are in a position to .-i,.kc probably more intelligent comment than had we discussed this sago yesterday in connection with the procodural memorandum we have come to the conclusion that/the complete now chapter lative to oconmic development in certain aroas is .so compro- nsivo and has covered the ground so fairly, and makes such very .finite recomnondations to both the Organizantion and the Economic .and Social Council, and, moreover, provides a very clear ception, that we cannot see the fitness at all of an additional 1rnap clause attached to Article 18 moroly because Article 18 ppons to be the relevant Article in the charter. Mr. Hawkins has already covered the field from the point of of the appropriatoness of our dealing with this document at l. I do not need to travorseo the same ground, other than to e, ns ho pointed out, that Article 20 is already before hor Committee, and, as Mr. coombs has told us, thoy' have n.git to deal with that themselves. The second recommendation here is that we should make some vision whereby, in assessin the position of a member, other bors should take into .account the height of the tariff of member. There we have actually written a substantive iclc into the charter, to do just that 59.. E/PC/T/C . II/PRO/PV/14 The third one is the romainder of that sentence - the need, if any, of that member to use protective neasures, and so on. I think that it would be most inappropriate to attch any. amond- ment whatever of this nature to Article 18, and I doubt the .isdom indeed of any cross-reference to Article 18. If start crose-referencing Article 18 to overy othor relevant Article or Chapter we will have a half-dozen cross-references under 18, and the result will be granter ambiguity and confusion even greater than oxiste at the moment. As I listened to the dolegate for cuba outlining his position or the position of his country as he saw it when these negotiations started and as he socks it nov, I thought that he had made a vory fair assessment of the change in the situation that has occurred during the last the or three weeks. he made reference particular- ly to the special provisions that are nov in the Draft Charter, not one of which was there when we started. I-was much struck with his conclusion that, while he saw his country in somowhat the same position as other undeveloped countries, and .while he had a good deal of sympathy for the motives behind an amendment of this kind, he folt that so many other things had been done which offered such possibilities for countries that find themselves in difficult situations that he was himeself by the facts, driven to the con- clusion that probably it was not necessary or advisable to make an actual amendment of Article 18. The delegate of India, in arguing his case, as he has very cogently, has always referred to the fact that it will be most difficult for a country such as his to make a proper contribution, because it will be afraid of the consequences if it binds too many items or reduces too many rates. I think in that respect we are all in that position. It is a matter of dogroc, and surely it remàins with the negotiators in each case to dotermino whether or not they can rocommend to their governments the putting in of a certain item, the reducing of a rate, or even the binding of a 04 E/PC/T/C .II/PRO/PV/14 rate, and probably that happens to be a situation that will weigh moro heavily on some of the under-doveloped countres than on other countries, but it sooms to me, it is a situation that the negotiators have to face and weigh when the nogotiations are on, and that is when it should be dine rather than playing any roliance on an escape clause of this character, which I think would be most inappropriate. mR. 8IMOKLE (UK) : Mr. Chairman, I should like to say I agree very much with what Mr. McKinnan has just said. It sooms to me that the principles contained in draft Article 10 - and, for that matter, all the other provisions of the draft charter as it is emerging - will have to servo as n guide, even before the Charter comes into force, to the countries who are engaged in negotiating the Goneral Agreement on Tariffs and Trade at Goneva next Spring. If, indeed, that were not so, there would be no point in suggesting any addition to Article 18, for it is only, as I understand it, from the point of view of giving a guide to the negotiations next Spring that the delogate for India was particularly concerned at this moment to got an insertion made in Article 18. P follows 61 E/PC/T/C. II/PRO./PV/14 If onr looks at Article 18 in its latest form one sees in paragraph 3 this provision, "The Organization, if it finds that a member has, without sufficiont justification failed to negotiateo with such com- plaining member in accordance with the requirements," and so on. I need not read further., The important words are "has, without sufficient justificatïon. " Now, I think that it is clear that the organization, in deciding whether ornot there is sufficent justification, will have to look at the provisions of the Charter as a whole, and if the Chapter on Industrial Development which is rocomtonded by the Joint Committee of Committees i and Il goes into the Charter it -will include as its Article i the provision that: "Members recognize that the industrial, .and general economic development of all countrics and in particular of these countries whese resources are as yet relatively undeveloped will imrprove oppor- tunitios for omployment, onhanco the productivity of labour, increase the domand for goods and services, contribute to economic stability, expand. international trade, and raise levels of real income, thus strongthening the ties of internatioanal understanding and accord." if that paragraph appears in the Charter it is clear I think that the Organization will have to have regard to that amongst things in the Charter in deciding whether there is sufficent justification or not in a particular case for regarding the reductions made by a par- ticular country in the course of tariff negotiations as adequato; and as I have said, before, it seems to me that for the purposes of the negotiation of this joint agreement on tariffs and trade the countries' which are negotiating will have to take as their pattern and guide what; is laid down in the Charter for the guidonce of the Organization. There- fore, they will have to take this point into account, and the fact that there is in the draft Charter this chapter on industrial developmen and this principle laid down. It seems to me that that is a. factor which will weigh with them in assessing whether there is sufficient justifï- cation or not. I think that there is no need to bring in any cross references, either in Article 18 or in Article 19. If one once started, on that process one would have to fill the Charter full of cross referernees 62. P.2 E/PC/T/C.II/PRO,/PV/14 all over the place,with, as Mr McKinnon has said, grother confusion than clarification. For these reasons, I conclude that there is no need. to introduco a reference to industrial development into Article 18. ,More. over,' if such a referance were introduced it would become necessary to introduce a. number of other qualification. 'we night need to introduce one, for oxample, as regards the special needs of the countries; we might need to include a. qualification for countries which have lost, in the course of the war, a large part of their foreign investments, and which are having difficulties with their balance of payments. For these reasons we could not start introducing such on enunoraton, and I feel that there is no occasion to make an addition to Article 18. THE CHAIRMAN; If I may say so, I am much s truck by the arguments put forward cspecially by Mr McKINNON by MR sheaklo, in addition to the other observations that we have a;readu receoved we jave tp see every Article of this Charter in connection with the whole spiriti of all the other Chaptors. That is the main point. Therefore, I am inclined to agree that we should drop the idea of having cross references because cross references would only create confusion, and also because if any cross reference is made to certain Articles and not to others questions might be raised. and people might say, "Why is not that adaptable to this part of the Charter?" On the other hand, there may be soem point in what has been. suggested also by the Cuban delegate, that in the memorandum on procedure we should draw .Attention to this part, because in that memorandum we draw attention to many parts of the Charter and specially draw attention to the chapter on industrial development and the conclusion reached there, which is, that the initial negotiations in geneva, later on, wll give us an opportunity of dealing with the whole thing as it is, with everything in it and every part closely interrelated with every other part, and that we cannot see justificable roasons for it when we looked at it in the light of the whole Charter. This is my conclusion. I think that now I would like to ask Mr.Hawkins and after that Mr Adarkar perhaps again to make a few remarks to wee shether we can reach any conclusion here. MR HAWKINS (USA): Mr Chrirman, I cannot add anything to what has been said. I 63. P3 E/PC/T/C.II/PRO./PV/14 think that the remarks of the Chilcan delegate indicate the sort of dangers you get in if you start qualifying this Article. Someone might very well with equal cogency say that in the negotiations consideration should be given to the position of the country which dosired to stabilize its agriculture, and when that starts somebody will think of something else. Each country has its own peculiarities and those peculiarities will come out in the process of negotiation. I think that is all I have to say, Sir. MR ADARKAR (Indla): Mr Chairman, I am glad the United Kingdom delegate hs undcrlinod thc words "vrithout sufficiont justification. It is truck, Sir, tha% the Orr nization ivhcn it is c31a¢d upun tu considor vwthor oa nemrbor has or has not fulifllccd his obligations vrill ccrtrdnly sec whothor it has suP'icient justification or not in doIoinî so in following, thoir course of action; but the wvords "without siux'ioicnt Justification" I think it will bo opprociatod arc definitely vague; sorw guidance is ncoessaxr as. to what lcind of cvidcnac vill boc rogrdocd as suf ficiont justification. T CHIR.LUN: Tic wholo Charter.% MR MDi.RK:R (India): It is threforc nocessary, Sir, th.t somc cross roforoncos .heulcd bc nado to the chapter on Industri±l Dovolopl)nnt. -:3 you will soc, Sir, it is not donicd thiat thc Orro.niz:.tion is likcl;y to bc o.1locd u)on to dotormine whothor a. country has fulfilled its obligations in rospoct of' thc negotiations; it is not denieol that thc Orgsnizatioui will have to porforrm that function at sonc stage or anothor; and tho purpose of the particular mrincbmnt is inercly to provïi, somno guidanco to the Org.onization in discharging thoir function.. The argument that has beon advanood, Si ls that a cross roforence if onc is radO in ordor to provide for those points wil mlan that o number of other cross rafor- onces will have to bc mado to proride for other points. But arc wc goin_ to be frightemd, Sir, by.the.multiplicit7y of the provisions rand. reservations that wfîll have to be rade? Is that a nore inrport.ant con- sideration than that of safeguarding our own interests? Let us face up to the problem. Instead of disposing of the argument merely on the ground that if that is conceded other arguments will also have to be conccded, let 64. P4 E/PC/T/C.II/PRO./PV/14 us first consider the argument on its own morits. I remember, Sir, that in the course of this discussion Mr Hawkins did explain to us that when the actual negotiations were proceding each country, if it is to safeguard the spirit of the negotiations, will have to consider what it should offer in return for what it gete from all countrics taken together, that is to say, if the spirit if these negotiations is to bo obsorved there should not be anything like a strict balancing of concessions, but what should.bo airnd at i3 thorc should bc a pool ùf benofits to which cach will contribute according ta his -.bi1ity and. in regard ta which each wiii soc that his ovm contribution is, a faor as possible, conncnsuratc with ihat ho ruccives. So tihat thu second principal is important, but the first principle cannot bc irnorcd. But if it is true that coach viill try to maka tho maximum concessions it cin, at the sarnc tium it should bc admitted tho.t it my bc precluded from makinM its .wximum contribution bccause of its other obli3.-tions; =nd thorofore it s necessary, Sir, that soma recognition should bc: Ujven ta the principles which arc emphagizod in this wrxmntbnt, cithor by in- corporating the wards as th àr atand or by makicing a cross rcfaronoc ta thc draft Chapter. TSHE CH.'i.W: MW I ask a question hbre? I thin k that fc should lcava the nogatiations opon horc bacauso wc have the mon randun n1 7a. hava hore Article 18, thc second part cf that iortiolc, azdl if ue could only add therc, "The Organization if it finds that a nmonber has, without sufficient justification, kocping in mind all tho othor chapters' ef the Charter, foiled ta negotiate, " rand thon so on: thon your. point muzt bo covered, because therc it ià in it, andl thon you hava orly left one othar point that. is, wihothcr, aiter part Il aof ticlc 18, wu should put gomzthîng in the mcmorandim, in that i;y covering your point -in. the mernorandumvitg a spocil chhaopter cf tho Charter, mne I think that thon we would have solved the difficulty. MR SHACKLE (UK): Mr Chairman, I have a very simple suggestion to make. I am bound to say that I think it is cntirely unnecessary, but I think it does no harm That is that in Article 18 (3), the words which have been 65 P5 E/PC/T/C.II/PRO./PV/14 referred to, "If the Organization finds that a Member has without sufficient justification," after the words, "suffieicnt justification," you could add, "having rogard to the provisions of this Charter as a whole," and that would mop up all these other special situations. THE CHAIRMAN: Yes; those are the words I had in mind. If that would be agree- able to the Committee then I think we would have found a proper solution to this problem. MR McKINNON (Canada): Although, .as Mr Shackle implied, it is drawing attention to the obvious, it Can do no harm. THE CHAIRMAN: May we have it again, to see where if fits in. MR SHACKLE (UK): Yes. "having regard to the provisions of this Carter," or we might add at the end "as a whole." THE CHAIRMAN: Mr .Hawkins, is that agrecable to you? MR HAWKINS (USA): Yes. . QIA.CIRM: In &V opinion, that would. covor the further jgsition; and thon mia wduld only have to study the pàseibility of haovinî; in tho memorandum, wherc ive mqyr refer to n certain part of the introductory remarks,> a special reforcnco tb .Chapter I. Thon vie could lcava it. to our Rarporteur ti do what lho think bost, amd thon vie couldesce it in draft when we have. this neu incmoraridum before us. I think that that would also cover the point that has already beon discussed in the Comaittoe On Quantitative Restriotions and all: other bolanceofe pcWymnts, so that I think ve put overy county on the same levol. MR tiDARKAR (India): If the two arc linked totther in paragra.h 1 of Artiolo 4 of the Chartcr, the Chrtpter on Econ pnic 'D0vcJ.lopmont, aonl if that in; invokod in oànnropjon rith pnraGraph 3 cf .1-tLioa t 18e the effect is the s ane. THE CHAIRMAN: The provisions of the, Charter as a whole; the Charter as a whole in here mentioned; so that that part of the Charter is montioned a s well. MR MIRUKAIR (India): N; what I an seyiïn is that .'rticlo . is ailoxvd.to bc invooked in connection with paragraph 3 of. Artiolc 18; then, of? course, tho affect is the sanoe as the affect of tho particular mcndmont roooi.wonded' by the Drafting Committee. I am only wondering whether technically it would be all right and if it would be possible for a county to invoke that particular Article. I suppose it would be. 66. Q.1 E/PC/T/C.II/PRO/PV/144 THE CHAIRMAN: The Drafting Committee will have to consider it, and we can consider it again in Geneva. That would take adequate care of the point that the Joint Committee of 1 and 2 raised. We have only to leave that to the Rapporteur and see whether he can take care of this point in the memorandum he in now drafting, and perhaps we can ask Mr Hawkins to say that to him becayse he will see him earlier than I will. Is that agreeable? Then I think we have reached a satisfyatory solution of this difticulty, I would then invite the Secretary to report to Committees 1 and 2, before they meet at 5 o'clock today, the result of our discussions. Uo have'stili ono point.lott opon, and that was tho point vo .deolt with yesterday about tho automatic rocluction of proforonces whon wo started our negotiations. We had left tit open because I isahod ovcry Doloaation to ctuiy tho problem further, and to oeo whether thoy think tho present draft. in adequate, or whether they have soce reservations to bb rmdoe on it. That aould b. roportod acoordirty to CoecLttee 2 znd thon Cormrttoe 2 would have, in the firet instance, the decision according to dissenting raobers of hov the draft should rewd. Perhaps soec Delegatos would like to a3d sono furthor rocarks? MR HAWMINS (U.S.A): I natural an. very rogrotful that it has beon'our Oc insistence on the provision that has oausel the difficulty. .We have giîon further oons±deration to it, but I st:li cannot agree. We sipLy cannot soe our way clear to abandon the vorcd "utomatioally". It i5 a Mntter of very considerable izxportance to us to retain it. TH OELIRONs Thank yot. I think the best plaon is thot wo should ask very Delegato to state hic position, so that wo cau rmlko a prcpor report to gccmïiroo a and wo should not try to solrv thick difficulty angy 0or now, because il is co fundamental th&t perhaps it may only bo clear at Geneora iteolf, or bofore-hand. by means of diplca.tio exhanes. ICR EI~CE (Juziited lwige)t I poroonally would cortai:L not prose further for tho deletion of the word "autcanatiLnly". Ib coCurs in the proposals drawn by in Washington last December, and to which the United Kingdom Government gave their general agreement, At the same time, I would say this that when I put 67. Q. 2. E/PC/T/C.II/PRO/PV/14. to Mr Hawkins the other day the question whether, supposing you read in there some such sentence as would say "This in without projudice to possible negotiations between a number of parties, in the course of which both the M.F.N. rate and the preference rate would be under discussion, such rodustions of the M.F.N. rate and the preference rate being reached in those negotiations as the parties may agree on". As I remember Mr Hawkins said, If the partien agree on anything, there is nothing to stop them. Those sentences with the word "automatically" will both be read in the light of that understandings, that if the parties agree on any particular adjustment of the particular rates, 'thore iB nothing to stop thon. That is asmuch as I wish to, say'on the subject. MR'oXINNN (Canada)- P'rom the tart this lhas b¢en a. very difficult probion for u8. I an not sure whothor wz vmer the f'rst to rai8s the point in tho nsotinga cf Comaittee 2. If wo were net, it is nct that it lias not been iin the ba'oks'of 01r4 minds éver sinco we saw the Draft Charzor. Wc felt that we had very goçd and cogentireazona, and honest reasons, for pressing for its deletion. We oven felt that might malco tho nett result of the negotiations even better in the ôvôrld interot't;han if wo -had to toiiave a road that contained the word "autcmaticaily". You lwfl reribecr, Sir, that atter we had prossed our case for soom tino, and w4ere opported by others, -wo oo.id ne toro about it until it came up aain on the védiesday or Thursday last, when vie again' wont or. record as saying that we would prefer vory much to see it deXtetd, but we did not prose to make an isuse of Lt. I thin I can only join in the tonor'of ir Shaoklol's roearks and say;that attexr sCme more serious reflection (bozauso it is a very nicot point with us), aNd after having eilt for several diys that the Unitod States Dolegation mig+t' see its way clear to withdraw the word, wo zow roalise Mr Hawkinn' statement' tode.y to be that thaot is saeothîng hoe cannot recoomcnd, and in tho interests of progrée98 as a whole, ini tho interoste of what should be the bettorment cf a.],J. our outries, in saiowin+ us te get on with the job, we wL.U certainly not; prose it' and for that natter wil withdraw iour objections to tho vord "automatically." MR GUERRA (Cuba): That is the position of the Cuban Delegation. MR ADARKAR (India): Mr Chairman, as the position stands, the Indian Dolegation finds it difficult to take the positions which the United Kingdom and the Canadian 68. Q.3. E/PC/T/C.II/PRO/PV/14. and Cuban Delegations have taken just at this present stage. All that the Indian Dologation can do in this matter is to take note. of the views expressed by the United States Delegation and these expressed just now by the other Dlelgations, and to report them to the Government of India for a reconsideration. of this most difficult problem. For the present, Sir, I can only restate the position taken by the Indian Delegation on the provious occasions when this subject was discussed, by saying that, so far as they are concerned, they would prefer their obligation to be restricted to ondeavouring to achieve by negotiations and, in concurrence with the parties at present enjoying the preference, . du¢tions in the cxistin, trgins of proferonco. By that, I iaoon aaargins. f proforence existing on a data to bc urood f pon botwaon tho parties ;oncoerned, In doing that, vw attach the utnost iportanoc to, consultation with all partoi, not norely w;th parties seeking production in tho rlain but plso with countrios vrhioh are at presont onjoyinZ the benofit.of tho profrene consultation vith all parties in tho sonso that thcy will bc sioultanoous negotiations. île would also liko to say that the reason why we tind it dMutieult to accept this principle is thot, by accepting it, wo shall be.. confusing the tzo object, tho trio considerations, which v. havy constantly to bear in rJad, n.=oly the ndods of our daorastia industries whîoh are safegu-rded by the particular lceol ut tho nost-fâvourod-nationa' ouuntriesp .and the consideration that tho proforential nia.rins vhich are at present given tp certain countries are indirectly bonoficial to our export trado. THE CÇazWEN; Thaik you. r. VMEFM2. (Chiii.) I shnil x'tu f irst to the àaàtlantic Chaortory quoted by the Indian Dole&ation in one of th3i r.interestiig papora. Thoy,;quote this phrase: "Existing obligations :ust bd rospoctod"J and I would like to roter a ilso to a spQoch 'iadl by Sir Staffoz% Gripps on1 publishoc1 in "$ho Tinus" of November 6th, with tho titlo "No contraction without adoquat compensationon. The reference is this: "You will recollect that the Prime Minister then said that we, for our part, were ready to agree that the existing system of preferences within the British Commonwealth and the Empire will be contracted provided there is adequate compensation in the form of improvement in trading 60. Q.4. E/PC/T/C.II/PRO/PV/14. conditions between Commonwealth and Expire countrios and the rest of the world". The question is this, that I arrive at the opposite conclusion to that of the United Kingdom Delegate. That is the reason why I was the first one to back the word we are discussing, and the more I think this over, the more satisfied I am with the line taken by the Chilean Delegate. I would not like to see the deletion of the word we are discussing. On the contrary, I fully agree with the United States Delegate. THE CHAIRMAN: Thank you. MR LECUYER (France)(interpretation): I think the deletion of the word ".autcatically" would rive more flexibility to tho negotiations, and its rutontion, on tho contrary, wioulcl givc greater efficiency in thoso nogotiatiops. For tho samo reason as exprossod by itr lMcKinnon, I do not insist on its dolction. mZ CIUM-UÏN: I think vrc shoultJ tonrinate the discussion of this point haro. VWo can put in our report the special rear=ks of the Indian Dolegato, and vm should drrv; the attention of Carnittee 2 te this Pzrobl"2 Conmittee 2 vL1 thon take a decision on hv. it should bc drafted, and make a npte in its. report of uhat should bc added inth regard te very special roscrvations, such as the rosorvation of the Indian DoleJ.oato. I au very thankful for the vwy ho put his reservation, bocauso I think that rust facilitatc furtiior proceeding te a great extent. Thon vw shoulL. advise Cor-da;tteo 2 to put in its report that in the interval before the Genova nogotiïtions one *ould try to soive the difficulty preferably by diplomatic rmcans. m l»i!oKlWON (Canada) Lre you apcakiî,, iin roferonce to the word "autcnaticaily"? TlE CWM eN: Yes - Lf thoro are certain countries dissenting. IMR MKINON (Canada) Have vo a rofurcnco from Co.iittec 2 on the word "autcnatically"? TIW CHOMlihMN: No. Wo houv te put it before the Corîiitteo. ;bi McK:NON (Canada): If thero is a measure of agreor.eent suoh as is exprossod haro today, why do wo nocd te refer te it in our report? THE CHAIRMAN: There is the reservation from the Indian Delegation, also a note that a solution might be possible. Perhaps it wiil be possible, before we get 70. Q. 5. E/PC/T/C.II/PV/14. to Geneva, to settle this by other means. MR McKINNON (Canada): Having in mind your own reference to the nature of the remarks by the Indian Delegate and the Cuban Delegate, I think it is merely a very politely expressed resorvation. THE CHAIRMAN: We might leave it to the initiative of the parties concerned to find sone resolution. MR ADARKAR (India): But why not put it in the Report? THE CHAlRMAN: We will put your reservation in the Report. MR GUERRA (Cuba): The usual procedure in other committees, as I understand it, is to put the agreed text representing the view of the majority of the sub-Committee, and then to make a reservation "That certain Delegations LUido a reservotion"l, and so on. THE CWAIRE.¨N: That idea of it. But, socing tho way this nattôr is, I think-that perhaps beforo Genova thorax will bo sono, solution. We rmght leavo that to tho initiative of' tho p.arties concerned.' I think wo havo tod.y donc overything vie can te exfpedit.the work of this S4b-Coamittee. Mr Leddy is at this rmornent busy with, I think, a new draft of the memorandum, and I hope that we will be-able to discuss that on Wednesday morning, so that it will possibly have to be multiplied. 71. PAE R-1 E/PC/T/C.Il/PRO/PV.14 After that he will no doubt do his best, as we know he always does, to proceed wotj the Report of the Subcommittee with as great speed as possible. Mr. McKINNON (Canad:): I suppose the intention would be to discuss which- ever one he has ready first? THE CHAIRMAN: Yes. Therefore I would like to have a meeting provision- ally on Wednesday morning, The only point is that here in the Journal for the time being there is a meeting on Wednesday of Committee Il, the 12th Meeting. That might create some difficultics. Therefore I would ask Mr Wyndham White to clear this point. Is it agreed that we meet again at 10.30 on Wednesday morning? Mr GUERRA (Cuba): Subject to ratification? THE CHAIRMAN: Yes, subject to ratification. (The meeting rose at 4.20 p.m.) 72.

GATT Library

hd217bb3539

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Ninth Meeting of the procedured Sub-Committee of Committee II held in Room 243 Church House, Westminster on Saturday, 9th November, 1946 at 10.30 a.m

United Nations Economic and Social Council, November 9, 1946

United Nations. Economic and Social Council

09/11/1946

official documents

E/PC/T/C.II/PRO/PV/9 and E/PC/T/C.II/PRO/PV/8-11

https://exhibits.stanford.edu/gatt/catalog/hd217bb3539

hd217bb3539_90050503.xml

GATT_157

A.1E/PC/T/C.II/PRO/PV/9 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the NINTH MEETING of the PROCEDURED SUB-COMMITTEE of COMMITTEE II held in Room 243 Church House, Westminster on Saturday, 9th November, 1946 at 10.30 a.m. CHAIRMAN: Dr. A. B. SPEEKENBRINK (Netherlands) (from the shorthand notes of W.B Gurney Sons and Funnell, 58 Victoria Street, Westminster, S.W.1.) . A.2 E/PC/T/C.II/PRO/PV/9. THE CHAIRMAN: The meeting is open. We now hve before us paragraph 2 of Article 29. MR.SHACKLE (United Kingdom): Might a say one word before we lave paragraph 1? You will remember that last night I said I was taken nather by sur- prise by the great width of the opportunities for action which this para- grah affords, but I did not press my point. Before we pass on to para- graph 2, I should like to say that there are, scattered up and down throughout this Charter, a number of escape clauses and waivers. The United Kingdom Delegation would like to look at the general picture as a whole. It is my suggestion that we should consider as it were all the waivers and escape clauses and tpy to form a general estimate of there before we pronounce finally upon particular ones. It seems to us that the question of escape clauses and waivers is one that needs looking at as a general picture. THE CHAIRMAN: That will be quite nature; other Committees have done some of the work, so we shall have to have the whole pictures That is one of the reasons why we should also have a Drafting Committee again in New. York, to get it tuned up. MR. MCKINNON (Canada): The Canadian Delegation has been driven to pretty .n.ch the same point of view as that expressed by Mr. Shackle. We are getting se many escape clauses in that it may be Well to list them ahd look at there. It has almost reached the point when we may have a chapter on escape clauses. THE CHAIRMAN: Would it not be wise to draw the attention of Mr. Wyndham White to this, and ask him whether it would be possible to get a list of these escape clauses as they come out of the work of the other Committees? E/PC/C.II/PRO/PV/9 MR.MOKINNON (Canada): That might be a practical suggestion; it would let us look at all the escape clauses and see them not only in relation to one- anothor but also in relation to the whole Charter. THE CHAIRMAN: Then I will ask the Secretary to convey this message to Mr, Wynham Now we have before us paragraph 2 of Article 29. Paragraph 1 we decided yesterday, should be recast by the, Rapporteur and we shall receive it at the beginning of next week. We have yet to look into that in conjunction with the proposals of the Cuban Delegation as set out in the paper mentioned yesterday. MR.ALAMILLA (Cuba): As I said before, this is not a controversial matter, ït is a matter of procedure that proper defence should be given to all the parties concerned. It is a matter therefore in which everybody should be interested to see that everyone is duly protected. I suggest that to the Rapporteur, in order that he will take it into consideration along with the other suggestions of procedure included, in both those paragraphs and bring out a text on which we could discuss the matter in more detail. I think that would be better than including here something which someone might oppose. We deel that it is necessary to nover the situation a little more completely in regard to the nation supposed to be causing the damage to the other, The second nation is fully protected, but we fuel that the nation supposed to be causing the damage should also be protected by having the right to bring the matter before the Organisation. We do not consider it is a controversial matter, but a fatter of procedure, and I do not think wo should waste our time here discussing it before the Rapporteur has had time to look at it. THE CHAIRMAN: To clarify the question for the Rapporteur, there are a few things that the Rapporteur has still do deal with in regad to the propceals of the Delègation of Cuba, one is the question of su labour standards. That we have left to the other Committee. The present point is this: as "a" is drafted injured parties have the right to disouss what action they will take A.3 E/PC/T/C.II/PRO/PV/9 but the accused has no proper means of defence. I think that is the point to be looked into by the Rapporiteur. I think he should see whether Artciles 29 and 30 should be redrafted accordingly. MR. ALAMILLA (Cuba) Exactly. B1 E/PC/T/C.II/PRO/PV/9 MR ADARKAR (India) : Mr Chairman, under the procedure described hero a member has to give prior notice and to have prior consideration with the other members affected by the proposed action before taking the action. A point was raised in the full Committee, which the Indian delegation supported, that any action of this sort to be effective must be taken quickly, if the threatened injury to the domestic interests is to be avoided. From that point of view would it not be butter if we so re-wrote the section as to require the member concerned to inform the Organisation and to start this process of consultation after taking the action which is needed if the circumstances are so urgent as to make that course necessary? THE CHAIRMIN: This point was indeed discussed there, and I think the suggestion was made as to whether wu should not include in the draft something that would require prior notice to be given as carly as practicable, or something like that, and then lock into it and see whether in certain circumstances only notice after a measure had been taken should be needed. I think they wore the twe points that were left open there. As far as my recollection goes, as I mentionedyesterday, mention was made there also of Article 53, paragraph 4, which provides as follows; "To consult with Members regarding disputes growing out of the provisions of this Charter and to provide a mechanism for the settlement of such disputes." The same thing was agian mentioned in connection with paragraph 2 of Article 55, which speaks about "waiving, in exceptional circumstances, obligations of Members undertaken pursuant to Chapter IV of this Charter." We further have paragraph 7 of the same Article, where it is said that "The Conference shall establish procedures for making the determinations and reeommendations provided for in paragraph 3(c) of Article 20; paragraph 2 of Article 29; and Article 30."' These are all procedures envisaged to see that wo have a proper system to work this clause and to protect members against unilateral action of a harmful, nature unless it is really warranted. Se that when we look into this paragraph we have to keep these other. Articles also in mind. MR LECUYER (Framce)(Interpretation): It is quite correct to have those Articles in mind, Mr Chairman, as you have said. I should like to point out that those Articles, 50, 55, and so on, are being discussed by Committee V., and the French 5. B2 E/PC/T/C.II/PRO/PV/9 delegation in particular intonds to present some amendments to be discussed; therefere I think that we cannot know befpre some days the position taken by Committee V. in connection woth those articles dealing with the modification of the charter, and so on. we shold discuss these questions wothout being too much concerned with tho discussion in Committee V., and then, when we know the decisions taken in Committee V., we can adjust our own decisions then. THE CHAIRMAN: Is not this the case? This is the main Article, laying down a certain aotion that we should take; and then the other parts of the charter at which Committee V. is looking should then provide for the mechanism arising out of this principle; so I think therefore we should start to discuss this, otherwise Committee V. will not be able to go on with it. MR HAWKINS (USA): I do not think there is any great difference of view here in reality. The Article as drafted provides for the fact that before action is taken notice shall be given as far in advance as may be practicable. That brakes it somewhat loose. In essence, what tho Article provides is that there ought to be advance notice and as long advance notice as a country can give in all the circumstances. It seems to me it is a desirable principle to retain. MR ADAKAR (India) : Mr Chairman, it is not merely the prior notice that is involved. here but also the consultation that members affect in respect of the proposed action; so the procedure laid down is that the member, as soon as he decides upon a particular course of action which is nocessary to prevent- ïnjury to the domestic industry, gives notice to the Organisation as early as practicable and then starts consultation under the auspices of the Organisation with other exporting countries - with the countries from which it imports - with regard to the proposed action. The procedure should be a little more elastic than this if the objective is to be achieved; and I think the procedure should be that the members should be permitted to take action Subject to consultation which may take place a little later, and the notice should be issued at once. THE CHAIRMAN: May I just any one word here? I think that we should agree about the principle of the thing that is to be put into Article 29 - that if possible there should always be prior notiee - because there might be sound reasons for 6. B3 E/PC/T/C.II/PRO./PV/9 saying, "Well this is a very unfortunate affiar that could have been prevented", or that tho other country could very easily have taken some action to provent the thing happening again or going on. On the other hand, I can also see that the thing may be so serious as to mke it necessary to take immediate action, but that should be in exceptional cases, and I think we have to try to find a. formula here, which, while stating the principle of prior notice as carly as practicable, gives the right in very exceptional cases, where perhaps there is a glut in the market or something like that, to take immediate action. C1 E/PC/T/C.II/PRO/PV/9. Mr HAWKINS'(United States): I think I agree with what you just said, but I would like to point out that this is not quite as impracticable as it may sound at first reading. An emergency of the sort we speak of here can be foreseen to some extent, or at least suspected. In other words you can see a situation developing which may have the effect contemplated in this Article. Now ifyou consult as fair as possible in advance you may bring to the notice of other countries that this situation is developing, and the country concerned may have to take action. In other words, I think there would be time for advance consultation. I would also like to point out that this is inter-Governmental consultation, so it is not going to be public and it would stimulate the inflow of goods. However, I think the Chairman's suggestion that there might be provision made for quicker action in exceptional cases is sound.. Dr COOMBS (Australia): It would then be preceded by the words, "wherever practicable". It would then read something to this effect: member shall wherever practicable, give notice in advance to the organisation and afford the other members having a substantial interest as exporters of the product concerned an opportunity to consult". Then should be added these words: "In any circumstances the members will advise the organisation of action taken and provide other members an opportunity to consult on that",. Mr. McKINNON (Canada): Before that is translated, might I suggest it be slightly amended. "Before any member shall take action pursuant to paragraph 1 of this Article it shall, unless the circumstances are exceptional, afford the organisation and other members", and soon, "an opportunity to consult. Dr COOMBS (Australia): May I suggest a further change: "Unless the circumstances make this impracticable Mr McKINNON (Canada): Instead of "unless the circumstances are exceptional". THE CHAIRMAN: Perhaps we could meet both delegates on this and say: "Unless certain circumstances make this impracticable". I have another 8. exceptional". C2 E/PC/T/C.II/PRO/PV/9 . point to make. Paragraph 2 has to be read in conjunction with paragraph 1, and paragraph 1 says, "any product is being importod". I just mentioned that because Mr Hawkins said you can see something developing. It States very expressly there, "is being imported". Mr ALAMILLA (Cuba). I wanted to avoid discussion on procedure, but as we have gone into it I am going. to speak very clearly about it. We oppose these unilateral actions, and we consider it to be very dangerous. Further I am going to explain the way in which we think this ALrticle should work, and how it could always be foreseen. Consultation should be undertaken before such unilateral action is taken, which may have very drastic consequences to the other country. First of all we have to take into consideration that this only arises because of developments which affect the obligations incurred under this Article. One country is said to have committed an error because he did not foresee all the consequences of his action, If that country did not foreses the consequences he should see them as soon as possible, and as soon as he sees them consult the other members in order that they may know what he is going to do. In that situation we think that ho should give notice to the organisation, arid the other members of the agreement should have a chance to say something about it. After that I admit that if no agreement can be reached, then both parties should have the right to refer to the organisation, But I am willing to allow the party who considers himself in a terrible danger of being damaged to do what he pleases under his own responsibility. But I should also give the right to the other member to bring the matter before the organisation. Therefore, if action is taken in a just way, then the othe r members have recourse against the decision and will be able to protect themselves. THE CHAIRMAN I think that is understood. Thèrefore.I again say that paragraph 2 is to be read in conjunction with paragraph 1. It says "unforeseen developments." If you get very good crops you get a glut in the market. There you would have the possibility of entering into 9. 03 E/PC/T./C.II/PRO/PV/9. an agreement to prevent serious happenings. I have already drawn attention to the tact that we should look carefully at the words, "is being imported" in conjunction with paragraph 2. If we have in paragraph 2 some words like I have suggested here, "unless exceptional circumstances make this impracticable", I think we have covered it, especially when our Rapporteur will have seen if he can add something to this Clause to protect that offending member; give him a chance to defend himself. In that case I think your point will be met, if not fully, then at least 90 per cent., Mr ALAMILLA (Cuba): I believe it is met, except for one specific point, which is that in exceptional circumstances it seems that you are to do what you like without consultation and without notification, and that is what we think is a very dangerous thing to do. D.1 E/PC/T/C.II/PRO/PV/9 MR. LECUYER (France) (interpretation) I think all of us whe have experienced practical commercial difficulties in internationall trade know that it is impossible in some casas to subordimate to provious negetiations certain emergency cases. There are casas in which we are compelled to take immediate action. For example, we have to do it in cases where we have an overflow of goods; we have to act immedintely. Therefore it is impossible in some cases to wait for negotiations under certain measures are taken. MR. HAWKINS (United States): Could I make one comment on what the Cuban Delegate said? Ife said that a country which invokes this exception commits an error. I would only like to suggest that there be more errors of that sort, because what he has done is to reduce the duty to the point where, in some circumstances, it may get him into difficulties. If ho has got a way out of these tomporary difficulties he will then be encouraged to make more errors of the kind suggested. MR. ALAMILLA (Cuba): May I put forward an iden which may affect a compromise of vicies. I think notification should always be given, but in the matter of the consultation I can see the point raised by the Delegate for Franco. However, in that case, as we believe the consultations should always also take effect, we may put a limit to the time of those consul- tations. The time could be fairly short, and if the consultations did not come to anything the member might have the right to do whatever he pleased. Thus, it is not a question that the consultations may last a long time, but that there is at least an effort at consultation and a chance for the other members knowing what the thing is all about and being able to study the situation. May be that would be a solution to the problem. MR. ADARKAR (India): The Cuban Delegats has suggested that prior notice should.. be given in ovey case. Prior consultation is equally necessary. So far as the prior notice is concerned, I think the words "as may be practicable" more or loss cover the point that we have in mind, because that gives D.2 E/PC/T/C.II/PRO/PV/9 sufficient freedom to the country. It may be that the notice may not roach the party concerned before the action is taken; but the country should make a bona fide attempt to inimate to the Organization and the parties affected what is its intention as carly as practicable. That, of course, cannot be questioned. As rogards consultation, our fear arises from the fact that consultations have not taken place in time and tho situation may be so ungent as to require immodiate action. I only wish to add that the danger which the Cuban Delegato approhends, of mumbers taking advantage of this provision more often than the circumstances roquire, is not very grant because any member taking such action will have to consider two sets of circumstances. It will have to consider the consequence of delaying that action from the point of viow of threatoned injury to its domestic industries; and on the other hand it has to consider the consoquence of taking any procipitato action on its oxport trade, because if such an action is taken the othor members may be free to withdraw from the country concerned certain benefits which they extend to it. Therefore there is no danger of tripartite action being, taken by members, go long as the members know their immediate interests I think the use of this provision will be kept within limits. THE CHAIRMAN: After all the remarks that have been made - if I see them clearly - I think the suggestions made here for making this clause less dangerous, and to prevent real abuse of this clause, are in my opinion more or less sufficient, oven after the remarks of the Cuban Delegate. There will be prior consultation unless exceptional circumstances make it impracticable. I may say, it will be one case out of a hundred that may happon in that way. Perhaps it is judged on a country which is a long way from other countries. However, there are countries bordering on each other, and therefore the thing may happen fairly soon. You will have consultations fairly quickly, which may be necessary because one, two, three or four days may be very important. We cannot simply take that possibility away from other countries. 12. D.3 E/PC/T/C.II/PRO/PV/9 MR. ALAMILLA. (Cuba): I do not want to go on with this discussion. I suggest we give all these ideas to our excellent Rapporteur for him to try to bring, back somothing to cover all these points which have boon raised here, if that is possible; and if it is not possible to indicate to us which are the ones that cannot be arranged. Then, when we have the new draft, we will be able to discuss the problem more intelligently, which is just a matter of procedure and safeguard for both parties. I am looking at one party just as much as the other. That is all wo ask for. THE CHAIRMAN I think I ebturely agree with the Cuban Delegate,that we have now, discussed it enough). I think when we see the new draft of the Rapportour most af our objections will have been settled. MR. SHACKLE (United Kingdom): Before we Iave the paragraph, if we are about to leave it, there is one tentative suggestion I would like to make in relation to the last sentence. I have hoard the foar expressed that in the ovant of action being taken on the lines canten- platod hare you may get counter action and retaliation which might, so to speak, davelop into a campaign of a dangerous nature, which might tond to disrupt the Organization. With a view to proventing that sort of train of circustances it has been suggested that there should be a provision that the counter action taken in a given case should be of; as near as may be, equivalent value or effect to the action in reprisal for which it is taken. I believe that is a common doctrine in international lawi, the so-called doctrine of roprisals: the action you take as a reprisal must be, as nearly as may be, of equivalent valua. I am wondering whether there would be any crit in writing some such works as these into the last scntence: "Members adversely affected may, unless the Organization reeommends otherwise, suspend the application to/trade of the member taking such action of concessions of as near as may be equivalent value gantedd under this Charter." I do not .make that a firm proposition. It is a tentative usggestion which I throw out for consideration. . E/PC/T/C.II/PRO/PV/9 THE CHAIRMAN: I think that might be a useful suggestion. MR. HAWKINS (United States): There is merit in the idea; it gives the Organisation some sort of guide as to how to act. We have to consider how to word, it; it should be "some substantial equivalent" or something of that kind. THE CHAIRMAN: Can we now agree to leave A title 29 to the Rapperteur for redraft of which are shall get the text next week? Agreed. THE CHAIRMAN: Now we come to Article 30. MR. COOMBS (Australia): Before we pass on to Article 30 I think I should inform the Committee of developments which have taken place in relation to the work of Committee 1, which have some bearing upon this sestion. You will recall that it was suggested in the discussion fo the employment provisions that there should be under takings in relation to employment and the use of international resources by the member countries, and that there should also be a provision that, in the event of failure to carry out these undertakings, resulting in an extensive decline in the effective demand of those countries for the products of other countries, for a review of the provisions accpeted in Chapter 4 of the Charter. Committee I has reached substantial agreement on the provisions relating to employment which they wish to propose, and while final report is still in process of pre- paration, there are certain P: which have been agreed upon in the Committee which mke action, possibly In relations to this section, noces- sary. If I may summarise the main points which will, I understand, be embodied in the Report of Committee I it will make the point clear. It was agreed that there was a problem in that countries whose economies were being subjected, to deflationary pressure as a result of a serious or abrupt decline in the effective demand of other countries, and it was generally. E.1 E.2 E/PC/T/C.II/PRO/PV/9 agreed that there must be some adequate safeguards to meet those con- tingencies. It was noted that certain safeguards afe ombodied in the provisions of the Monotary Fund, but it was agreed also that the Articles of agreement of the International Trade Organisation should, themselves contain adequate safeguards. The provisions relating Io the use of quantitative restrictions for the balance of payments would be, of course, one such safeguard, but it, was considered that the provisions of the Draft Chartershould be examined carefully te determine whether they are adequate to deal with the circumstances of a country adversely affected by a decline of effective deimand elsewhere. What CommitteeI has done, therefore, is to pass this problem on to Committee Il, In this connection it was the view of the Australian Dele- gation, as you will recall, that something which night be called an escape clause, linking up the employment and other related provisions to the obligations accepted under Chepter 4 of the Charter, should be included. While I an not quite sure whether this is the proper line to discuss it, I did want at this stage to let the Committee known because it seems to me that it is in relation to this section "G" that consideration should be given to the question. We have drafted possible working for such an additional article to follow Article 29, which we have called Article 29A, and which I will have distributed to Members. has I say I am not sure whether the Committee will wish to discuss it now but it mighy be of amsistance if it is available, and you, Mr. Chairman, could perhaps decide how you wish the matter to be dealt with. MR.ALAMILLA. (Cuba): The Cuban Delegation also had been considering this . effect of the resolutions or conclusions which Committee I might reach on these matters of employment, and after a lot of discussion among ourselves in our Delegation we came to the conclusion that the bost place to add it was net in Article 29, as I suggested previously, but on Article 30. There- fore we were waiting until Article 30 came before us in order to put our views to the Committee, We have no objection to discussing them in relation -15- E.3 to the project of the Australian Delegation, and then we might decide whether they should come in Article 29 or Article 30. MR. HAWKINS (United States): I wonder whether (United States): Article 55(2)has been con- sidered in this connection? I should think that Article 55 (2) would cover ewerything in these exceptions. It would cover other things also, within tho competence of the Organisation. There is a further question also, the balance of payments, exceptions, which is still in process. That would hava a definite relation to this question. There will be some kind of a lot-out there which seems to me would also cover this case. In other words, what I do not understand is the need for special exception of this point, which is certainly covered by Article 55(2) and which very likely will also be covered by the balance of payments exception when we get it formulated. Mr. COOMBS (Australia): Could I make a suggestion? I quite agree with Mr. Hawkins that the necessity for am article of this sort does turn upon another of the excape clauses which exist in the document and upon their adequacy to deal with a situation of this sort. It seems therefore that the propor way to handle this might be to add this to the list of escape clauses which the Chairman undertook to have prepared, and we could then look at there collectively in the light of the various types of situation which it is expected they may have to deal with. If we could do that we could leave this now and deal with it when we look at all. the escape clauses togethor. I Might mention, as Mr. Hawkins has referred to article 55(2), that I am not exactly happy to leave this type of situation to be covered by that Article, although I quite agree it is covered O but so is any other escape clause already embodied in the document. I prefer however to leave that for the moment, I would like to mention one point, because I think it would be worth while of our Rapporteur gave some consideration to it, I have some doubts as to whether 55(2), which comes in the section dealing -16-. E/PC/T/C.II/PRO/PV/9 E/PC/T/C.II/PRO/PV/9 with organisation and is primarily a machinery clasue in the appropriate place for substantive excape clauses. I fool myself that the content of 55(2), so far as it rotors to an escope, out to be put back in Section G . of Chapter 49 and that Article 55(2) shouId refer only to the machineyr for dealing with that and perhaps, any other scape clause. I wouldd prefer to see something added in Section G which provided for this type of escape in exceptional circumstances, on the decision of the Organisation and in accordance with criteria and procedures to be approved, and then to set out in 55(2) a provision as to how these criteria, and procedures aru to be established. That is purely a dreating point;. it seems to me to be a bit untidy to have an excape clause tucked away in a section Which deals with mechanies. I just mention that poing so that the Rapporteur may give it consideration. On the main issue, if it would be acceptable to you, I would suggest that this suggested draft might be added to the list of escape clauses when we come to consider them altogether. E.4 F1 E/PC/T/C.Il/PRO./PV/9 MR. ALAMILLA (Cuba); We have no objection to leaving the substantial dis- cussion of this problem until the time when we discuss the other oscape clauses, but I think it would be useful for me to give you just a thought that we had in suggesting that this clause should be placed in Article 30, because we think that it will help overybody to get an exact idea of the problem. As you know, originally we also suggested, as well as the Australian delegation, that it should come in Article 29, in this Section G. We still feel it should come in Section G, but our feeling new is that it would be better to put it in Article 30 than in Article 29, for those reasons. Article 30, as it is contemplated and drafted now, deals with the situation of two members having a problem between them, and then bringing this problem to the Organisation, and the Organisation then looking into the matter and maybe deciding that the other mumber is ontitled to suspend the application of any concessions granted to the other. Now, what we are thinking here is not of the situation between two members but of the situation between three or more members, that is, the situation of a member in respect of the/market of a third party. We thought it would be logical to deal ini Article 30 not only with the situation existing between any two members but also with the Situation between two members and a third party, or maybe several members and a third party, and Where the suspension of concessions given to only one member might not effect a cure of the, problem in question. Therefore we were thinking that in this Artilcle the same procedure should be laid down in that case of more than two members as in the case of the two members alone; so that when, any, two mombers are injured by a situation caused by a third member, that case may be brought to the consideration of the Organisation, and then the Organisation may take decisions that would be, I will not say binding but that would be in the form of recommendations not only to the member itself but also to the other member of the market where the situation is taking place. I believe that if we word this clause to contemplate both situations we shall be able to deal with the situation which the Australian delegation is contemplating here. 18. F.2 E/PC/T/C.II/PRO./PV/9 Mr. SHACKLE (U.K.): would just like to say that in such consideration as the United Kingdom delegation has been able to give to this question we had provisionally come to feel that Article 30 was the right sort of context in which to include a provision of this kind, if it is decided to have one. It may be worth considering possibly the question whether the matter might be covered by some expansion or amendment of the terms of Article 30 as a possible alternative to a separate Article. I merely throw that suggestion out for later consideration. DR COOMBS (Australia): I would notlike to onter into a discussion at this stage on the appropriate place for the inclusion of this Article or provision, It does seem to me to be cssontially a drafting matter and one which we could consider after we had discussed the substancc of it. Offhand, I find it rather hard to see how the thin, would fit in with Article 30, which took to be rather a means of undertaking to consult if any member feels that you are cvading an undertaking which you have, given bythe use of other provisions, that is, if you, are dodging, an obligation to make a tariff become effective by using exchange regulations, state trading operations, customs regulations and formalities, sanitary laws, and soon. Artilcle 30 is for the purpose of pretecting the benefits which countries believe they ought to obtain from a concession granted to them; and it does not seem to me an appropriated place, therefore, for theinccrperation of the type of provision which we have in mind; but I am prepared to leave that question really to the examiners as a drafting matter when we have made a decision on the basic issue as to whether semecthing of this sort needs to be included. G1 E/PC/T/C.II/PRO/PV/9. Mr MCKINNON(Canada): Various delegates have expressed viewes as to whether it would be appropriate under Article 29 or under Article 30, and I am beginning to wonder whether it is appropriate at all under Chapter IV. It seèms to me that this is a very general and broad oscape clause and the type of situation to which Dr Coombs refers might arise, not necessarily out of a violation of a commitment under. Chapter IV. Dr COOMBS (Australia): It arises out of a failure to give effect to a commitment under Chapter I. Mr McKINNON (Canada): That is the point. In the event that this is finally adopted it would entail a consequential change of wording in two places, Dr COOMBS (Lustralia): It is a matter of complete indifference to us whether it is in Chapter I or Chapter IV, but Committee I thought that since the kind of obligations it is sought to waive here are the, obligations embodied in Chapter IV, it was desirable that Committee Il should have a look at them. It does seem to me that the question of the place of the thing is immaterial. The critical thing is that we should look at this together to see whether something of this sort is necessary. If it is necessary we can argue with Committee I whether it stays in Chapter Iv or whether it goes to Article 55(2). I think it would be best to leave it at that, Mr Chairman. THE CHAIRMAN: My first reflection would be this, that it cortainly has a bearing on the problems we are discussing here, and perhaps on Articles 29 and 30. On the other hand, we do not know at this moment the outcome of the discussions with regard to balance of payments restrictions, which are also closely connected with, this. Furthermore, we have, as Dr Coombs rightly pointed out, to look at this in conjunction with all the other escape clauses Already in the Charter. There is this third point. As far as I understand it in Committee V there have been some discussions on Article 55(2), and the idea was put forward whethor we should not delete the words "Chapter IV of this Charter", so as to make 20. G2 E/PC/T/C.II/PRO/PV/9. this general clause refor to all the chapters of the Charter. I really do feel that for the time being we should go into whether it is already covered by the other clauses or not. In that case we must have a combined meeting with Committee V, after we have had all the cscape clauses before us. I think that will be the only intelligent way in which we can deal with this problem. If that is agreeable to the meeting, then I would suggest that as soon as possible - perhaps in the middle of next week - a combined-meeting of Committee V and Il and perhaps even Committee I, which perhaps could be under the Chairmanship of Dr Coombs, so that we would have all the points proposed. (Agreed) We still have Article 30 to look into more closely. I suggest we now try to reach some conclusions on that Article. Mr MUKINNON: (Canada): Does your sugested programme envisage looking at the other escape clauses before we pass this one in the Joint Committee? THE CHAIRMAN ; I think it would ccrtainly be useful. May we now turn to Article 30 ? Mr HAWKINS (United States): The question here will arise beginning with the second sentence, the first sentence being only a general obligation to consult. The delegate of Cuba has raised a point which I think could be considered now independently of the question just raised by Dr Coombs, although it night conceivably have a bearing on it. As the delegate of Cuba has correctly said, this Article is pretty much narrowed down to questions arising between two parties, a complaint by one party that another is not carrying out the letter of the Charter - which lnvolves the question of interpretation - or is not carrying out its spirit. I should be quitc happy to hear the suggestions of the Cuban delegate on this subject. I should say in advance that we would be quite prepared to broaden that Article. I cannot give you the exact wording, but it could be made to cover any situation. I also suggest although only tentatively, that it might be made to cover the Charter 21. G.3 as well as the Chapter which would take into account certain obligations in othor parts of the Charter. I think that the delegato of Cuba has given thought to this, and he might be asked to give us his ideas, that is, if he is now prepared to put forward any ideas on this. Mr. ALAMILLA (Cuba): I will not try to give a drafting of my own, but I will try to make my idea clear. If it is accepted we may pass it to the Rapporteur to try his hand at it. My idea is just this. This Article, considers the situation of two members. I believe that it should be enlarged to consider also tho possibility of a third party being involvod in the situation, and that recommendations should not be made to only two parties. The second point is that wc consider here only the problem that may arise from the operation. of Chapter IV, and I think it should be enlarged to consider the situation which may arise on the non-conmpliance of all the obligations on the whele Charter. Those are the two enlargements I would suhmit to the Committee. On the third point as to which obligations are to be freed, I would suggest that in this case we should trdat them as obligations arising from Chapter IV. That is the difference I would like to point out, I want to point out also that should there be cases of non-compliance of the whole of the Charter, the effect would be to free them of the obligations or the benefits, given in Chapter IV. I do not know if my idea is clear. H fois. 22. H.1 E/PC/T/C.II/PRO/PV/9 MR. SHACKLE (United Kingdom): whilc this is not to be taken as a serious proposition, I cannot help remarking that effect would be given to the Cuban Delegate's point, as far as I can see in the English text, if in the Charter in the first three places where it comes in the Article you substitute the letter "r" for the letter "p", so that it would road ."Charter" instoad of "Chapter." THE CHAIRMAN: That sounds quite simple - so simple that I am a little bit suspicious. MR. SHACKLE (United, Kingdom): I do not advocate it seriously. MR. DARKAR (India): There is refpremce here to the objects of this Chapter. The objects of the Chapter have net been specifically stated anywhere clse, and they are only to bo inforred from the provisions of the Chapter. Therefore from that point of view also the reference to the objects of the Charter would be more casily understood than the objects of the Chapter. THE CHAIRMAN: We are in this difficulty here. We are trying to fit in undor Section G and under Chaptor IV of the Charter the Wholc a work of other committees, and the commitments as they have worked them out. Before taking any provisional decision on that I think we should see more clearly what is involved in this change. with regard to the work ot Committee V especially I cannot see us dealing with it in this way without having a proper idea of what we are geing to do. I think that here the opinions of the drafters of the Charter would be very welcome. MR. HAWKINS (United States): This Article is growing into something a lot bigger than over intended - which is saying nothing against it it. The original antccedent of this Section - and like almost overything clse in it it has anteccdents in other instruments - was a provision devoloped in the London Economic Conference to deal with mattors of protectionism. There the question came up whother we should list all of the things' that a country could net do which might destroy the value of concessions made. We got such a long list that they finally hit upon 23. H. 2 E/PC/T/C.II/PRO/PV/9 a clause something, like the ono that is here. wel took it up, starting with that, but we broadened it. That clause rclated only to matters which were not in conflict with the agreement but had the effect of nullifying or impairing its objects. In this draft that has been broadened to cover violations of the agreement; and that is where it has rosted until today's meeting We now have two suggestions to broadon it vory greatly, making it go far beyond what the draftors intended. As I say, that does not mean it is wrong to broaden it, but I think we should be aware of just what wo are doing. I think it would probably be as difficult for many of the members of this committee as it is for me, ovon although I had given some previous thought to this point, to reac onclusion on this particular Article with the proposed amendments today. I think what We should do is to consider the proposals that have been made, and then examine the other provisions of the Charter which would be brought in under it by this minute change suggested by Mr. Shacklc. I do not think we can consider it intelligently in all its implications unless we all have an opportunity to do that. MR. LECUYER (Franco) interpretation): I think there is another reason for hesitating here. The drafters of the Charter - and here Mr. Hawkins will tell me if I am wrong, but I do not think I am -- have considered, Chapter IV as a whele, which is connected with tariff negotia- tions, and this Chapter can probably be put into effect indopendently of other Sections, as inter-governmental agreements or restrictive business practices. Therefore, it might be inadvisable to extend this Article to the whole Charter. If we intond to do that we should place it olsewhere than in Chapter IV. THE CHAIRMAN: I think the Franch Deleate has made a very useful remark here. I, would not liko to lengthen the discussion at this moment, because we certainly will not be able to reach a definite conclusion without giving the Rapportour, in consultation with the drafters of the Charter, some chance to reflect on it. I suggest he does it in two ways. First, that he trios 24. E/PC/T/C.II/PRO/PV/9 to limit it only to Chapter IV to see how it should read after all our discussions. Secondly, he should try his hand at the, broader formula, which may then have to bo placed somewhere clse in the Charter, and will certainly be a matter for discussion with Committee V. As we have only 15 minutes loft I suggest we restrict the discussion to Article 30 on the suppesition that it Would only apply to Chapter IV, and to any points that are not clear or any additions that should be made. MR. ALANILLA (Cuba): In that caso, I suggest we take the second part of my proposition, where not only the cases of the members but the cases of two members with a third or more mombers may arise. I want to safeguard our position, if it is not covered here, to try to put in some other clause when the thing comes up to see how this some procedure of the two or more members can be applied also to some casos that may ariso from non-compliance of the Charter by these whe arcnot in in this Charter. L.1 E/PC/T/C.II/PRO/PV/9 MR.HAWKINS (United States): I. do not see the principle of the Delegate of Cuba has said. It is rather tricky drafting; I wonder if the Delegate has a draft? MR. ALAMILLA (Cuba): I have boon drafting for a week and I have not succeeded, that is.why I want the assistance of the Rapporteur because ho is much more able than I am to do this. THE RAPPORTEUR: I think we need a Commission rather than a Rapportour. THE CHAIRMAN: I think we ought to give him a good dinner after this. MR. AIAMILLA (Cuba) : Perhaps we should all offer him flowers, as we did to the lady the other day. MR. MCKINNON (Canada): Is the point of the Delegate of Cuba that this wording restricts the negotiations rising out of the complain tto the two members? I do not agree that that is necessarily the case under this wording, but if so is his point that it should read something like this: "by any Member or Members"? Is that the extent of it? MR. ALAMILLA (Cuba): Yes, and I suggest that the reeommendations should go not only to those two but to other Members. MR. MCKINNON (Canada): If that is the whole point I do not think that the amendment is extremely difficult to make. I am just afraid that that is not the whole point, and that the Delegate is not stating it so that I understand him. It seems to me that in the English phrase" any other Member" might be understood three others. MR. ALAMILLA (Cuba): You have to read what is said at the and - it only gives to the complaining Member the right to suspend a specific obligation under the Charter. If you will consider also the case of a third or more Member you have to rearaft the whole thing, so that the recommend- nations should go not only to the complaining Member but also to the other 26, I.2 E/PC/T/C.II/PRO/PV/9 Members who may come into the Problem. MR. SHACKLE (United Kingdom): Might I ask the Delegate of Cuba whether, in the case he has in mind, it is not probable that other Members would alse themselves be sufficiently interested to make a complaint, so that when we say "the complaining member " we in fact mean "the complaining members'. MR. MCKINNON (Canada): That is what I meant - a group. THE CHAIRMAN: If I understand the Delegte of Cuba rightly, it is this; he has a serious complaint and other members of the Organisation may say that this complaint is justified. He wants not only himself but the other countries concerned, whe are important clients of the other country, to take action. Is that it? MR. ALAMILLA (cuba): It is possible that a third party would also be interested in the matter but it might come to the point where he will not agree about it bccause it does not affect his markets. That is why I would like, even in the case where the third party is not concerned or interested, the Organisation to be able to makd recommendation to him and not only to the complaining Member. THE CHAIRMAN: If the Committee is agreeable we will have the translation latar. The position now is that our hard-worked Rapporteur, and our even more hard-worked Mr. Hawkins, have to leave at a quarter to one and I should like to leave them a good week-and to prepare all the drafts. I suggest then that we ail think this over; the Rapperteur will see whether he can fit in an amendment, and we can discuss it when we have the draft boforc us. I would like to make only one remark for my own part: are the provisions relating to State trading operations clear enough in this draft of Article 30? 27, I.3 E/PC/T/C.II/PRO/PV/9 If this is agreeable, we can fix our next meeting for Tuesday next at 2.30 or 3 o'clock. The Rapporteur will then have had time to do certain urgent work to complete our drafts. If we meet at 2.30 we shall perhaps have time for tea, but I am afraid we shall have to meet practically every day next week to finish the whole thing, and perhaps have to meet in the evening as well. The Committee rose at 12.26 p.m.

GATT Library

wv940xd7835

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Ninth Meeting of the procedured Sub-Committee of Committee II held in Room 243 Church House, Westminster on Saturday, 9th November, 1946 at 10.30 a.m

United Nations Economic and Social Council, November 9, 1946

United Nations. Economic and Social Council

09/11/1946

official documents

E/PC/T/C.II/PRO/PV/9 and E/PC/T/C.II/PRO/PV/8-11

https://exhibits.stanford.edu/gatt/catalog/wv940xd7835

wv940xd7835_90050503.xml

GATT_157

GATT Library

jb939md3597

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Second Meeting of the State Trading Sub-Committee Committee II held at Church House, Westminster, S.W.1, on Friday, 8th November, 1946 at 10.30 a.m

United Nations Economic and Social Council, November 8, 1946

United Nations. Economic and Social Council

08/11/1946

official documents

E/PC/T/O.II/ST/PV/2 and E/PC/T/C.II/PRO/PV/15+E/PC/T/C.II/ST/PV/1-3

https://exhibits.stanford.edu/gatt/catalog/jb939md3597

jb939md3597_90050510.xml

GATT_157

E/PC/T/O.II/ST/PV/2 UNITED NUTIONS ECONOMIC AND SOCIAL COUNCIL PREPARTORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SECOND MEETING of the STATE TRADING SUB-COMMITTEE COMMITTEE II held at Church House. Westminster, S..W.1, on Friday, 8th November, 1946 at 10.30 a.m. Chairman: Mr. R.J. SHECKLE, C.M.G. (United Kingdom) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL 58, Victoria Street, Westminster, S.W.1) Chairman:Mr. R. J. SHECKLE, C.M.G. (United Kingdom) Page A-2 E/PC/T/O.II/ST/PV/2 THE CHAIRMAN: Well, Gentlemen, as I gather we are all present, shall we begin? I think at end of yesterday we had started on Article 27; w had been discussing the first sentence, the is to say, that very long sentence which begins Articl 27 down to the semi-colon at about the10th line after the words "price for such product charged in the home market Has any- body else got points. to raise on that particular sentence, the first of Article 27? (After a pause:-) Well, I have a point to raise myself; it is this concerns the definition of the margin, the words about 6 lines down, being "the maximum margin by which the price for an imported product charged by the monopoly in the hone market may exceed two price at which such product is offered for sale to the monopoly by foreign suppliers". Now, this is a point which I mentioned in the main Committee. There is a difference of wording hero as between the draft Charter and the proposals of December last. The way in which this is worded the Proposals of December last is this: "the maximum margin between the landed price of the product and the price at which the product is sold in the home market". I then said that our feeling in the United King- dom delegation Was that "landed price" is much better than "the price at which such product is offered. for sale to the monopoly"; because it so diffcult to tell what really is an offer for sale. It may be a big offer; it may be a small offer; and as to price, well, it might conceivably be a sort of accidentally low duming price and feel that you want something firmer.as a basis, For that reason we should favour going back to the "landed price" which was the test in the Proposals of last December, May I invite discussion on that point? Mr JOHNSEN (New Zealand): I think that seems a very reasonable proposition. Mr. HAWKINS (USA): It seems reasonable to us too. THE CHAIRMAN: The you, well, if nobody has any further comrt- ente on that particular point or on that first sentence we can now pass on...After the semi-colon it goes on: "after due allow- ance in either case for internal taxes and for transportation, distribution and other expeness incidents to purchase, sale or further urthersioces.ng."Il That islia caaifi-ontion of w at has.gone before . Hasanybody points on thfat? (Ater a pause:-.) I have one ipo:nt-istributionand' dJ.strr expenses", suggast tah£ we houlsr there include a reasonable proftii Afterl al, lt isonlyigh rt and proper that a State tradgin concern should be able to earn a reasonable profit, just like a mmcoeircaconcel rn, Have you got any m,mnoets on that point? (After a pause:-) eThn let us go on to the next sentence: members newly estlabishing any such monopoly in respect of any product shall not create ma argin as defined above greater than the maximum rate of import duty (ori, n the case of an export monopoly, greater than the maximum rate of export duty) which may have been negotiateid n regard to that product pursuant to Arctile .18" Are there comment upon that? Thats i the change- over, as I understand it, from private trading to State trading after a tiafrf rate has been negotiated, .r HWKINSLO(USA):M I Chairman, oI go bcao to your reasonablee prot ,fpoi?nt THCE HAMIRAN: Yes, Mr HAWKINS (USA): I had not considered th.at I ithnk it prob- ably isl al right.M y only query is whether it might not result in a mairgn much wider than the negotiators had contemplated as a reasonable profit, It is a very loose phrase Im a just thinking- out aulod on this. Ihad not thought of the point beforeMy . only query is, does that leave open the possilbiity oif ncreiasng that protective margin undu?ly I put that as a question I have no conviction oin t at the moment, THE CHAMIRAN: Well, of course, I suppose that as the. IT.O, will be in charge of. all this Charter, questions taso the interpreta- EC/P/CT/.11/ST/PV/2 A-4 . E/PC/T/C.II/ST/PV/2 tion of such a word as reasonableI might always come up to the ITO. After all, it is to have a procedure or setting dis- putes, is it not? We had tried to think whether one could put in some.sort of illustrative figure of what might be a reasona- ble profit; but it is extrenely difficult when one considers the different circurastancas of the different products, and so on, Mr TUNG (China): Mr. Chairman I think your point is well taken; because if we leave out the words reasonable profit"I, it means that a State enterprise would have to carry on for nothing except expenses, I think the word "reasonàble" has been used in Many Chapters and everywhere inthis Charter; and that word has to be interpreted. insome way by ITO, as you have just said. So I am strongly for the insertion of the phrase in that sentence- "at a reasonable profit". ''Mr.HAWKINS, (USA) Mr Chairman, I am again thinking out aloud on the point. I should. have thought that when there are these. ble profit on the margin, consieration of what is a rasona- ble profit might be taken into account infixing that margin. THE CHAIRMAN Yes. Mr. HAWKINS (USA): In other words, is "reasonable profit" a term which could be defined generally by the. ITO or any other.organ- isation? Is it not something which the parties to a negotiation might best work out? Suppose, for example that the country which has raised the question as to the margin says "We think the margin between the purchase and re-sale price should be 10" and the other party said: "Well that leaves us room: it does not even cover our costs; it does not evan take account of the fact that we are entitle to a profit", whereupon there could be a discussion then and there on the particular case in the light of the circumstances whether that is a reasonable profit n the oircurastcncos. Mir JOHNSEN '(NEW .'ZEALAND): Yes, but J9 not, this ,Just spellings it to out and indccati-ng the types 0o. addition/the ianc.ed 'cost that you would have to allow fo'z? .. In Cther words,-t i8s. merely an.-- E/PC/T/C.II/ST/PV/2 indication that, considering whether there was case to put forward, you would have to allow for a reasonable profit as well as the other items, It does not say that it limits the amount of the profit that might be allowed I do not think it alters the sense in any way does it? In other words, that would be an indicate on to the ITO, If any question was raised, that a reasonalbe profit would have to be taken into consideration. Mr HAWKINS (USA): I think that may be right I am just trying to think how the text would read, If it means only that, then I think it is all right, that that is a factor which would have to be taken nto accoint Jn thgotiations.ons. iIf lt means that, then I shoueld rfectlyb pe saitisfed. Mr JOHNSEN (New Zealand): That iight:- rJ it must be taken i-to cionsderation, Mr H.WKINS (USA): If that is laliimet ins; buth w1t Im aiwondering is ethwher themend ament as drafted .w ould mean that that is figured in the landed price, If reasonable profiit s only a factor to be takein nto accounti n detmierngin eth margin, then it is perfectly all)i rght, .Mr JOHNSEN (New Zealand): Yes, .Mr HAWKINS (USA): It depends how you word that. THE CHAIRMAN: Well, perhaps the Rapporteur would consider that point, THE RAPPORTE:UR Wmighte do mething i sn the. wayf o chgianng after due allowance to aki"tng: into consideration", or something kes hat, THE CHAIRMAN: Itmay be. 5. E/PC/T/C.II/ST/V/2. THE CHAIRMAN: There is one other point I would like to mention, and that is the question of averaging. This has been mentioned in the main Committee. I then suggested that you would have to have some averaging if only for administrative reasons, but for purposes of stabilisation you bright want to have a rather longer period of averaging than would be necessary for strictly administrative reasons, and I suggested that possibly there might be a period of, say, three years. I would like to amplify that in the sense that the average would be a moving average.with determination. say every year. I think that might to some extent.help Mr. Hawkins, who was inclined to feel that three years was, just like that, too long a period. May I ask for his views on that point -- the moving average with annual determinations? MR. HAWKINS (USA): I think that would be all right. MR. JOHNSEN (New Zealand): Would this Article not operate in respect of individual transactions without regard for any prior transactions? THE CHAIRMAN It is hard to see how you could carry through the price at which you had bought a particular consignment to the sale price of that same consignment. You would need to lump together. When I say "we", I speak for the UK Delegation -- what we lad felt was that you would need to segregate the supplies you got from each country of supply, so that for its supplies, taken over whatever the period might be, you would actually observe the margin as between the average of your buying price from that source and your sales. You would undertake to show that you were observing the margin. If you did that, each country would see that it was being treated in accordance with the undertaking. That .was how we envisaged the thing might be made to work, MR. HAWKINS (USA): The point is well taken, for this reason, that your buying prices for different lots would be variable. You would be buying where you could at best advantage. Your selling price B.2 E/PC/T/C.II/ST/PV/2. internally would probably be uniform. If you had to relate the selling price internally to the buying price of each parcel, you would get constantly varying prices internally, whereas if you can take an average of your purchase prices over a period -- MR. JOHNSEN (New Zealand): It is only the margin you are negotiating and not the actual price. MR. HAWKINS (USA): But that is the basis on which you compute the margin. The margin would be at some amount exceeding the average landed price. MR. JOHNSEN (New Zealand): I see a difficulty there in that you are taking the landed cost of shipments from different sources, and there might be little relationship, in having regard to changes of the nature of the commodity, in the margin in one case and the margin in another. THE CHAIRMAN: Is not that rather likely to be covered by differences of quality from different sources. The kind of what you got from one source may be different from the kind of wheat you get from another, and the same goes for a good many things. It may well be that you would have different selling prices in any case, and that itself would in a general way correspond to differences of source. MR. JOHNSEN (New Zealand): I can see a lot of practical difficulty in giving effect to this. THE CHAIRMAN: I think our feeling has been that it will have to be observed as a broad general principle and as faithfully as possible, but that one cannot undertake to, as it were, show that it has been observed in minute detail in cases of particular transactions. It would have to be rather broadly observed. MR. JOHNSEN (New Zealand) : You would suggest then, in considering the margin, that account might be taken, rather than say that account shall be taken of average prices over a prior representative period. . B.3 E/PC/T/C.II/ST/PV/2. MR. HAWKINS (USA): I should think that would be a practical way of stating it, leaving it permissible to average. THE CHAIRMAN: Shall we pass from that sentence? I think the point we had got to was the third sentence .... "With regard to any monopolised product in respect of which a maximum margin has been established pursuant to this Article, the monopoly shall, subject to the provisions of Section C of this Chapter ....etc." MR. JOHNSEN (New Zealand): I think we had not yet taken the previous sentence. THE CHAIRMAN: The one which begins: "Members newly establishing any such monopoly in respect of any product shall not create a margin as defined above greater than the maximum rate of import duty....etc." That is cases where, after there has been a tariff negotiation, the method is changed, so that from private trading one would pass to a state trading monopoly. This says, in effect, that the limit of the margins under state trading shall, in that case, be the maximum negotiated tariff rate. MR. JOHNSEN (New Zealand): It seems to me that you arc attempting to compare a margin of tariff protection with a margin between the landed cost and the selling price, and I do not think that is practicable. THE CHAIRMAN: You think there are elements in the two situations which would require the money amount or the ad valorem amount to be different. MR. JOHNSEN (New Zealand): I should think so. You talk about a margin of protection that represents an amount of duty only which is a factor in.the margin between the landed cost and the selling price. That is only one factor. This sentence says that the two shall be the same. THE CHAIRMAN: I had thought that just as the tariff was intended to be regarded as a protective measure, so the margin of the state trader might also be regarded as protective, and that prima facie 8. B.4 E/PC/T/C.II/ST/PV/2. the amount of protection under the one system might be regarded as a suitable measure under the other. I suppose it is arguable that state trading combines, as it were, quantitative restrictions with tariffs, but I am not sure how that bears on this particular point. MR. JOHNSEN (New Zealand): You can visualise cases where the state trading monopoly would still have to pay the duty in any case, even though it is a monopoly. THE CHAIRMAN: Yes, but is not that rather a bookkeeping point, that it pays the duty for goods into the general exchanger, and then recovers in its firsthand sale price in its home market. Is there more than a bookkeeping spirit in that? MR. JOHNSEN (New Zealand): It might ultimately become a bookkeeping point, but in the first instance it is part of the construction of the landed cost from the selling price. THE CHAIRMAN: You are thinking that if it paid the duty it would then have its distributive costs on top of all that, and you might find the negotiated tariff figure was not a suitable one? MR. HAWKINS (USA): ls your point, Mr. Johnson, that if the landed cost included the duty, and then you had a margin between the landed cost and the selling price equal to the duty, you would include the duty twice in that margin? MR. JOHNSEN (New Zealand): That was not my initial point. The initial point I made was that in the earlier portion of this particular Article we talk about negotiation in the margin between the landed cost and the selling price, and this particular sentence Says that members newly establishing any such monopoly in respect of any product shall not create a margin, as defined above, greater than the maximum rate of import duty which may have been negotiated in regard to that product, pursuant to Article 18. You are comparing a margin with a rate of import duty. 5. . B.5 E/PC/T/C.II/ST/PV/2. MR. HAWKINS (USA): That is international, the point being that the negotiated margin between the purchase and the resale price is a protective factor. If a country that did not have a monopoly on the product had previously negotiated a rate of duty, a maximum rate of duty of, say, 20 per cent., and then established a state monopoly for the product, they should observe and not exceed that degree of protection in the margin between their purchase and resale price. That is the thought here. MR. JOHNSEN (New Zealand): What you really mean to say is that members newly establishing such a monopoly in respect of any product shall, if the product is not subject to duty if imported by the monopoly, in fixing the margin, make allowance for no greater amount than the amount of duty which would otherwise be payable. In other words, you do not want them, by reason of the fact that the monopoly imports the product and does not have to pay duty, increase the margin unduly on that account. MR. HAWKINS (USA): That is right. I think you have raised a question that we ought to look at -- how this would apply in the case of a duty-free product. Suppose that at the time negotiations took place on tariff the product were free of duty, and suppose that in the negotiations the product were bound duty-free, and suppose, that then a monopoly is created, what is the margin in that case? THE CHAIRMAN: It raises the question whether to negotiate over what you might call the distributive part of the margin or not. If you are negotiating to cover the distributive margin, then your margin will be something higher than nil. If you are simply negotiating for the protective clement, it would remain nil. I am not quite sure whether the intention of this sentence is that you would negotiate about distributive margins or not. Our feeling was that you would not negotiate about a margin on the understanding that it included no more than your real costs, with 10. B.6 E/PC/T/C.II/ST/PV/2. a reasonable profit. MR. HAWKINS (USA): I think the question of a reasonable profit does come in thoir definitely. THE CHAIRMAN: You might negotiate about that, but the question of actual costs is hardly a matter for negotiation. It might be a matter for inspection or verification. MR. JOHNSEN (New Zealand): ls there any necessity for the sentence at all? Is it not covered by the general provisions of the Article? MR. HAWKINS (USA): It is intended to cover cases which there has been a change between the time the margin negotiations took place, or after them, of the tariff negotiations. If, for example, the duty were bound at 20 per cent., and thon a monopoly were created and the difference between the purchase and the resale price wore 40 per cent., the duty concession is nullified. MR. JOHNSEN (New Zealand): Yes, but they are still paying the 20 per cent. duty. If the duty were bound at the original rate, there would not be any change in that case. The fact that the new monopoly had been created would not affect the position; that is, if the Government Department that made the importation had to pay the duty, and if no duty was.payable, then that would be a fact that would be taken into consideration in determining the margin, and any country that wished to make representations, if they thought the margin was too great, would be entitled to raise that point. THE CHAIRMAN: Is there not this point about that, that the position is a little different as between state trading and private trading, in that the state trader could conceivably, as it were, just stand the cost of the duty himself and then behave, so to speak, as though the duty was not there. In other words, he could either ignore the effect of the duty when assessing commercial considerations, or, on the other hand, he could sell at such a high price to the home market that he would so to speak discourage imports. He would 11. B.7 E/PC/T/C.II/ST/PV/2. discourage demand. My feeling had been that the reason why the margin had been expressed in this way was in order to prevent his doing that sort of thing, or putting his rosale price arbitrarily high in a way which would perhaps diminish demand, and therefore diminish imports. ls not that your feeling? MR. HAWKINS (USA): That is the point. MR. JOHNSEN (New Zealand): That is the whole essence of the argument, is it not? It seems to me you are complicating the position unduly by introducing that sentence. The effect of it would normally be taken into consideration in determining the margin. MR. HAWKINS (USA): Except that in the case under consideration, if the duty had been fixed and later the Government took over the trade, there would have to be a renegotiation of that rate, unless there was some provision which lays down the margin to be followed by the state trading organisation. He could do that in a number of ways. He could operate as a private importer previously had done, and in fixing the resale price simply take into account the duty which had been previously paid. That would be in conformity with this provision. But in the absence of some provision like this, the only recourse would be a renegotiation of the item. THE CHAIRMAN: It would always be open to the state trader, suppose he found the tariff rate was too low for his purposes, to attempt renegotiation, to reopen the matter with the country with which he had previously negotiated the tariff rate. MR. HAWKINS (USA) I think one of the difficulties is that we are attempting hero to work out in detail the application of a principle without the concrete facts before us, whereas what we should be doing here is simply stating the principle. I do not think we can work out the application. If that is a sound principle, it should be written in, and then when the cases arise, we should use it as a guide as to what action should be taken. 12. . . Cl. E/PC/T/C.II./ST/PV/2 MR JOHNSEN:(New Zealand): If you said "In so far as duty is affected in the margin between the landed cost and the selling price no greater amount shall be provided for in that respect than the actual amount of duty payable", that applies to any other cost factor. It is just a point, as to whether you need to provide for it. THE CHAIRMAN: That would leave open the possibility of having an additional margin over and above the negotiated duty and I take it the supplying countries would be anxious to see that extra amount limited, would they not, so that you would be involved in a re-negotiation if, in fact, the amount of the margin were to differ from the amount of the duty previously negotiated. MR JOHNSEN:(New Zealand): That is always open to negotiation; but it would be at the discretion of the countries concerned as to whether they should take up the question at all. After all, the duty is only a factor in the margin. It is the whole margin that is the subject of negotiations - not merely the duty factor. THE CHAIRMAN: That rather depends, does it not, on the.way in which the margin is built up. If you regard it as built up by an element which corresponds to duty, an element which corresponds to distribution costs and the other costs here, and finally a reasonable profit, does it not follow from that that if you put your costs on one side as representing the real costs.of your operations, you have then two nego- tiable things - the protective element and the profit element. There may be, so to speak, an addition to be made to the original tariff element in respect of the profit, but I should have thought, as regards the other elements, not they would/be matters for negotiation. It would be recognized that the margin might include them, but they not would/be subject to negotiation.. 13. C2. E/PC/T/C.II/ST/PV/2 MR JOHNSEN (New Zealand.): The duty would not be subject to negotiation under this article either. Any negotiation of duty would be in term's of a general trade agreement, I should say. THE CHAIRMAN: It depended a little, does it not, on the nature of the countries that are negotiating. If a country which is State trading in a product were negotiating with another country which was not, it would then be a State margin which would be negotiated, instead of a tariff rate. Is not that the sort of way in which it would work ? MR JOHNSEN (New Zealand): I understood that this meant the margin between the full landed cost, including the duty and any other charges on importation - also transportation distribution, /internal taxes, any processing charges and a reasonable margin of profit. MR HAWKINS (U.S.A..): You mean in the final landed price ? MR JOHNSEN (New Zealand): It goes a bit beyond the landed price. MR HAWKINS (U.S.A.): Yes. MR JOHNSEN (New Zealand): In determining what additional amount should be added to the full cost in arriving at the selling price. MR HAWKINS (U.S.A.): In that case, if I understand you correctly, you would be including the duty twice, in fact ? MR JOHNSEN (New Zealand): No. MR HAWKINS (U.S.A.): You would be including two protective elements - one is the duty which is already there and then there is a margin on top of that on your defïnition. MR JOHNSEN (New Zealand): Any margin, of course, that I had in mind, was the reasonable profit after you had arrived at the full cost. That is the final margins it not - the reasonable profit ? You have to allow for all costs prior to that point. What you are endeavouring to get at is that too great a profit is not taken. That would be the 14. . . C.3 E/PC/T/C. II/ST/PV/2. effect of restricting sales and consoquontly imports. That in the purport of this, but you have to allow for any duty payable and any other actual charges which are involved. THE CHAIRMAN: It does depend, does it not, rather on the way in which tho monopoly chooses to work. On the one hand it may actually pay the duty and then recover that in its selling price or, on the other hand, it may just buy at the one landed prico and soll at another price to the wholesalers in its home market and, so to speak, it collects the duty automatically in that way. It is a sort of agent of the Exchequer. It is almost a matter of the administrative relationship between different government departments more than anything else, is it not ? Our own departments, who do a certain amount of this State purchasing themselves, felt it could be worked either way, as a matter of practice, probably consistently with the terms of this. MR JOHNSEN (New Zealand): Would it not cover it if we provided in the previous sentence "after due allowance in either case for import duties, internal taxes and for transportation, distribution and other Costs incident to the purchase, sale or further processing, and also a reasonable profit". You have the whole of the cost factor and a reasonable profit covered then. MR HAWKINS (U.S.A.): Suppose it is 100 per cent duty on a product or even, say, 200 per cent ? If that is included in the landed cost and then a margin is put on top of that, you have get a tremendous protection. MR JOHNSEN (New Zealand): That is the case with private importation. MR HAWKINS (U.S.A.): Yes, but in the case of the private importation, the duty is the thing that determines the price at which he can sell. MR JOHNSEN (New Zealand): No. You must make allowance for his other costa and also for reasonable profit; otherwise he could not do business at all. In other words, what you are concerned about is that the State trading monopoly should not be in a position to charge a higher price than a private trading organisation. But in each case they are allowed to take into consideration duty and any other charges involved. It seems to me . C4. E/PC/T/C.II/ST/PV/2 that would cover it, if you want to make any particular provision for duty, if you just included it in that proceeding sentence. THE CHAIRMAN: One needs to have some sort of assurance, does one not, that even after duty has been paid, the monopoly does not then go on to charge a considerably higher price in its own market, which would, in fact, have either an extra protective effect or an extra affect in dis -couraging demand. MR JOHNSEN (New Zealand): The reasonable profit is the limiting factor there. THE CHAIRMAN: Yes. It really is a question, is it not, of how, from the negotiating point of view, you deal with the different elements that go your your into the margin - / tariff, / various costs and your profit. If one assumes that the varicus costs are not negotiated, although they may be subject to some sort of check you are then left with the tariff nego- tiable and possibly a profit margin negotiable. Does not that mean the that the negotiated rate of tariff? is likely to bo / appropriate figure unless in a particular negctiation the parties want to negotiate about the reasonable rate of profit. MR HAWKINS (U.S.A.): Yes. MR JOHNSEN (New Zealand): I do not think we want to confuse the negotiation of a tariff with the negotiation of a margin of profit. This is designed to cover negotiation of a margin of profit. THE CHAIRMAN: Thu total margin rather, is it not ? MR JOHNSEN (New Zealand): The tariff is quite a separate factor. THE CHAIRMAN: I still have the feeling that that is rather a question of mere administration. Whether the importing monopoly pays the duty or does not, it rather comes to the same thing in the last analysis, does it not - that it is, so to speak, merely an administrative question. MR JOHNSEN (New Zealand): That is so. So that you cannot make any special provision to cover the tariff. All you can make provision for is any duty payable. But the State must be in a position at some stage, to account for the revenue that is to be received, in respect of imports. 16. . C5. E/PC/T/C.II/ST/PV/2 THE CHAIRMAN: I wonder whether we had better Ieave this point to be thought ovor further and perhaps discussed at our next meeting. We shall probably have to meet on Monday to consider the Rapportour's report. We might then take up this point again, when we have reflected on it a little more. Is there anything more on that sentence, or shall we pass to the next ? "With regard to any monopolist product in respect of which a maximum margin" - I have already read that. Has anybody any points on that sentence ? MR JOHNSEN (New Zealand): You have already raised a point on that yourself, I think. There is a further point - and this is another one of practical impossibility - in respect of exports: "in the case of an export monopoly, offer for sale to foreign purchasers such quantities of thu product as will be sufficient to satisfy ........ the full foreign demand for the product". I cannot see how any exporting country could take responsibility for that. MR HAWKINS (U.S.A.): You would want to insert, would you not, "supplies being available" ? MR JOHNSEN (New Zealand): Yes, naturally. MR HAWKINS (U.S.A.): That, of course, is practically implied, but there is no objection to making it explicit. MR JOHNSEN (New Zealand): "as far as practicable". MR HAWKINS (U.S.A.): You see the point there ? The export aide relates to relatively few cases - in case the raw material is withheld in foreign countries in order to protect the domestic finishing industry. The prices here are dealt with - the margins. Suppose that were all agreed to and then suppose the exporting country simply did not allow any to be exported, to take an extreme case - suppose they did not sell any. Taking the illustration I gave you the other day (it is not quite a parallel case but it will illustrate what I mean) take peclear legs, used in the vencering industry: there is an agreement that the price margin there will be determined so that there is no undue protection to the domestic plywood industry. The exporting country agrees to that and then does not sell any. 17. C6. E/PC/T/C.II/ST/PV/2 The efectt is to defeat the purpose. This is intended to prevent that. Obviously, if supplies are not available, it cannot do it. In the case I cited the supplies -sample supplies - were available. MR AUGENTHALER (Czechoslovakia): I think that it would not be just to impose, on State trading organizations or State monopolies, an obligation to offer commodities forexport in order to fulfil a foreign deman and at the same time put upon them an obligation as to prices. I think each enterprise of this kind should be free to offer or not offer as they wish. I do not understand why a State enterprise or a monopoly should be under this obligation if there is not the same obligation on private enterprises which are in the same position. We have had several cases where foreign enterprises have just refused to make offers - not because of coommercila considerations, but they have just said that they are not offering to nationalised industries. MR TUNG (China): I have expressed the same view as the Czechoslovakian delegate has just expressed. It is impossible for any exporting country to meet the full demand of a market at the prices charged at the same margin. I want that to be on record. THE CHAIRMAN: Mr. Hawkins, would you like to comment on these points ? MR HAWKINS (U.S.A.): Of course, there is this difference, that in the case of a product dealt with by private enterprise - in the majority of cases at least - there are a number of competing suppliers. Under normal conditions those suppliers are looking for markets. Normally you can given always find suppliers who will make goes available in a/ exporting country. It is not likely that there would be a withholding by all of them of supplies to the market, whereas in the case of a monopoly it is something which is subject to the decision of one body as regards the supplies of the product produced in that country. THE CHAIRMAN: Really, one has here rather a combination, has one not, of two functions of the State trading monopoly. On the one hand it is a trader, on the other hand it is, so to speak, a piece of the machinery of government. Under the private trade you have dealt with the possibility 18. C7. E/PC/T/C.II/ST/PV/2. of an export prohibition in another article - in article 19 I think. Here you have to cover the possibility that the State trading organisation might act as a government organ. imposing an expert prohibition. Is that not so ? You have put in this provision words about satisfying the external demand in ordor, as it were, to cover the possibility of an indirect prohibition being escaped by the State monopoly, just as on the impart side you provido that the domestic demand shall be satisfied, because that is the equivalant of saying that you would not have an import restriction. Here you say that, subject to the negotiated margins the foreign demand should be met in order to correspond to your export prohibitions in article 19. Is not that rather the scheme of it ? I take it by. referring "to the provisions of Section C of this Chapter" we have brought in all the exceptions in the import restrictions articles ? Those come in article 19 mostly, do they not ? MR JOHNSEN (New Zealand): I think we discussed that and we thought there might be others. I was going to suggest that the first portion of the sentence might be altered to read "The monopoly shall, as far as practicable and subject to other provisions of this Charter, import and offer for sale" - in other words, make it general. You do not need to refer to any particular section of the Charter. You would, have to have "as far as practicable" because no government organisation could undertake to import and offer for sale. There are a lot of factors which might preclude any such arrangement. It is a question of actual practicability. MR HAWKINS (U.S.A.): Yes. I do not see any objection to those two suggestions. THE CHAIRMAN: All right. That will consist in adding "as far as practicable and subject to the other provisions of this Charter" in place of the words "subject to the provisions of Section C of this Chapter" in that sentence. Is that the proposal ? MR JOHNSEN (New Zealand): Yes, that is what I have suggested. THE CHAIRMAN: Should we say "the other provisions of this Chapter" ? I think it should be "Charter".. 19. . C8. E/PC/T/C.II/ST/PV/2. MR HAWKINS (U.S.A.) Article 19 refers to the commodity chapter. THE CHAIRMAN: The Rapprtourwill perhaps take not of that amendment. MR TUNG (China): I would like to make our attitude clear towards this article 27. We would accept article 27 withi therservations: First, in any negotiation of the maximum margin we must have due allowance for a reasonable profit, as you suggested. The second point is that the second sentence should be deleted from this article. THE CHAIRMAN: The second sentence? MR TUNG (China): Yès, and the last sentence. THE CHAIRMAN: That is the sentence beginning "Members newly". MR TUNG (China): Yes, and the last sentence. I do not think there is any necessity for that provision. THE CHAIRMAN: Does the amendment which has been suggested by the New Zealand delegate go any way to meet you on that sentence ? MR TUNG (China) I am not quite clear what he has suggested. THE CHAIRMAN: If I understand it rightly, the amendment refers to the sentence which begins "with regard to any monopolist product" and it would read like this "With regard to any monopolist product in respect of which a maximum margin has been established pursuant to that article, the monopoly shall, as far as practicable and subject to the other provisions of this Charter, import and offer for sale" and so or MR TUNG (China); What do you mean by "other provisions " ? THE CHAIRMAN: That would cover, I take it, in the first place, all the provisions about import and export restrictions in Section C. It would than also cover other chapters cf the Charter, such as the commodity arrangements chapter, the restrictive businesses chapter and so on. I do not know whether there are any other specific provisions in the Charter which would have an obvious and direct bearing, apart front the ones about import and export restrictions. MR JOHNSEN (New Zealand): It is very difficultat this stage, to say how far other provisions might affect it. I think it is better to make it comprehensive. 20. E/PC/T/C.II/ST/PV/2. THE CHAIRMAN Yes. I am not quite sure that, oven so, one does not need to include something about rationing, because I am not sure there is any specific provision in . this Charter which does deal with the tendency of rationing, is there ? I do not think it is mentioned, for example, in article 19. (D. fols). 21. C9. E/PC/T/C.II/ST/PV/.2 RAPPORTEUR: I should say paragraph 2 of Article 19 (i) THE CHAIRMAN: It is a detailed point, is it not? RAPPORTEUR: Yes. MR TUNG (China): Article 19, paragraph 2? RAPORTEUR: No, on reflection, I do not think that is right. MR TUNG (China): I do not see the necessity for this provision in the last sentence; I do not think that any status enterprise should be under lbligation to meet the full domestic demand or the demands of the foreign market, because, from the point of view of more commercial considerations, they will do as much business as they can. Why should they be required to meet the full demand other way? THE CHAIRMAN: It is in a sense, is it not, rather a counterpart of what we might put in about import and export prohibitions and restrictions, in that if you do not put in anything about satisfying demand you then leave the way open for the state trading monopoly to be a means of introducing import or export prohibitions and restrictions. In fact, is that not no? I take it that it was with that possibility in mind that this provision about meeting domestic demand or external demand as the case may be was put in. What I feel is that if one simply omits any reference to demand it is a little difficult to see how one could provide against the possibility of the provisions of the Charter about import and export prohibitions and restrictions being simply circumvented by setting up a state trading monopoly, and that is a point which we would have to take care of in some way. I am not suggesting that this is necessarily the right way, but I think there is a problem there. RAPPORTEUR: The objective of that requirement, as you pointed out, was to cover the problem of quantitative restrictions in the same way that the objective of the earlier part of Article 27 is intended to provide a counterpart for Article 18, Tariff Negotiations. Naturally, whatever was said with respect to quantitative restrictions in connection. with state trading by state monopolies would have to conform in general principles to D.2 E/PC/T/C.II/ST/PV/2 what was said in Article 19 and subsequent Articles with respect to quantitative restrictions. I think another point might be mde that would perhaps clarify it a little bit, and that is that this sentence in Article 27 does not require state enterprises which are not monopolies of a particular product to satisfy full foreign demand or, conversely, domestic demand. This applies only to monopolies which are complete export monopolies for a partiuclar product or completemonopolies for distribution of a particular product. MR JOHNSEN (New Zealand): It is only where the margins have been negotiated in respect of products; if there have been no negotiated margins this does not apply. THE CHAIRMAN: Yes. RAPPORETUR: Yes, that is right; that is a restrictive feature. MR JOHNSEN (New Zealand): Yes. RAPPORTEUR: And it is not applicable until the margin has been negotiated. MR JOHNSEN (New Zealand): It is not applicable until some country. actually makes representations and negotiates a margin. RAPPORTEUR: That is right. MR AUGENTHALER (Czechoslovakia): Mr Chairman, may we take a specific case. Supposing my country Czechoslovakia had to begin exporting timber - and this is only for the sake of argument, because it is not likely to do so. Now, during the war our forests were so dspleted by the Germans that just to bring them up to the pre-war level it would take from ten to fifteen years, and that is assuming that we out no trees at all. In that state of affairs why should a state monopoly be obliged to offer the product to full foreign demand? RAPPORTEUR: Mr Chairman, if the Czechoslovak delegate will refer to Article 32 he will notice that under Item J it says: "Nothing in Chapter IV of this Charter shall be construed to prevent the adoption or enforce- ment by any Member of measures ..... (j) relating to the conservation of exhaustible natural resources if such measures are taken pursuant to international agreements or are made effective in conjunction with 23 D.8 E/PC/T/C.II/ST/PV/2 restrictions on domestic production or consumption." I think that that would cover the case of timber. THE CHAIRMAN: Might I also suggest that there is a further passage as well? The passage you cited just now would seem to presuppose that there was an internal restriction on consumption; but surely under Article 19, paragraph 2 (b), where you have "Export prohibitions or restrictions temporarily imposed to relieve conditions of distress which are local to the exporting country and which are caused by severe shortages of foodstuffs or other essential products" that would cover you. Of course, we have had some discussion on the meaning of the word "distress, " and it may be that the drafting of that leaves something to be desired; but surely the intention there is rather that it should cover the type of situation which the Czechoslovak delegate has mentioned, that you could if you were very short of, shall we say, timber, prohibit or restrict its export. I take it that if we are to apply the provisions of this Article to the state trading chapter we shall then have left it open to the state trading organization to say: "No, I am not going to export any timber for a number of years to come just because there is a domestic shortage." Is not it possible that the matter might be covered in that way? RAPPORTEUR: I should think so, and I think that there are sufficient means in the draft Charter as it exists, and as it may be nodified, to cover a situation in which you have such a point raised. For example, presumably if you were conserving timber reserves you would be con- serving them in terms of domestic consumption as well as in terns of export. MR AUGENTHALER (Czechoslovakia): Yes, but probably not to the same degree. RAPPORTEUR: Probably not to the same degree; but if they were made effective in conjunction with restrictions on domestic production and consumption you would make it -part of the over-all consideration to cover it. THE CHAIRMAN: Under Article 19 paragraph 2 (b) you could restrict exports without restricting domestic consumption, if you wanted to. 04 . E/PC/T/C.II/ST/PV/2 RAPPORTEUR: Yes, that is true. MR JOHNSEN (New Zealand): Yes, but there have get to be severe shortages before you can do that. THE CHAIRMAN: Yes. In a sense one has to think of all this in the first place in the context of privante trade and, secondly, in the context of state trading. What we want to be sure about is, is it not, that in such an Article as Article 19 we have covered by exceptions the things which it is necessary to cover, and, if we do that then all this is incorporated by reference in the state trading chapter. This is in a sense rather a question as to whether the exceptions listed in Article 19, or elsewhere in Section C, are sufficient for the various purposes that may be needed, because problems of this kind can arise equally under private trading as under state trading. Is not that so? RAPPORTEUR: Yes. THE CHAIRMAN: So that what we want to look at rather narrowly - it is true that it is not before this sub-committee - is whether the ex- ceptions in the quantitative restrictions, Section C, are themselves sufficient. RAPPORTEUR: I would not think that was entirely a function of this sub- committee. THE CHAIRMAN: No, I do not suggest that at all. What I mean is that from the moment that we have put in the cross reference to Section C of this chapter, or even to the other provisions of this Charter, you have brought in, by reference, all of those. Therefore, the question is whether that particular contingency under state trading is sufficiently provided for, or whether it becomes a question as to whether the exceptions in this Chapter about export prohibitions are sufficient or not. Is not that so? It is not a question which is peculiar to this subject; it arises just as much - and primarily - on the private trading clause. RAPPORTEUR: Yes. It is a substantive question in another field but which is applicable to any form, almost of trade such as the timber item that 25 . . . E/PC/T/C.Il/ST/PV/2 Mr Augenthaler raised. It would make no difference whether timber was being exported by private firms or by a state trading organization, because you might have a conservation programme. THE CHAIRMAN: Thank you. Are there any further comments on this sentence? Can we provisionally leave that Article to the Rapporteur and pass now to Article 28? MR TUNG (China): Are we going to discuss it at the next meeting, Article 27? Is that what you mean? CHIRMAN: Yes. We certainly could leave it that way, that we will further discuss the question of satisfying demand, when we come to discuss the Rapporteur's report on Monday. MR JOHNSEN (New Zealand): How about this question of rationing and price control? Are you going to leave that over in the meantime, or are you going to like a concrete suggestion there? THE CHAIRMAN: I am not sure that price control necessarily comes in. You might have rationing without price control - probably normally you would not, but it is conceivable; and it is definitely my feeling that one has got to provide an exception in this obligation to meet demand in the case where there is rationing, whether or not there is price control. I do not think that is covered by the cross-reference to Section C, and I doubt if it is covered by anything else in the Charter. If that is so, then I think we need to think of some form of drafting which will bring in an exception for the case where there is rationing. MR JOHNSEN (New Zealand): But why would there be rationing? THE CHAIRMAN: Well, I take it for the reason that one has rationing now - shortage of supply. MR JOHNSEN (New Zealand): As far as practicable, this says, you shall meet domestic demand. If it is not practicable rationing will be covered by it. RAPPORTEUR: Yes. 26 E/PC/T/C.IIST/PV/2 THE CHAIRMAN: I have the feeling that this question of rationing ought to be specifically provided for here. I would prefer that it should not be covered merely by some general phrase such as "as far as possible". Can we just leave that as a point to be noted? Mr JOHNSEN (New Zealand): Yes. THE CHAIRMAN: Perhaps the Rapporteur would consider whether an amendment is or is not needed in the drafting. And them we will resume at our next meeting this question . I would only like to remark on leaving is that I feel that if one cut it out there would be a gap, because you would have left the way open for a State trading enterprise to circumvent the provisions of the import and export restrictions, and I feel one ought to have some provision to deal with that, though whether it ought to be in this precise form or not is perhaps a question which we could have open, Shall we now pass to Article 28, Would the United States delegationwish to give any further explanations with regard to this? I think they have already explained it in the full Committee. THE RAPPORTEUR: I think we have said what we have to say on the matter. We think that something of this nature should be re- tained as comparable action on the part of a country with a complete State monopoly of foreign trade - action comparable to reduction of trade barriers by countries which do not have complete State monopolies of trade. On the other hand, we re- cognise that in the refence of this country primarily concerned, it might be inappropriate to do anything particularly firm in this regard until an opportunity has been afforded for a discussion with that country. THE CHAIRMAN: Yes. Your suggestion would be that it should stand, as it were, in square brackets? THE RAPPORTEUR: Yes. THE CHAIRMAN: As being something which is there as a possible basis for discussion? E-2 E/PC/T/C.II/ST/PV/2 THE RAPPORTEUR: Yes. THE CHAIRMAN Not as being anything which we neccessarily re- commend as being the right provision? Mr JOHNSEN (New Zealand): And the Report would go forward acc- ordingly, THE CHAIRMAN: Yes. THE RAPPORTEUR: I might add that I think it would be most useful and helpful if we could have a discussion of the General proposi tion to get the ideas of everyone concerned, still on the under standing that it will be on a tentative basis. Mr JOHNSEN (New Zealand) : Seeing that it is likely to affect only one country, as far as we can see at the moment, would there be any good purpose? Would it not be wasting a lot of time? THE RAPPORTEUR: It might be. Mr JOHNSEN (New Zealand) : After all, the country concerned is the one which should have the opportunity of discussing it. THE RAPPORTEUR: On the other hand, it might be desirable. We in the United States, for example, would like to know what other people think wiih regard to this particular problem. This is what we happen to think about it. THE CHAIRMAN: Yes, from the angle that, on the assumption that the country in question did adhere, what would be a reasonable undertaking, to ask from it - reasonable, that is, from the point of view of the other members with a view to ensuring that they got some counterpart for the benefits which they viould be giving to that country under this Charter. That is your point, is it not THE RAPPORTEUR: Yes. Mr JOHNSEN (New Zealand): Well, it would seen that the first sentence really covers the position generally. I cannot myself see why a country having a complete State monopoly should be able to operate under any different rule than say in Article 27 if that is adopted. . E/PC/T/C.II/ST/PV/2 THE RAPPORTEUR: The intention in the difference between Article 27 and Article 28 is perphaps not very well expressed; but it is this, that when you are dealing with a State monopoly of a particular product conducteds in a country which in general follows practices in private trading, you are dealing with one type of economic phenomena, whereas when you are dealing with a country which has a complete State monopoly of all foreign trade and all domestic trade, you are dealing with another type of economic phenomena, and the differences in essence between those require some consideration. Mr JOHNSEN (New Zealand): Well, I think we had certain views in the full Committee on this particular question. I do not think it would be right that any discussion of this particular Article should be confined merely to Members of this Committee, if we are going to consider it in broad terms. THE RAPPORTEUR: I agree. THE CHAIRMAN: I think you have in a way put out an invitation for any other and better ideas so to speak, for incorpora- tion in this Article, if anyone has them. THE RAPPORTEUR: That is right. THE CHAIRMAN: So far no one has produced any. THE RAPPORTEUR: That is right. THE CHAIRMAN: Well, perhaps that is rather too sweeping a statement. Mr JOHNSEN (New Zealand): I think it is a matter for the full Conference. THE CHAIRMAN: Well, can we carry thu discussion on this any further, does anybody feel? (After a pause:-) In that case, then, we retain it, as I say, purely as a possible basis for negotiation, should the question of negotiation arise, and leave it at that, Well that brings us, I think, to the end of this Subcommittee's field until we have our Rapporteur's Report. 29 PAE E-4 E/PC/T/C.Il/ST/PV/2 Mr AUGENTHALER (Czechoslovakia): Mr Chairman, I say this only for the Report of the Rapporteur: I would like it to be mentioned in the Report in some form that in our view the State trading countries should be only those which have exclusive imports or exports; that is, monopolies or State trade organisations which have been created for purely financial moral, religious, health and similar reasons are not subjucted to any of those negotiations; and then that State enterprises should not be subject to any oblligations which are not applied to private enterprises which are in the same situation. For that reason, and as it has been seen that this State trading and so on are extremely complicated matters, we would recommend that it should be subjected to further study to see all sides of this problem. THE CHAIRMAN: May I just ask a question or two to make sure I .have your points clearly. In the first place, I understood you to say that that you felt we should only have specific pro- State visions about/trading where monopolies are concerned, as distinct from State trading which is not a monopoly. Am I right in thinking that that was your first point? Mr augenthaler (czechoslovakia): Yes, only State trading enter- prises which are exclusive importers or exporters. THE CHAIRMAN: Yes, having the sole right to import and export the product? Mr AUGENTHALER (Czechoslovakia): Yes; if they are not exclusive importers or exporters, then anybody can deal with other companies. THE CHAIRMAN: Then I think your second point was that those State monopolies which are not, so to speak, trading monopolies but are exclusively for raising revenue or the protection of morals, and so on, should also be completely excluded, even though they are monopolies? Am I right in thinking that that was your point? Mr AUGENTHALER (Czechoslovakia): Yes. . PAE E-5 E/PC/T/C.II/ST/PV/2 THE CHAIRMAN: It would be, so to speak, the trading monopolies only which should be covered? Mr AUGENTHALER (Czechoslovakia): Yes. THE CHAIRMAN: And your third point was that State trading organ- isations should not be subjeet to any obligations while did not apply to private enterprise in the same conditions? Mr AUGENTHALER (Czechoslovakia): Yes. THE CHAIRMAN: I see. Thank you. THE RAPPORTEUR: Mr Chairman, the Rapporteur would appreciate it if the delegate from Czechoslovakia could give him a little paper on that with the formulations spelt out of the observa- tions. THE CHAIRMAN: Well, thank you. In that case, then, I think we now adjourn and meet again on Monday to consider the Rapporteur's Report. Thank you very much. The time will be announced later, (The meeting rose at 11.55 a.m.) 31

GATT Library

jq158hk9325

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Seventh Meeting of the procedures Sub-Committee of Committee II held at Church House, Westminster, S.W.I. on Wednesday, 6th November, 1946, at 3.0 p.m

United Nations Economic and Social Council, November 6, 1946

United Nations. Economic and Social Council

06/11/1946

official documents

E/PC/T/C.II./PRO/PV/7 and E/PC/T/C.II/PRO/PV/5-7

https://exhibits.stanford.edu/gatt/catalog/jq158hk9325

jq158hk9325_90050501.xml

GATT_157

A.1 E/PC/T/C. II./PRO/PV/7 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SEVENTH MEETING of the PROCEDURES SUB-COMMITTEE COMMITTEE II held at Church House, Westminster, S.W.I. on Wednesday, 6th November, 1946, at 3.0 p.m. Dr. A.B. SPEEKENBRINK (Netherlands) (From the shorthand notes of W.B.GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminister, S.W.I. ) CHAIRMAN: Dr. A. B. SPEEKENBRINK (Netherlands) (From the shorthand notes of W.B. GURNEY, SONS & FUNNELL, 58, Victoria Street Westminster, S.W.I.)W.v E/PC/T/C. II/PRO/PV/7. THE CHAIRMAN Gentlemen, I open this meeeting. I think we have now two- matters to discuss. Later on, we shall have to discuss the question of Article 18 and so on. As we are still busy with Article 8, I would ask the Rapporteur how far he has gone with regard to the ultimate redraft of Article 8, paragraphs 1 and 2, so as to get a definite decision on that if possible. THE RAPPORTEUR (Mr Loddy): We have prepared revisions of Article 8, paragraph 1, and of Article 9, paragraph 1, In so far as these provisions relate to the matter of. public works and governmental purchased for public use. We have also prepared a revision of Article 8, paragraph 2, in the light; of the discussion at earlier meetings and a draft of a provision which could be inserted . a paragraph 3 of article 33 to take account of the suggestions made with regal to new preferential arrangements. I believe those documents have been distributed and I think we could probably take up first the provisions of Article 8, paragraph 1, and Article 9, paragraph 1, relating to public works and governmental purchses for governmental use. I think it would be better to start with Article 9. paragraph 1, regarding the deletion from that provision of the commitment regarding governmentalental purchasesgovernmental use, because it a it affectsform of d of Arti,le 8 par*graph 1. CHAIRMANAMdZ: May Ietak every member hasber had time to read through this ment prepared by the Rapporteurtour? I think we should follow the advice of Rapporteur and start with -itAreiclo 9, paragraph I will ask our ur pporteur to o report thechanges he proroposes shouldebo madenià this Artic.e, THRAPPORTEURURMr Leddyîy): he decision of the Committeeee, as I understooit,t, s to revise paragraph's 11A article 9 so as omit any commitment to grantrat ionalntreatment in respect pct governmental purchases for governmental use.se. wt vas pointed out at the meeting by the Deategre ofetUnited Kingdom& that a simple deletion of th words s in the first paragraph ofAarticle 9 relating tosuch purchasesw ould not be enough, that itwould. probably be necessary to have a specfZce exception. Upo -examination of the draft,wee .~~~~~~~~~~2 E/PC/T/C. II/PRO/PV/7. same to the same conclusion, that the phrase appearing about the middle of the paragraph including laws and regulations governing the procure- ment by governmental agencies of supplies for public use would need to be changed into a specific exception, and we have changed it to read "except laws and regulations govering the procurement by governmental agencies of supplies for governmental use". That change from "public" to "govern- mental" I would like to discuss in a moment. The need for this is, I think, made clear by the fact that the preceding language is a broad general commitment and, if the sentence should stop after the words "other use", there would still be ambiguity as to whether or not the commitment for national treatment in respect of governmental purchases was included. That is the reason why we have made it a specific exception. With regard to the question of "public" as against "gonvernmental" use, in the light of the discussion which took place here earlier, we came to the conclusion that "public use" was probably too broad and what we had in mind was purchases of. supplies for use by governmental agencies not for resale. The word "public" might be construed to mean supplies bought for resale to the public. So we suggest that that change should also. be made. THE CHAIRMAN:. Before we begin to discuss this, I would like to make one remark. As the paragraph has been phrased now, it sounds rather definite. It sounds. as though the question of public works and so on has been deleted altogether. So I think in any case we should have to make a note here that we will refer to that question later on when we have discussed the question of state trading. I do not know whother we should put in here the phrase "except as covered by article " so and so. I think that is something to be decided later on.. So the deletion is provisional at this Moment and not definite, because that is a question to be discussed and decided upon later. . . MR MIÂC=iE (Uand àhôuld like to say one thing, asd that is that I feel rather dgo ernmentalt the'use of the word "I.aerrnraeta" in the phrase "foto me rnmental use"there doos seen to.e we get back thG'r to the melyguity fis covered w startetermweely, what Là coveredd by the tom'. to me that if . In a way, Lt sees to rie that if .you talk about ~ ~ ~ * . . . E/PC/T/C.II/PRO/PV/7. "procurement by governmental agencies of supplies for governmental use", you are in a sense arguing in a circle, because governmental agencies may have different sorts of functions and it might be argued that the word must have the same connotation in the two places. and therefore, whatever the working which the particular governmental agency may be doing whether it be a government department of the ordinary kind or whether it be a post office which has telegraphs and telephones, or whatever it may be -ipso facto anything it does is for governmental use, so that so to speak, you have a definition which would XXXX not define anything. It does still seen to me that it might be rather better to bring in the test of resale in so many words and to say some- thing like this: "procurement. by governmental agencies of. supplies which are not intended .or resale". .One could embroider on that, if necess- ary and say "which are not intended for recale whether in their original state or after processing". I feel that, if one puts it that way, although there are more words in it, you have then a definite line drawn, whereas, if you say "governmental",.you do not have à definite line. MR McKINNON (Canada): Mr Chairman, I have been considering a suggestion such as Mr Shackle has just made, as to whether or not we could not again revert to a reference to resale. I personally would prefer to have it in, but I do recall that, when. the phrase was suggested some days ago, Mr Hawkins thought that by implication it might cause confusion.in respect of the provisions of articles 26 or 27, in. that it night convey the impression that goods under this Article, being not for resale, might be subject to national treatment and, therefore, on a discriminatory basis which night conflict with the whole conception of Articles 26 and 27. We did not argue that point at that time. It struck me when he made it, just hearing it stated, that "three might be some substance to it, but that, if it is not going to delay too long to re-open it, I would like to endorse Mr Shakle's suggestion that we attempt in some way to got in a reference to the fact at these goods, - whether you call it "governmental use" or "public use" :are not for 4. E/PC/T/C.II/PRO/PV/7. resale. MR SHACKLE (UK) :Mr. Chairman, might I just say on that it was my idea that, if we did include an amendment of this kind in Article 9, then in Articles 26 and 27, we should make a corresponding amendment so that those Articles would cover goods which are for resale. In that way, I think you could get a clear division between the two sets of Articles. would. relate to goods not for resale, and Articles 26 and 27 Could relate to goods for resale. THE CHAIRMAN: May I ask Mr Hawkins to comment upon the remarks that have been made and to say whether it would perhaps be wise to put it the other way round and say "other than the goods mentioned in.Articles 26 and 27"? MR. HAWKINS (USA): I do not see any objection to including the phrase "not for resale". I suppose it would read something like this "laws and regulations governing the procurement by governmental agencies of supplies for", had that refers to governmental us and not for resale. I think that would be all right. The choice is between public and "governmental" in that context It seems to me slightly to favour "governmental" for this reason, that it sounds as though they were not for resale to the public. There is not much danger of that, but still it is possibility. MR.McKINNON (Canada): One of my colleagues suggests that it might be worth examining whether or not, having excluded then by specific reference, we should impose the condition in respect of, such goods in the last sentence. I know that is not the intention and I myself think it does not have that effect, but I want to raise the point since it has been put to me ."The provisions of this paragraph shall be understood to preclude the application of internal requirements restricting the amount or proportion of an imported product permitted to be mixed, processed, exhibited or used I do not think one cuts across the other, but I just thought I would like to raise it. THE CHAIRMAN: Has, our Rapporteur anything to say on this? THE RAPPORTEBUR (Mr Leddy): I think the last sentence refers too the quantitative limitations relating to mixing, processing and . exhibition 5. E/PC/T/C.II/PRO/PV/7. and not to. governmental purchases at all. THE CHAIRMAN: Gentlemen, I would first like to have your decision as to whether we can agree with Article 9 till the last sentence. commencing "The provisions". Is that agreed? MR SHACKLE (UK): I am sorry to interrupt again, but it is with reference to the.phrase which *Mr Hawkins suggests - "for governmental use and not for resale". I am wondering whether, once we have introduced this test of resale, we gain anything by adding "for governmental use". It does .seem to me that the term "governmental" is, so to speak, vague in itself, because the conception of what is governmental is a thing which changes from time to time. In the past, the functions of governments have been, so to speak, administration as traditionally understood, but we have seen of late years governments enter upon all kinds of activities which were not regarded as governmental in past ties. They now run post offices; they run telegraphs and telephones; they run railway and so on, and some of them even engage in complete monopolies of foreign trade. So that the term, as it series to me, becomes enormously extended, and one cannot really say what it covers. I should have thought, if one .. . . inofoduced this defiaiie test oe resale, it would ba better to leave out the word "govenru.ontaso completelyund that it is se cor:pglete nibiguous. THE CHGIFEMI' At firat sight, w shsome have thought there *as sooe sense ental.vin the words "gevernmüweal ueecomecluded, because vo hero core to tof very trading, nationalisedt state tr.dig, nbicrna!iscd industries, "d so on. In ri reading ofe governmental use", I should say that it at they we callo dô Y;it vihatand so on, done ublic works àndà8 seon, done ke nationalised industries, in mytionalisaod industries, in. opinion, that wwould net be a question that muld bu covered by the tomr "govomniental resaleran "not intended for re3ale" would simply strengthen the pescommodities. Thatd to myesc cormodities. 2hat, is PY ot know whether I read the sentenceïw hethur I reoa the sento'roei clearly. something included suchy aving somethingà included suc as 'of supplies for govewkins to compent will ask Mr Havicins to co=e.Stf .~~~~~~~~~6 E/PC/T/C. II/PRO/PV/7. on that. MR HAWKINS (USA) I would prefer to keep the words "for governmental use", but I have not any very "conclusive reasons for doing so, except that I do not see clearly the difficulty decribed by Mr Shackle. It may be that I have understood him well. I cannot imagine what difficulties of interpretation would arise under it. Mr. SHACKLE (UK): My idea was that, if you have an exact test, it is perhaps superfluous to reinforce it by; an unprecise one. THE CHAIRMAN:What is the Rapporteur's idea? THE RAPPORTEUR: I think if you say "procurement by governmental agencies of supplies not intended for resale", the question arise as to what you mean by "not intended for resale". To whom? Mr SHACKLE (UK) Any resale. THE RAPPORTEUR (Mr Leddy): Any resale to other agencies of the government.. Frequently one agency will purchase for another, and you will have some sort of resale. MR SHACKLE (UK): If you do not qualify the word "resale", you will cover resale to anybody and everybody. THE RAPPORTEUR(Mr Leddy): Yes, which you do not necessarily want to do. I think if you have both phrases you make it clear that what you are talking about is the use of supplies for the government itself and not for use by the general public-- not to be sold to the general public. 7. B.1 E/PC/T/C.II/PRO/PV/7 THE CHAIRMAN: May I comment on the remark. just made by. the Rapporteur? If we were simply to say "not intended for.re-sale" or "not for re-sale" that would, not cover the position in my country. The position in my country is this. We might perhaps buy through one agency and re-sell to another agency simply to make a debit and credit balance. So we would defeat cur own purpose here.if we do what is suggested. MR SHACKLE (U.K.): Mr Chairman, it strike me, with regard to. the ambiguity which has been mentioned .by you and by the Rapporteur, that it would be got over if, after the words "re-sale", we added "to-the public", so that it would then read, "which. are not intended for re-sale to the public". . , THE CHAIRMAN: What about nationalised industries in that connection? MR SHACKEL (U.K.): I think processingg" would clearlsomeover soe kinds cf Indusoceal prccoss, but you could elab rate et.furthcr and say "after processing or manufacture", or "for use in the manufacture cf other gcods", perhaps. MR HAWKINS (USA): Mr Chairman, itoseems ta me if wouteave oUt "for governmental use" weloseher lcse the pfrpose o. the provision. I am not at all sure that ail the draftssuggested would not uld.not be all riohto i dc net think that much difisrence Ls present in the texts;. but I thineverhichOvwe form wc weoose, vu mustreferenceeforen,. te governmental u.o. THE CHAIRMAN; Ifgathered atherod the feelieg of tommitteeommittcc correctly, w think ve are all in faveur cf including theforrds "fcr governmental use", with the excepMron cf Me Shackloo so I weuld ask him weothor ho insists on leavine eutothoso wwhether vehothcagreean agrce te it as it isonow, "fcr governmental use and not ifor red fee re-salc". MR SHACKEL (U.K.): I do not want to insispointmy ocint. I do say that I think there still romains a doubt es to thc meanieg of tho word "governmental", and for that reason I doubt whether it is of much value to have et in thore. I should have theught cncoverld eovor tho matter more preciscly by, as it were, elaborating the matter of re-sale; but i do 8. B.2 E/PC/T/C.II/PRO.PV/7 not feel more strongly about it than that. Mr HAWKINS (USA): This is another point one raised by the Canadian representative. I do not think there is any conflict between the exceptions the last sentence but we could avoid any possibility of it by taking the exception out and making a separate sentence. THE CHAIRMAN: That is another point. I want us first to decide on this one. I move that we all agree to accept the first part of Article 9, paragraph 1, and make a note of the remark made by Mr Shackle for the guidance of the Drafting .Comittee, so that his point is not lest sight of. May we for the time being then, agree on this part of it? MR SHACKLE (U.K.): I take it that we are not agreeing to questions which fall within the competence of the Technical Sub-Committee? I am thinking of these words "sale, transportation or distribution or affecting their mixing", and so on. As I understand it, that's before the Technical Sub-Committee and not before us, so I take it that in agreeing to this wording we are not prejudicing the discussion in the other Sub-Committee? THE CHAIRMAN: That is right. MR. McKINNON(Canada): Do not you think the last half hour's discussion has revealed that the more we attempt to refine this the more trouble we make for ourselves? For instance, the latest suggestion has got the word. "intended" in. I can think of a government buying a great quantity of very important capital good and later re-selling them. They could always say they had net intended to re-sell them when they bought them but that there was net anything. else they could do -with them It is just another instance of the confusion we get into when we attempt to differentiate between public use. and -governmental use. Although I think we are all agreed that the first draft of the Rapporteur did almost exactly what we wanted, in a sense the more we attempt to touch up every. little refinement of wording the more difficult the sense becomes, and I wonder if it would net be still better to go back to what was the original Canadian suggestion, that is, to drop all reference to this from the charter, Just as we moved to drop all reference to public contract from the preceding article? Mr Shackle on that point has suggested that if we 9. . * .~~~~~~9 B.3 E/PC/T/C. II/PRO. /PV/7 do so these gords may be still caught under tho more general wording of the first sentence. Well, if they are, what about it? we are finding great difficulty in specifically excluding thom, and it seems to me that we are not taking very much more chance if we accept the possibility that they may be included. THE CHAIRMAN: Before I ask Mr Hawkins to comment on this proposal, may I say this? I think Mr McKinnon's remark raises a very important point of principle. My own opinion has always been that, whatever we do here, we shall never be able to cover every contingency and possibility in a draft. Economic life is tcc varied for that, and .there are all kinds of questions which are bound to arise later on The important thing is that once we have this agreement laid down we have to act in the spirit of it. There is no doubt that there will be certain difficulties, -but if we are able to cover 75 cr 80 or 85 por cent of them I think it will be Suf- ficient. Perhaps I am too optimistic,* but i think.that is the only way this whole charter will be able to work later on, and, basing myself -n that supposition, I think that there in a gain in having in hero the words "for governmental use and not for re-zale". MR McKINNON (Canada): I think we should leave out the .word "intended". TUE CHAIRMAN: Leave eut "intended"? MR HAWKINS (USA): I was rather inclined to agree with Mr McKinnon's views but net so much so that I think we can spend much more time on this. My position would be that I agree either to drop it, as he suggested, or take the present draft as it is. THE CHAIRMAN: .I think we would gain by making clear what we moan by this clause. I think probably the best thing to do now is simply to raise hands and say what we prefer. The first proposition is to drop it entirely. These in favour cf that? MR ADARKAR (India): We are speaking of Article 9?. . MR McKINNON (Canada): It is on thc assumption that we are aiso dropping the cne out cf Article 8. My proposition was always to drop both. THE CHAIRMAN: Again I ask the question: Who is in favour of dropping it altogether? 10. ` 4 . E/PC/T/C.Il/PRO./PV/7 MR ALAMILLA (Cuba): I shall have to oppose it if the suggestion is to take it out completely. THE CHAIRMAN Will those in favour of dropping it out please raise -'their hands? (how cf hands). There are five in favour, and there seems to be one really oppesing it. Now, who is in faour of having the new draft, for governmental use and not for re-sale"? MR.ALAMILLA (Cuba): I am not carc which it is, but I must have in the words "re-sale". THE CHAIRMAN: Those in favour? (Show of hands). There seem to be two in favour of this. I do not know how to get out, of this. MR SHACKLE (U.K): Is not there, on the whole, a balance of advantage in saying "fcr governmental use and not for re-sale"? Afer all, one knows there will be a. definite difficulty. for some countries over those purchases if government departments are required to give no preference to home supplies. I do not feel strongly about it, but I should have thought we would-be putting cur necks out less if we accepted this for of amendment, MR HAWKINS (USA): I would move that we accept it as re-drafted. MR McKINNON (Canada): I would say this: rather than have a division in the Sub-Ccmittee I am quite propared to take the last draft, "for governmental use and not for re-sale". MR. ALAMILLA (Cuba): I should explain to the Committee that I am oppesing the deletion of this on these grounds. In the constitution of Cuba there is a provision that in cases where goods are offered. at the same tïme b: nationals and by other countries, the Cuban product should be preferred, therefore I would have to oppose the deletion of that clause. It says in this text, "shall be accorded treatment no less favourable than that accorded like products of national origin". MR McKINNON (Canada) It says "except" thore. MR ALAMILLA (Cuba): I oppose taking out the whole exception; but, of course, if the exception is left in, I am content either with the words "for governmental use" or "for governmental use and not for re-sale", Either 11. . ./PV/7 B. 5 E/PC/T/C.Il/PRO./PV/7 oneeof thoe is pQrfectly satisfactory to mc. MR ADARKAR (India): When I indicated that the Indian delegation would agree to the deletion of this particular phrase from both clauses and both Articles, Article 8 an Article 9, what I unoorstocd was that .by dgletinS the clauses here we should be dealing with it elsewhere under state trading, in accordance with your original proposal Mr Chairman; but if the proposal is that we just delete them here and say nothing about governmental purchases for governmental use, then I would certainly strongly support Mr ehacklo's suggestion that we soick ta this formula, "except laws and regulations governing the procurement by governmental agencies of suppor governmental use l use ondfne tor' re-sale eo tho public". THE CHAIRMAN: I twink ve have reacommoncamon agreement to leave. it as it is. Of course, it is a clear-cut exception - "for governmental use ond net for re-sale". MR ALAMILLA (Cuba): I am satisfied. THE CHAIRMAN: Then is it eecidod teat wc adopt this revised draft and make a note weth rogard to Mr Shackle's arguments for the guidance of thf Dratting. Committee when they look into it again more closely? (Agreed.) Bewore ve return to Article 8, there is just the last sentence cf Article 9. -Now, my first opinion would be that ia is à question fcr the Technioam Clmeittea to deal with. I left that out on purpose. Therc were certain remarks made to the effect that some confusion might be caused - I think Mr McKinnon put argumentumoln forward. MR. McKINNON (Canada):. I accepted the Raopo't urte4intorprotation that that lapt sentence related back to the major portion of the Article rather than to the exception. THE CHAIRMAN: Gentlemen, I think th t if' we report toat ea tho.,other Sub-Committee, with the remark made just now by Mr. McKinnon, and advise toen te make a separate paragraph of this last sentence, we have done everything we ought to do here; otherwise we are doing the oork Of the Technical Sub-Committee, and that is not in our terms of reference. 12. B. 6 E/PC/T/C. II/PRO/PV/7 MR VIDELA (Chile): The Technical Sub-Committee agreed this morning to meet tomorrow at 3 p.m. therefore if I may have a copy of what we agree here I will be able to present it to the Sub-Committee at that time. THE CHAIRMAN: Yes; and would it holp you if the Rapporteur were there to explain it? MR VIDELA (Chile) : Yes. THE CHAlRMAN: Then I will ask Mr Leddy if it would be convenient for him to attend the meeting of the Technical Sub-Committee tomorrow at 3 o'clock for that part of the discussion. THE RAPPORTEUR (Mr Leddy): Yes. THE CHAIRMAN: We have now to return to Article 8(1), and again I would like to ask the Rapporteur to explain to us how it should now read. THE RAPPORTEUR (Mr Leddy): Our understanding with regard to article 8 was that the Committee had agreed to drop two things: firstly, any most favoured nation commitment relating to the awarding of public works contracts; secondly, any most favoured nation commitment relating to govermental purchases for governmental use and not for re-sale, which was obviously provided for in Article 9. The first agreement is taken care of rather simply by deleting the last sentence of the first paragraph of Article 8. Tho second agreement required some minor technical re- wording, simply because, ;ven though we have excepted governmental. purchases for governmental use from Article 9, they are still referred to in that Article. The language of Article 8 originally read, "most favoured nation treatment with respect to all matters relating to internal taxation or regulation referred to under Article 9". 1e have simply changed that to read, "and with respect to all matters affected by the provisions relating to national treatment in Article 9". In the revised wording the "governmental purchases for governmental use" would not be affected by the previsions relating to national treatment, and therefore would not be subject to most favoured nation treatment under Article 8. THE CHAIRMAN; Gentlemen do we agree to the proposal of the Rapporteur? B.7 E/PC/T/C. II/pro./PV/7 (Agreed.) Then we are finished with Articles 8 and 9, and the only possibility of referring to then again is in Geneva, whon we discuss state trading. MR ALAMILLA (Cuba): I do not want to have to make a reservation, but when you use words of that sort I feel I ought to say that we may not want to wait until then. THE CHAIRMAN: You have the chance to refer to it again, of course, when this pomes before the main Committee, but I sincerely hope you will net find it necessary to take advantage of that opportunity. 14. E/PC/T/C.II/PRO/PV/7. Gentlemen, we have still paragraph 2 of article 8 to deal with I understand that our Rapporteur has done some very useful work in getting out a new proposed draft of Article 8, paragraph 2, which is now before you. The first question I have agian to askk is: Have you had an opportunity to study it no that we can discuss it now? may I take it that we can. discuss it now? There is one small change in the forth line, where you will find the word "importations". It should be "importation"; the ."s" should be deletod. I will a ask the Rapporteur to explain this draft to us.. THE RAPPORTEUR (Mr Leddy):I should. say that fortunately there was no work to be done on this. This text with minor changes is the same. as that agreed to by the Sub-Committee at an earlier meeting, on the under- standing that one or two points that were bothering the Delegate for Cuba would be discussed with him and with the Delegate from Canada Upon examination of the text and further consideration, I think they both agreed that it was all right, that the points they had in Mind were taken care. of. There are two minor changes. With regard to the language in brackets under 8:2 (a) "in respect of which preferences were in force at that date", it is suggested that that phrase be deleted since it refers back to this whole question of establishing a dateto serve as a basis for the negotiations in the spring, whereas the Committee had agreed earlier, I believe, that that question should be taken up elsewhere, possibly as a part. of the precedural details rather. than be incorporated in any way in the charter, The second change.is a. very minor one under (c). It has been agreed that the exception should read "preferences in force on June, 30th, '1946, between neighbouring countries". We simply rade it July 1st, because we had. July 1st, 1939, in (a). It was. a natter of consistency of dates.. One further suggestion that might be made is that, in order to put the exception under (c) on the same footing as the exemptions under a and (b), ..the word "exclusively" should be -inserted in (a) at the 15. C.2 E/PC/T/C. II/PRO/PV/7. appropriate place, probably before the word "between.", so that it will read "preferences in force on 1st July, 1946, exclusively between neighbouring countries". THE CHAIRMAN: Gentlemen, before I ask you to open the discussion on this proposed redraft of Article 8 (2) (and I shall take it paragraph by paragraph, the first part of paragraph 2 and then (a), (b) and (c), in order to see that we agree on it), I think we will ask the Rapporteur to explain the last part of this note to us: that is the proposed new paragraph to be inserted a ter paragraph 2 of article 33, because it has a definite bearing on this whole thing, THE REPPORTEUR (Mr Leddy): The provision on page 2 of the draft before you has an error in it in the last line but one. It should read "Any such exception shall be subject to approval by the organisation" -- the words "the organisation" have been omitted from this copy. At an earlier meeting, the Delegate from India proposed that there should be provision.,of new preferential arrangements somewhere in the charter. It was felt by other members of the Committee that any new preferential arrangements could be authorised by the organisation under .Lrticle 55, paragraph 2, under which the organisation may establish procedures for waiving any of the obligations of the charter. The Delegate from India felt nevertheless that something should be put in the charter which would recogisee that in exceptional circumstances such preferential arrangements may need to some into force, and other members of the Committee, as I understand.it, tentatively agreed with that, provided that it vas understood that approval of any such arrangements would be under ArticIe 55, paragraph 2. The language before you is our attempt to set forth that understanding. It would be placed in Article 33, paragraph 3, which contains certain exceptional from all the provisions of chapter 4, including those relating to advantages accord d for the purpose of facilitating frontier traffic and customs unions. The provision is' simple. I do not think it requires any further'. explanation. 16. E/PC/T/C.II/PRO/PV/7. THE CHAIRMAN:. I went to say that I asked our Rapporteur to memtion this -- it was discussed at length at previous meetings in order to show that it has been agreed on. I propose that we discuss this proposed new paragraph to be inserted after paragraph 2 of article 33 and not confine cur remarks and obligations solely to Article 8. MR VIDELA. (Chile): I have a note here (perhaps I am wrong) that Committee II referred-Article 33 to the Technical Sub-Committee. THE CHAIRMAN: No. MR VIDELA (chile): Is that Wrong? THe CHAIRMAN: Article 32 was referred to the Technical Sub-Committee, and Article 33. to the. Sub-Committee on Procedures. MR VIDELA(Chile): Then I.am wrong. MR LECUVER (France) (Interpretation): Have. we adopted the proposed redraft of Article 8, paragraph 2? I thought you said that we .should,. first of all, consider the. proposed new paragraph .to be inserted. after paragraph 2 of Article 33? THE CHAIRMAN: No, I did not say that. I said that we should now try to agree upon paragraph 2 of Article 8, referring at the same time to para- graph 3 of Article 33. If you agree, I propose. that we now take the first part of Article 8, pararaph 2, down to (a). Is that- adopted? (Agreed). Then we come to (a). Are there any remarks or is (c) adopted with the change proposed by the Rapporteur? MR SHACKLE- (UK): I think there is a very.-small drafting question left over, about the use af the expression "a commonwealth of nations". I would say that we in the United Kingdom delegation are quite content to leave that as it is drafted. There are possibly some -obscure questions which only Constitutional -Lawyers versed in the complexities of. the British Commonwealth of Nations could answer, but we are quite content to leave that as it stands at present. THE CHAlRMAN: Is that adopted? (agreed) Then we come to (b): "Preferences in force exclusively between tho United States of America. and the Republic of Cuba". Is that adopted? (Agreed). Then we exie to (c): "Preferences in force on 1st July 1946 exclusively between neighbouring 17. . , E/PC/T/C. II/PRO/PV/7 countries". We have to add the word "exclusively". MR SHACKLE (UK): Mr Chairman, on that (I apologise for mentioning again a point which I think I mentioned at the last meeting), I still have a feeling that it might be better to be specific in this exception. I understand that it is a case of preferences between Chie and Peru and between Chile and Argentina. Might it not be better actually to specify those preferences rather than to use this phrase "between neigh- bouring countries"? I have the feeling that, if we use this phrase, even with the limiting- date, it does seem to give some kind of approval to the idea of a general exception from the most-favoured-nation treat- ment as between neighbouring countries, just because they are neighbour- ing. I think that wouid be an unfortunate implication, and, although I -do not wish to press the point strongly, I would have felt hapier if it has been possible to write in the specific exception for the particular preferences we :have in mind. THE CHAIRMAN: If I understand Mr Shackle correctly, he would prefer to have added the sentence which is in (a), namely: "Each member to which this provision applies shall provide a. list af such territories, which lists shall be incorporated in an annex to this charter". Is that right? MR SHACKLE(UK): No, because this is not a case of common sovereignty. It is a case of preferences between three independent but bordering sovereign states. I think there would have to be a separate paragraph, but my suggestion was that we should actually -menntion Chile and Peru and Chile and Argentina by name there, instead of saying "between neighbouring countries". THE CHAIRMAN: may I ask another question? When in the main Committee II we discussed Article 33, mention was made of a mind of custom union or preferential treatment between India and Kashmir, between South Arica and India and Australia and certain islands. Is that something we can cover with the words when we discuss territorial application only, or have they some reference to these neighbouring countries here? We have to be clear on that before we simply mention only a few; countries. . ; ~~~~~~18k.' E/PCT/C. II/PRO/PV/7. MR ADARKAR (India): We would prefer to leave ( ) as it is. We are not quite sure about the legal and constitutional implications of sub- paragraph (a) and, in order that any difficulties that may arise in regard to the interpretation of that paragraph may not exclud certina preferences, we should prefer that (,) should remain as it is -- not with specific reference to the preferences which exist between Chile and Peru and Chile and Argentina. THE CHAIRMAN: The question arises whether at a later date we should have a list of these preferences in force as we have under (a) (I am repeating my former question to Mr Shackle) in order that we know where we are with these things. MR ADARKAR (India): I should prefer a list. MR SHACKLE (UK): May I say I should be prepared to withdraw my suggestion for amending (c)? MR McKINNON (Canada); By "neighbouring" do we mean "bordering"? MR SHACKLE (UK): Not if you mean Australia and Papua. MR McKINNON(Canada): It might be a substantial point when we come to interpret this clause. "neighbouring" might well not necessarily be bordering or entirely contiguous. THE CHAIRMAN:- Therefore, I think at a later date we ought to have a list of these territories otherwise we shall always be getting into difficulties as to what is neighboring and that is bordering, and how; far it is to be stretched -- ls it 20 niles of sea or is it 100 miles of sea; I do not know. MR HAWKINS (USA); I do not think we need worry a great deal because the limiting factor here is actually in force now. The question whether you want to include "neighbouring" or contiguouss" is not important, because the important fact is that you have the limiting factor actuallly in force If my original. suggestion had .been adopted and we had qunalified this by long-standing and important preferences, it would have been a little safer. But that is withdrawn, I think the real point here is that preferences actually in force justify their inclusion whether. neighbouring or contiguous. THE CHAIRMAN: What in your objection to having a list of these, preferences? It must be very easy.EVery country concerned in send in a list. 19. E/PC/T/C. II/PRO/PV/7. MR VIDELA (Chile); Perhaps here there is a mistake of procedure. You were not in the chair the other day; Mr Coombs was in the chair. I have the records of the other meeting, and on page 34 you will see that after some 30 pages devoted to a discussion on. this. we agreed. "(The Chairman) I presume that is satisfactory to the Chilean dolegate, since it is his own phrasing. (Mr Videla: Chile): I was only going to say that when the United States delegate made his proposal I felt that we should be on the same level as other people in regard to preferences, but after wthat he has just said I realise that that may not be the boat thing, and I am very willing to agree to his proposal." This wording is not my wording. I presume they have deleted. pprt of my speech, but I do not mind. The Chairman said: "Is there any further comment on this, or may I take it as agreed? Then I take it as o.greed." Therefore, it seem.- to me that we- are wasting time here and that it is not useful to rovert to. the same discussion ,after it has. beon approved, because, if this question: is again re-opened, I will re- open the whole article. I have in mind that there is, a Sub-Committee of IV form which has not yet met on the question of the preferences under letterr A. t. THE AHAIReLN: Parhaps that might answer that. I think I put it quite clearly that ve have adopted it. After that, we han a Iefgthy discussion and I imadelsomeeremarkse n dk; anC. then we came to Article 33 and a new para- graph to be inserted. Then we adoptedrocedurenodure of agreeing it again paragraph by paragraph. ELAVIDELte(Chilc): The United Kingdom delegate has withdrswn hie proposal, I think? .R S!ACKLE (UK): Yes, I have. ELAVIYELA (Chile): Thon perhaps we can go ahead. KI HUWIUNS (USA): I weink va meett ralepoint poelit hère for present pur- poses by inserting aftgr pas raphe (a)anin(b) ii parenthes s "to' be seecifioe". lhothose tilos whoclaimsocomingcciinr uneer thùse parsgraphe, partioularly paragraphwic), 'wll indicate that they have certaie prefcr- onces in orce 'and, had them in force on July let, 1946,neighbouringouring countries. Anyone whoreferencesrances in force on1July lst,- 1946, would ticalaatiealy bc, specified undor this paragraph. THE AHAIR am: I =n prepared, in order not to lengthen ocr disoussion, to haveArticlezrtclo adopted as it ie.s It ij quite obvious that, eheomeo coos to the, definite drafting stage, numbers will want to know where they are, .so it will crop up anyway in Genevawonce ve have had our negotiations. Ail these preferences have menbe r-mtwhend iého. you have negotiations, s0 I on preparedoto ad«pt it now. 20. D. 1 THE CHAIRMAN: The only question still to be asked is whether we should add here "neighbouring member countries". That is again difficult point but perhaps we should, leave it out. Everybody has to refer to these things again in the main Committee. Well, gentlemen, is 3 adopted? MR VIDELA (Chile): What is the final draft? THE CHAIRMAN: "Preferences in force on 1 July 1946 exclusively between neighbouring countries"; se we have made a change after the agreed text. MR LECUYER (France)(Interpretation): I should like to draw your attention to the tact that we have discussed only the English text. Translations always involve certain difficulties and there is sometimes a risk of modifying the text while doing so, therefore if you will permit me I shall. contact the secretariat and refer to you, Mr Chairman,any difficult- ies that might arise. THE CHAIRMAN: Yes., Now, it is my pleasant duty to congratulate you all on reaching agreement on Article 8.and part of Article 9. I thikn we have earned some tea, so we will adjourn for a quarter of an hour. (The Committee adjourned for 15 minutes) We have now before us Article 18. When we discussed this part of the charter in the main Committee the Chairman made a summary of the basic points which needed further consideration by the Sub-Committee. I referred tc them yesterday; thoy are enumerated cn page 16 of document E/EC/T/C.II/7 of 26 October 194. These are the basic points tc be discussed, together with other drafting points and other observations which delegates may desire to made here. The question is whether it ould not be wise te read this through first and see whether there are any points already covered; and in that way we shall be ablc to approach this problem with fresh minds. First pf all there is (a): "whother the negotiated reduction to be required would differ according to (i) the stage cf economic development of the country concerned, (ii) the level of its tar- iff in operation". Wo have to look into that till. Then (b): "whether preferences subject to negotiation should be those existing at the time cf negotiations or those existing at a prior date 1 July 1939 -or 1 July 1946". I think we have covered that already in drafting Article 8. 21. E/PC/T/C. II/PRO. /PV/7 D. 2 E/PC/T/C. Il/PRO. /PV/7 Then (c): "whether, in order to reduce margins of preferences, only the most-favoured-nation rate, or both the most-favoured-nation and the preferential rates, might be reduced". We have still to discuss that. Then (d): whether preferences subject to negotiation should be limited to tariffs or include those based on price arrangements in grant- ing of contract and quota arrangements". We still have to discuss part of that, because I do not think we can discuss the granting of contracts in this way. Then (c)-: "whether preferential arrangements, which had already been agrued upon but had not actually been affected, might be implemented or extendedd, I think we have taken care of that and will take further care of it when we discuss Article 33. Then (f): "whether provision should be made for the establishment of now preferences as a step in the direction cf the formation of a Customs Union". This again is article 33 and Articlo 55. Finally (g): whether an escape clause should be included, so as to make possible remedial action in cases where industries wore seriously injured because of reduction or elimination of preferences". We have still to go into that as well. I propose, gentlemen, that wc start with Article 18, paragraph 1. May I, in the light of the remarks made before, ask Mr Hawkins and perhaps also the Rapporteur whether they have anything to suggest with regard to paragraph 1 of Article 18? MR HAWKINS(USA): I have no comment to make on paragraph 1. I think it is simple and self-explanatory. THE CHAIRMAN: I think, then, that we may take the first paragraph, up to a. are there any remarks? MR SHACKLE (U.K). I have one very small point here. In. the fourth line we have the words "substantial reduction of tariffs". In the Canadian amendment to Article 8 which we have already adopted we speak, I think, of tariffss and other charges on importation". We perhaps should bring the wcrding into lino with that. MR ADARKAR (India): I suggest that there might be some general discussion on the principle involved in this proposal to negotiate substantial roductions in tariffs on imports and exports; because, as the Indian 22. D.3 E/PC/T/C. II/PRO./PV/7 delegation has stated on previous occasions, some reservation is necessary on this point to safeguard the position of developing countries, The sort of reservation that I have in mind is some such addition as the words, "subject to the provisions of the charter dealing with industrial development". I suppose that in the Committee which is dealing with the problems of industrial development the extent to which tariffs and other restrictive devices could be employed for assisting the industrial development of backward or undeveloped areas is going to be discussed. Whatever unclorstandings are arrived at in that Committee, should we take then into account while conducting these negotiations? Therefore I suggest that tho condition of the under--devolood countries should not be disregarded if the entire paragraph 1 of this Article is made subject to the provisions dealing with industrial development. That is my first point. The other point deals only with the drafting of this. There is an explanation here, substantiall reduction of tariffs (or cf margins of protection afforded by state trading) ". It seems to me that the object of these negotiations is to secure not merely a reduction of tariffs which serve to protoct but to socure some sort of rationalisa- tion of all tariffs, whether they have any protective significance or not, the object being that even when a particular rate of import duty has no protective significance, it right be so high as to discourage consumption unduly. It night be so high as even to defeat the purpose of bringing in the maximum: revenue. The idea is to use this occasion to secure the rationalisation of tariffs, and therefore it sons to me that, Just as the word "tariffs" refers to both protective and non- protoctive tariffs, the margins maintained by static trading organisations should be taken into account irrespective cf whether they serve any restrictive purpose or not. In Article 27, under this letter (a), where margins maintained by state trading enterprises have been referred to, no indication has been given as to whether the margin is serving a particular purpose or not, Tho only word used here is the maximum margin maintained by the state trading enterprise. wemight adopt the same procedure and delete these two words "or protection". 23. D.4 E/PC/T/C. II/PRO. /PV/7 THE CHAIRMAN: Are there any other observations with regard to- the first part of paragraph 1? MR HAWKINS (USA): Would it be useful if I made my comments at the ond of each suggestion that comes up? I have a few words to say on the suggestion of the delegate.of India. THE CHAIRMAN: I Myself have also a fow observations to make here. I think another point cropped up .which was, I think, -mentioned by the Belgian and Netherlands delegations We said, "Look here, whatt are we going to do?" Hore we mention only that we should have the tariffs and the margins of protection afforded by state trading, but there are still a number of countries which have a combination of rather low tariffs and quantitative restrictions, and therefore we have the difficulty: what should be the starting point of the negotiations? Should it be just simply, as I think the Belgian delegate said, to reserve the right to increase tariffs if the outcome of the negotiations is not satisfactory, se that there would not be a real decrease in the tariffs and margins of preference? Should we take care of that here and. discuss it here or should we leave it to a later stage? We have that observation by the Belgian delegate before us, and we should take it into consideration one way or the other. I think that when we deal with the summary of the Chairman we should also take this into consideration. Are there any further observations? . E.1 E/PC/T/C II/PRO/PV/.7 MR ALAMILLA (Cuba): Mr Chairman, I would like to point out in reference to the point raised by the Delegate for India that the Cuban delegation have presented a proposed amendment to add a paragraph, latter (c), to paragraph (a) of this Article, in which that sane point of industrial- isation is brought to the attention of this Committee. It may be that we may leave the problem raised by the Indian delegation and consider it when we come to the proper portion of this letter (c); or in the event of your wishing to discuss it new, I believe it should be discussed in reference to the amendment that was distributed on the 28th October under cover II.16. MR VIDELA (Chile): I would like to call attention to the Chilean speech of C.II/PV/2, page 19, which was taken into consideration in the report of the Rapporteur on the 27th October, page 16, where we refer to Article 18 (3). You will see there what are said. These are important questions in relation to the speech of the Indian and Cuban delegates. We said that exceptions should be (a) when a concession affects or might affect a national industry in its initial stage of develop- ment; (b) when a concession affects or might affect a national industry which is vital to production and employment in a particular region and cannot easily be re placed by another industry; (c) when home industries are sufficient te supply internal consumption; and (d) when home industries use for the most part domestic raw materials. TBE CHAIRMAN: Gentlemen, I want to see what we have to discuss. We have first to discuss what will be the basis of the coming negotiations. Then we have to discuss the exceptions to this basis of negotiations. Then vie have te discuss vthat will bc the consequences of these regatiations. I think (a) and (b) simply more or less state what would be the consequence of the negotiations -- specially (b) -- ana (a ) states those which may net be brought forward as an exception. The first thing to discuss is what would be the basis of negotiations, and, we have had some remarks made. already. Perhaps there. is more in. thee paper that has been prepared by the Secretariat. As I see it, it comes down to exemptions to what will be the basis of negotiations, so perhaps we had better confine our discussion to that first point. 25. E/PC/T/C. II/PRO/PV/7. E. 2 MR HAWKINS (USA): I want to be clear about the subject we are discussing. You speak of the basis of negotiations. Do you mean by that such qualifications as have just been made by the Delegate for India. and the Delegate for Cuba? THE CHAIRMAN: I think the first thing to discuss is what will be the things to put on the table -- the tariffs, the margins of preferences, and so on. Then we come to the second part and say there are exceptions in some circumstances. Perhaps it is not a clear course, but I have to grope my way through this mass of arguments. MR AHAMILLA (Cuba): I believe that what we are going to work on is what the title of Article 18 says -- "Reduction of tariffs and elimination of preferences". I think that is our subject. MR HAWKINS (USA): I agree that that is a. subject- and I do not know -whether it can be spelled out in any more detail. But, attempting to answer your question, the subject-matter of the. negotiations which are contemplated here would be both tariffs and preferences. Now, on the question as to how to proceed with those negotiations, generally speak- ing, the only way to proceed would be to look at the most-favoured-nation rate. iA country night ask another for a reduction in that rate, ,with one or both of two object in view: one would be to reduce the degree of protection afforded, and the other would be to narrow that preferent- ial margin. In one case it would be one and in another case the other. THE CHAIRMAN: It. comes down to this. We have tariffs and margins of preferences to put on the table. The first thing is the question asked by the Delegate of India as to the margins of protection afforded by state trading. We have to orange perhaps the. wording MR HAWKINS (USA): On that point, I think we should note that that is a perenthetical clause which refers to Article 27, and the controlling language would be in Article 27 As to the point that there may be margins in state trading operations which are so small as to be designed only for the reason of raising revenue, I think the answer to that. is that even a revenue margin is to some extent protective. 'Therefore, the roference in the parentheses in paragraph 1 of Article 18 seems to 26. E. E/PC/T/C.Il/PRO/PV/7. me an accurate description. However, I do not think that the point is extremely important. The main thing is to show that you are includ- ing in these negotiations a margin between purchase and resale in state trading operations just as though it were a tariff. That is the sole point of the parentheses there. MR ADARKAR (India): May I explain the reason why I suggested the particular amendment? It is not of very great consequence, it is true. It has to be recognised that in certain quarters these negotiations are regarded with certain misgivings -- quite unjustified misgivings -- and, if the language of the clause makes it appear that the negotiations are solely directed towards securing a reduction in the protection afforded to domestic industries, I think the opposition to those negotiations is likely to b., stronger.If the reference to protection is eliminated, it places certain governments in a position to argue that these negotiations are not solely directed to a reduction of protection but are also intended for rationalising tariffs, to bring about a general lowering of tariffs, in order to stimate consumption. As regards the point raised by Mr Hawkins, that even a revenue margin has a protective consequence, I should ray that in lost cases that is so, but there may be certain cases in which there may be no domestic industry at ail, and state trad- ing may have been resorted to for other reasons. 27. F.1 E/PC/T/C.II/PRO/PV/7. MR. VIDELA (Chile): I have here the paper that you mentioned, Mr. Chairman, and I see that there was agreement in Committee II on the subject of the order of the discussion in the Sub-Committee. I think the order was set out in the speeche of the Canadian Delegate, when he said that there seemed to be general agreement that the reduction or elimination of preferences should be a matter of negotiation, and that basic points needing further consideration by the Sub-Committee included a list of things which he enumerated very clearly. Perhaps that will help us; MR. HAWKINS (United States of America): Could we dispose of this point? I think it is easily dealt with. The whole purpose of the parenthetical phrase is to try to indicate that the margins referred to in Article 27 are to be treated in much the same manner as in tariff negotiations. It is convenient to describe. them by saying "margins of protection". I think we could make the point clear simply by saying "margins affordcd-by State trading referred to in Article 27." THE CHAIRMAN: Is that agreeable to the Sub-Committee? MR. SHULCKLE (United Kingdom): I should like to raise an incidental point. In the next lino ono sces the words "and to the elimination of import tariff preferences." I think that in the same way as we have by words in brackets explained what is said about tariffs is meant equally to apply to margins afforded by state trading, so that after the word "import tariff preferences" we should include words in square brackets "preferences accorded by state trading." THE CHAIRMAN: If there is no objection, I think we should add this amendment proposed by Mr. Shackle, and include the words, in brackets, "or of the margins: afforded by state trading mentioned in Article 27." 28. F. 2 E/PC/T/C II/PRO/PV/7. MR. ADARKAR (India): The reason I suggested that the reference to the provisions relating to industrial development might be considered in conjunction with the opening portion was that this part of the Article deals with the principle of negotiations, while, as you will sce from the concluding portion of this Article, the remaining part of the paragraph deels with the rules of procedure...."These negotiations shall proceed in accordance with the following rules." Whethter the clauses dealing with industrial development are to be taken into account in this connection or not is a matter which, I think, should be covered in the opening portion itself. It is a natter of indifference how it is dealt with, provided it is dealt with somewhere, but it seems to me that the way I have suggested would be the more logical way of dealing with it. THE CHAIRMAN: The Delegate of India is right. Therefore, I would amend my suggestion so that we would now say, in the first phrase, "These negotiations...." MR. McKINNON (Canada): Are we talking about the same margin and the same state trading in the two parenthetical sentences? MR. SHACKLE (United Kingdom): That was my intention. MR. McKINNON (Canada): Then why qualify the second one and not the first one? THE CHAIRMAN: We do it in the case of both of them. MR. McKINNON (Canada): I am not objecting to its boing done in both, but it makes for a pretty clumsy construction. THE CHAIRMAN: It is a little bit clumay, but we can ask the rapporteur to make a better draft of it, if we agree on the principle. 29. F.3 E/PC/T/C. II/PRO/PV/7. THE CHAIRMAN: We now come to the point raised by the Delegate of India; that is, the question of the undeveloped countries. We have there the Indian proposal and the Cuban proposal to discuss. MR. ALAMILLA (Cuba): Mr. Chairman, I would like Mr. Torras, who is one of our substitute Delegates and has studied this part of the matter, to take my place now, so that he may be able to discuss these specific points. E/PC/T/C. II/PRO/PV/7 THE CHAIRMAN: Mr. Hawkins is away for about five minutes so I have not his very valuable Advice on this matter. But it comes down to this, if I understand it rightly: that if there is need for the protection of infant industries, countries should not be expected to make these tariffs a natter of negotiation. MR. ADARKAR (India). May I add a word in justification of the amendment that I suggested. It seems to me that we must avoid the danger of overlapping between the work of this Committee and that of the Joint 1 Committee on Industrial Development. This problem of industrial development is extremely complicated. I am not participating in the discussions of that Committee, but I think that the precise extent to which restrictive devices should be used, or the conditions under which such devices should be used, are boing dealt with by them. In connection with that discussion that Committee will considor not merely the general proposition that such devices should be allowed to bo used, but will also, go into very great detail in regard to the prociso conditions under which they should be used, the type of industries which should bc developed, and safeguards that should be provided in ordor to prevent abuse of those restrictive devices. If that matter is going to bc discussed in such detaol in another Committee it seems best to avoid a discussion of the some subject here, and the beat thing would be merely to refer to the clauses relating to industrial development as they will be worked out by that Committee. Then we shall have automatically taken account of any safeguards which that Comiittee will device to preavnt excessive reservations being isade by undeveloped countries in the matter of tariffs and other devices. MR. LECUYER (France)(Interprosation): I do not think that the question raised here is of very groat importance. What we are doing here is contomplating the subsequent negotiations and what will be discussed then. 31. E/PC/T/C.II/PRO/PV/7 will be tariffs During those negotiations the conditions prevailing in each country will betaken into account. Same countries will say that under the conditions prevailing in those countries it is possible to reduce tariffs, others will say that their tariff's are so low that they cannot reduce them - and I think you, Mr. Chairman, have referred to this matter elsewhere. At any rate we shall have negotiations on an equal footing, and each situation will be taken into account. This does not mean that I object to referring here, in this Article, to the position of undeveloped countries, but I would like to say that we cannot foresee what will be the result of the discussion within the Committee on Industrial Dcvelopment and, if we adopt such a reference, we should only do so in a tentative manner -perhaps put it in brackots, in a ,text similar to that suggested by the Delegate of India, on tho condition that the text my be revised after we have hard tie results of the discussions in the Industrial Comitiee. THE CHAIRMAN:I really think that before putting in a clause like that we ought to know more about the results of the discussions in the other Committee on Industrial Development, Perhaps it is better that we should ask our Rapporteur to got into touch with them. and see whether there is anything to be done by this Committee with. regard to this Article. MR. ADARKAR (India): The reason why undeveleped countries will be anxious to see such a. reservation made in paragraph (1) is the possibility that, in terms of the first sentence of paragraph (3), any country which fails to fulfil its obligations under paragraph (1) of this Article will expose itself to certain penalties. What precisely theobligations are is rather an important question for the undeveloped countries. If it is recognised that thengotations are subject to any understandings that may be arrived at in regard to industrial development, their position will be safeguarded and they-need have no anxiety. Otherwise some very explicit or extended 32 G. 3 E/PC/T/C. II/PRO/PV/7 reservations will be made. We are assuming that some proress will be made in that Committee on Industrial Development, and some specific provision will be made. It is on that assumption only that the reservation is proposed. THE CHAIRMAN : There is one thing on which I am still in difficulty. As I understand it, we shall have these tariff negotiation in Geneva in April and we accept to have then. Every country is free to state its position and find acceptance for its situation and point of view . After than we shall have the craft of the Charter; we have already had the first negotiations. The Charter will not come into affect bofore we have had the world conference, as I understand it, and then we shall perhaps have a second set of negotiations. What is the sense of putting this in the Charter? It would only Can that there would be further reductions after the initial reductions arrived at in negotiations in Geneva. Is that not right? We have already agreed to enter into negotiations; there is no need to put it into the Charter as such, Even the rules do not iplly, because the Charter ;will be debated after the negotiations - it if for further negotiations. MR. HAWKINS (Rapporteur): The negotiations need not necessarily and with these to be undertaken next spring. They might be going on for years. We might go one stage next spring, and in addition to that there will be other countries who are not parties to these negotiations who will be partici- pating in other negotiations, So the Charter has to lay down rules to cover all these proposals. 33. E/PC/T/G.II/PRO/PV/7. MR. HAWKINS (United States): I have a few words to say on the proposal of the Indian Delegate. It seems to me net appropriate to be inserting in this Article at this staeg reference to actions which will be considered by the Joint Committee on Industrialisation before the committee has even considered the question. We not know what provisions regarding relaxation of tafiff commitments are going to be agreed to; and to insert that in here now is to prejudice the question. It implies that we in this committee think that there should be some relaxation in favour of the underdeceloped countries. Now, without attempting to tissuee the merits of that question it does seen to me to be inappropriate to be putting a referencee in this draftf at this stageto some problematical,. unknown actionwhich may come out of another committee.e In te-limit of what they do we could then reconsidere what,if any, reference should be made here.ere. VIDELADSLL (Chile): I think we arc allagreement. unt. I just consulted with my friend, the Cuban Delegate, Dolate> so think the Indian Delegate will be in agreement, aZreeme, low the llmiJ ohe line nf the Chigeanonele3atimn. Toit. is oe say, ta put the exenderons un"Ie No.3 - beaiusc we referring to errin-. t that, sancteons. Tharefore, i;ecannot ndw proceeJ with (a) and (b), about dhe proceJure, andeloave thu exemptitomorrow tincludings of course, ' oi crse, the exemltlTggested is su::gesded bDelegate and DcLele>gato nl ate amd tje Chilean Delegate. As the De1ate., .'.s Cuban old -rat juot tolCL me, te:. cf these Exemptions referrod to by tge Chileae Deleîaedon aru includcJ in dheir paper; ani we may m-ak. .a general exemption covering the whole of the easmptiggested wq8 sugjQ>ste byfthe Chairman oi Committee II 34. H.2 . . E/PC/T/C.II/PRO/PV/7. in the document to which we have refeffred: " ..whether an escape clause should be included, so as to make possible remendial action in cases where industries were serioously injure because of reduction or elimination of preferences." I think we should leave that till the last part of our discussion, because there are exceptions, although we can follow tha lines of the other committees and sub-committees in making.- the general l principles first and then the exceptions. MR. McKINNON (Canada): This is, after all, the basic provision of the Charter relative to tariff negotiations, and I am inclined to think that if we amend it by means of a number of paragraphs - (a), (b), (c), (d),(e) etc. - involving or permitting reservations or exceptions to a general undertaking , negotiate tariffs and state trading markets. we woul,. be in this particular committee for another month. I have grave doubts that this, which is the substantive provision expressing a willing- ness t. undertake tariff negotiations, should be qualified in any way. Even. if we know what the other committeez hal done or is going to -do, what may be done in the committee in connection with underdeveloped countries should, in may opinion - if I may use the phrase stand on its own feet. I do not. believe it should be referred to here it 11, unless as a matter of drafting a cross-reference appears t- be necessary. I take much the same view, I think, that Mr. Hawkins expressed, but I think I feel more strongly on it than he does - or than he put it - namely, that this first substantive provision to express a willingness to negotiate tariffs and preferences should be completely 35. H.3. E/PC/T/C.II/PRO/PV/7. unqualified. There are unough escape clauses of one kind and another being drafted in other committees, or being considered in other committees, and surely they of themselves will be substantive articles or chapters of the Charter, and will speak for themselves. THE CHAIRMAN: I am inclined to agree with Mr. McKinnon, that we should not try to put in here more than a readiness to negotiate tariffs and preferences .or the. coming negotiations, even after we have had our meeting, in Geneva. Perhaps the Charter may be adopted at the meeting for negotiations, as the starting, point, but I would suggest it will have no legal effect, because I think it will. nt have been adopted: when we start our. negotiations. MR. TORIRS (Cuba): This is very important point to the Cuban Delegation, because of' Cur special economic position. in regard to and underdeveoped countries. I think this point should be discussed in the tariff chapter, because it relates to industrialisation .ind also to tariffs This industrial negotiation will be taking account of the relative tariffs- of each country begin, reduced, with special conslder-ation for those countries which are in th; early stages of their industrial development. These are points on which we cannot seem to .n:..ree ti put in here, in order to authorise those countries in these cases tc maintain adequate labour or trade to protect the indus- tries and the agricultural production,which mny be injured by imports if the tariffs: are reduced,in a proper manner. MR. .ADARKAR (India): I appreciate the difficulty raised by Mr. Hawkins, that it does look haward to refer to certain E/PC/T/C.II/PRO/PV/7. provisions which have yet to be worked out without knowing the content of those provisions. However, from the point of view of the underdeveloped countries we know the object of the whole discussion which is taking place in the Committee on Industrial Development; we know how the committee has been set up, and it seems to me that, although it is true we are not undertaking the actual drafting- cf' the various provisions, it may be advantageous to adopt some such reservation ns that suggestedby me in' tentative manner. 'If a chapter nn industrial development is included in the Charter, then the reservation still stands. If no. such chapter is included, then it is open to us to comn back to this provision and to delete that, and to consider some substitute. I feel there is danger of our falling between two fires. On the one hand we may be tempted -- and surely it may be necessary also -- to insert a very general provision to the effect, for example , that underdeveloped countries should have freedom to maintain tariffs at any level necessary to, protect 'their domestic industries; but that will not include any references to safeguards, but, conditions under which those taroffs may be maintained, to the types of industries which may be developed, the criteria which may be adopted in applying.. that principle. On the other hand we may have no reservation at all, in which case there is nothiW in this paragraph to safeguard the position of underdeveloped countries. The paragraphe says that Members shoul;- enter into negotiations directed ' to the "substantial reduction.of tariffs." Now that expression, "substrntial reduction of tariffs " strikes a note which is completely out of accord with the intentions and aspirations of the underdeveloped countries. 37 The substantial reduction of tariffs is a principle which does not suit all countries. It is true that there is scope for reduction of tariff s in the cse of undeveloped countries and also that all members should enter into negotiations directed toward a substantial reduction of tariffs; but, as a principle, it is not fair to expect the undeveloped countries to accept readily aind without qualification. Now, a reference has been made in the course of the discussion to an escape clause. I am not sure, Sir, that escape clauses which are meant to deal with emergencies and not to deal with the current situation would really meet the requirements of this ctse. I therefore suggest, Sir, that either a tentative roser- vation of the kind suggested should be rade or that the undeveloped countriess sh;ul1dL bu given freedom (,nd I speak without committing, the Indian Delcgatiun) to reserve their position in regard to this principle cf a substantial reduction of tariffs until they can see .-hat i s happen- ing in regard to the Chapter on Industrial Develeiopent. That is, of course, without prejudice to this broad procedure of entering, into tariff negotiations, because, as I satid, even undeveloped countries will find ample scope for some reductions in tariffs. Thore is no disagree- ment or difference of opinion, as far as I can see, between these two groups of countries in regard. to the necessity or the desirability of entering into negotiations for tarif' reductions in a broad way next spring, . THE CHAIRMAN:I think that as things are, and as Mr McKinnon rightly pointed. out, this is the basic article probably of the whole Charter. I would like myself to have some time to reflect upon it further, and I am sure that .Mr. Hawkins and other delegates here would like to do the sane. So that I propose that we. start our next meeting with this same point. Our Rapporteur will then perhaps have had time to get in touch with Committees I abd II,. or with the draftinG sub-committces, to see what they are working out, and we could perhaps reach a conclusion on that. Our next..meeting would have to be on Friday afternoon I think 38. E/pC/T/C-LI/pRo./PV/7- E/PC/T/C.II/PRO /PV/7 at three o'clock, because tomorrow we are having a meeting of Committee II the whole day. MR HAWKINS (USA): Mr Chairman could I just say that I would like to revert to the point that Mr Shackle made for additions to the paragraph - or I may want to, beacause I did not have much chance to consider it. You will remember he suggested putting some thing in brackets. THE CHAIRMAN: We will leave that to our Rapporteur to make clear. Is that greeable? The meeting is adjourned. (The Meeting rose at 6.50 p.m.) (Adjourned to Friday next,3.0 p.m.) 39.

GATT Library

hp317ms6726

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Sixth Meeting of the Procedures Sub-Committee Committee II held at Church House Westminster, S.W.I. on Tuesday, 5th November, 1946, at 10.30 a.m

United Nations Economic and Social Council, November 5, 1946

United Nations. Economic and Social Council

05/11/1946

official documents

E/PC/T/C.II/PV/9 and E/PC/T/C.II/PRO/PV/5-7

https://exhibits.stanford.edu/gatt/catalog/hp317ms6726

hp317ms6726_90050500.xml

GATT_157

A-1 PAE E/PC/T/C.II/PV/9 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the SIXTH MEETING of the PROCEDURES SUB-COMMITTEE COMMITTEE II held at Church House Westminster, S.W.I. on Tuesday, 5th November, 1946, at 10.30 a. m. CHAIRMAN Dr. A. B. SPEEKENBRINK (Netherlands), (Form the Shorthand Notes of W. B .GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.I.) 1. A-2 E/PC/T/C.II/PV/9 THE CHAIRMAN: Gentlemen, I open this meeting. Before we come to Article 19, I should like just, to say this: we must try to get Article 8 finished off and in a convenient shape as soon as possible. We must come back for one moment to the question of public works. At our meeting before last we had a discussion about that. We had before us the British draft, It was proposed that in Article 8, paragraph 1, should delete the last sentence that is, from the principle, and so on; and that in Article 9 we should delete the concluding words of the first sentence, So that that means that we should drop the question of public works altogether from Articles 8 and-9. That would only leave one thing to decide, whether that matter in that new Article should be discussed now or later, or whether we should say.No, that it is such a special thing that it should not be in the Charter at all, I think it comes down to that. I should like the opinion of delegates with regard to this proposal. We should first discuss the proposal to delete these words from Articles 8 and 9 and then we will see whether there, should be a new Article; but first clear up these two paragraphs. Mr. SHACKLE (UK): Mr Chairman, I rather doubt whether simply to amend those two phrases will really clear up the matter. It seems to me that If they were omitted and nothing more were done, it would then be very arguable that these matters of public works and contract are covered by the general phrases in Article 8 (l) and Article 9 (1) respectively. These are quite widely worded, and 1 think it could very well be argued, when you took all matters relating to, Internal regulation, or including laws, regula- tions affecting it and so on, that those words alone are enough to cover these governmental, as you might call then, administrative contracts if nothing else is said, It is for that reason that I feel that if we want to treat public orks and contract at all specifically, we have got to have some special, provision about 2. PAE A-3 them. No doubt to do that it will benecessary, to have these two deletions, but Ithink we have got to go beyond were deletions That is my feeling. THE CHAIRMAN: I think this has a close, connection with the whole question of state. trading, and in Committee, II we decided not to discuss State trading any more, but leave it more or less open until we have our next meeting at Geneva. 3. B.1E/PC/T/C.Il/PV/9 So perhaps it could be resclved that we simply delete it here and say there is still this problem to deal with and that it an only be properly discussed when we have the whole question of state trading dealt with in a full way, and that can .only be done at, the next meeting. Would not that be the. solution for the time being? MR McKINNON (Canada): Mr Chairman, from the point of view of the Canadian delegation, we first took soma exception to the last sentence of paragraph 1 of Article 8 on the ground thai it was a rather unusual addendum to a conditional most favoured nation clause, and we rather doubted the propriety of inserting it as part of the basic m.f.n. clause Our objection to the somewhat corresponding sentence in 9 was at first a doubt as to what it meant, and, as we went along in our discussions; growing confusion as to what it did or might cover. Our last position, when we last discussed this, was that we thought lt better to delete entirely both references from the Charter as being somewhat unusual pro- visions, and, though we might be perhaps losing something by so doing, we thought that the possible or potential loss in that respect was more than balanced by the removal of the confusion and doubt as to the meaning of-this clause, let alone the manner in which they might be administered by different countries quite legally under the wording that is bound te come cut because of our difficulties in agreeing upon it .Therefore our view would be very strongly that both the excerpts referred to in Mr Shackle's paper should be deleted from the Charter. MR VIDELA (Chile): I entirely agree with the proposition put forward by the Canadian delegate. I also agree with the suggestion made by the Chairman, that in case there is something to discuss in relation to this matter it would be preferable to discuss it along with Article 26; as it is 4. B.1 B.2 E/PC/T/C.II/PV/9 intimately related to the question of state trading. MR.LECUYER (France) (Interpretation): Mr Chairman, may I support your suggestion that public works contracts are a very delicate and very difficult question? They involve the state and they make it necessary to create special conditions of allocation of contracts: They also in some degree, although it is not always obvious, involve the security of the state. On the other hand, it is obvious that these contracts are limited; it is clear that any enterprise cannot be entrusted with any work - any enterprise of any country. In those circumstances believe it is preferable to reserve the position on this question at least on this Article , MR HAWKINS (USA): Mr Chairman, I would be agreeable to deleting both provisions referred to in the first two paragraphs of the British draft I am not agreeing to that because I think it is necessarily desirable from a policy standpoint to leave the subject uncovered in the Charter but nerely because of the difficulty we are having in trying to find any solution to it; and I do not think the importance of the subject warrant the amount of confusion it is creating. There is one suggestion which I have, which is entirely. tentative and offhand and occurred to me white the discussion was going on on the other side of the table, which is this. There is a field there with which we are having difficulty now - trying to formulate provisions. It would be desirable that the Trade Organisation, when it gets established, should look into this whole matter. I have not had time to. look through the Charter-to. find out, but I wanted to be quite sure whether it Would clearly come within the functions of the Organisation, and, if not, to include some provision that the Organisation should give attention to this and. formulate some rules of conduct for dealing with it. B.3 E/PC/T/C.II/PV/9 MR McKINNON (Canada):. Mr Chairman, I think we would be very glad to support that as an alternative to our own suggestion. I am doing it on the presumption that presumably. Mr Hawkins had in mind both provisions, the contract one out of Article 8 and the.prourement.by the governments out of 9. MR HAWKINS (USA): And could I add that my suggestion is not necessarily that there be a clause inserted covering it but as to whether there is any general clause which clearly brings it within the scope of the Organisation. MR ADARKAR (India): Mr Chairman, the Indian delegation would be quite happy to see these two provisions deleted, for the reasons given by you and the delegates of Canada, Chile and France. The further suggestions made by.Mr Hawkins that if necessary the functions of the I.T.O. should be amplified so as to bring a study of this question within the scope of the I.T.O, would also be acceptable to the Indian delegation. MR SHACKLE. (U.K.): I think that both suggestions are agreeable to us, provisionally. It does seem to me, on a small point, that we shall have to be very careful about the drafting, for the sort Article I mentioned before, because I.do not think that mere relations will-cover the point, and I think that also applies to Article 26, because there you have some wide words which introduce ït, and when one talks of public works it is clearly a mixture of supply of goode and supply of, services. Those are points. which no doubt the rapporteur will have in mind in drafting it. MR GUERRA (Cuba.): We are agreeable to the deletion of these. two sentences in both paragraphs and also to the suggestion of Mr Hawkins.. THE CHAIRMAN: Then, gentielen, I think it is agreed that we delete these sentences. We will ask our rapporteur to write out a memo. giving our reasons for deleting them, which 6. memo should be set to the Committee on technical questions and to the Chairman of Committee II, so that it can be dealt with when we, have the main meeting. Perhaps the repporteur could draw attention to paragraph 4 of Article 64, which reads: "The Commission on Commercial policy shall have the following functions: To develop and. to recommend to the Executive Board programs designed to further the objectives of the Organisation in the general field of commercial policy, including co-operative projects of a technical nature in the field of commercial policy." Perhaps that could be adddor something like that. I think it would be best to cover it here. It should be covered somewhere. 7. E/PC/T/C.II/PV/9 THE CHAIRMAN: is that agreeable to you, Gentlemen? (After a pause:-) Then it is so decided, Gentlemen, on Article 8 the only question that remains is that that special paragraph should be discussed later on, That is the one on which the Cuban delegate asked for time to discuss it with his delegation. It is the first part of paragraph 2, to which we shall refer at a later stage, unless the Cuban delegate is prepared to finish with that this morning., I understand the Rapporteur has not had. time to discuses that with delegates, so that I think it would. be better to defer it till tomorrow morning, if the Meeting is agreeable, Then, Gentlemen, having cone everything we can today to Articles 8 and 9, I think we now - Mr GUERRA (Cuba): Mr Chairman, I Just want to mention that it would be proper at this time to remind this Subcommittee that, apart from this question of paragraph 2 to which the Chairman has just referred to, we had an amendment intended to be inserted in this place regarding the general application of the most- favoured-nation clause, We agreed and we declared the other day that we agreed to let this matter at this stage stand over In order to include an amendment in a more general way, and that pending the final decision taken on that amendment when it i- discussad, we reserve our decision in regard to the final form of this Article 8. Mr McKINNON (Canada): Mr. Chairman, it does seem rather a pity to have spent so much time on Article 8 and still leave itfor con- sideration, if I understood the delegate from Cuba properly, at some later date, probably In the full Committee or elsewhere, We seem now to have agreed, subject to the conference between the Ouban delegate and ourselves and the Rapporteur at noon; we seem to have been able to arrive finally at a wording of the most- faoured-nation Article that is pretty generally acceptable, even though, in order to achieve that, we had to make very considerable amendments and add certain exceptions, such as the clause that we debated so long yesterday. If the Ouban delegate were prepared to E/PC/T/C.II/PV/9 go ahead and discuss his amendment this mornings, I submit it would be in the Interests of time if we should do so, THE CHAIRMAN I should like to say that I am in entire agreement with Mr McKinnon on this point. We should try to deal with all the problems in the logical order and not leave things over and have to return to them again at a later stage when we think we have done our work, So, if the meeting is agreeable to that, I would like to discuss now the Cuban amendment at this moment. MrGUERPLA (Cuba): I perfectly understand the position taken by the delegate from Canada. Perhaps I may now attempt to give some clarification of the amendment and the reason for the procedure. that we suggest, As Mr McKinnon has said, we are in agreement as to the final form of paragraphs 1and 2 of Article 8 which have been approved here, Our amendment 18 not going to change In any sense the draft that we have agreed to. It is merely directed to adding a new paragraph, It is directed to granting to the countries under the most-favoured-nation treatment fair conditions of competition with other countries with regard to labour conditions, dumping and very low standards of employment and to protect countriesh Its purpose is not to make the most- favoured-natlon clause of no application, but to give countries the rlght to put the question before the Organisation In order that the Organisation may determIne whether unfair competitIon is really injuring the country that makes the application, As the amendment is of this nature, we thought, for precisely the reason to which the Chairman has referred - that we should try to proceed with our,"discussion In a reasonable order - that we should leave this amendment, and it may be possJble to insert the amendment under Article 29 of the Charter among general exceptions, not only covering the most-favoured-nation treatment but alo, It may be, applying to the granting of other concessions under the Charter, As I have explained, the amendment does not change the dratt already agreed to In paragraph 1 and 2; it only adds an escape 9. PAE C-3 E/PC/T/C.II/PV/9 clause given a country which is injured a right to apply to the Organisation with regard to fair competition. I repeat that we thought that the more appropriate place for this would be in Article 8 under general exceptions, rather than as an amendment to the provisions of Article 29. We think this should cover not only the most-favoured-nation treatment but also other concessions granted to other countries under the Charter. If after this explanation this Subcommittee think It better to discuss the question here and now, we will accept that decision, though we think it would be more appropriately placed elsewhere . Our reservation of the position is due to the fact thet we consider that amendment to be a very lmportant one, I mean the right to apply with regard to the Injurious effects of concessions given under the Charter. We think most- favoured-nation treatment as applied In relation to the proposed reduction, and elimination of preferences is very important for us, and that is the reason why we made the reservation In regard to this Article 8, subject to the final decision on our amendment at the proper place; but we will agree to any place at which the committee think it would be more proper to discuss that amendment Mr McKINNON (Canada).: Mr Chairman, it may be that the discussion is somewhat pointless in that the Cuban delegate has not referred to the actual amendment or additional clause that he has in mind; but if it is the clause contained In paper E/PC/T/C.II/16 of October 28th, and I presume it is, then I think we should discuss-- it now. That clause in its present wording would give my country the most complete escape from any obligation under the Charter, in that I doubt if we should be required under this to give favoured-nation treatment to any country ln the world, with the possible exception of one or two. But we are not seeking an- escape clause of that nature. We have already got a very large hole in the escape clause 29, I cannot emphasise to strongly that this would lotus out of livIng Up to any obligation under the Charter. 10. Mr GUERRA (Cuba):Mr Chairman lI have to apologize to the Sub- committee for being responsible for this sort of confusion created by this amendment of ours. Mr .McKinnon is right, He referred to the amendment proposed .under (a) of the document E/PC/T/C.II/16, that, blue paper in which we originally expressed our amendment : We did not have time to circulate or give to the Secretary for distribution, the amendment we have thought proper In substitution for the one to which he has referred just now, Originally we had thought of this amendment which we thought to Introduce under Article 8; but after the general discussions that took place in the general and full committee meetings, we realised the trend of the documents referred to by different delegates in the committee In regard to the too general nature of the effect of this clause as proposed, In our amendment: that it world really to a very great extent render practically inoperative the most-favoured nation clause, For this reason we felt that this amendment in its original form would not be acceptable to the Committee or the Conference as a whole, and would not really be justified either in such terms, Therefore we thought we would change our amendment and propose a new one, and that is the one that I apolo- gize for not having been able to hand to the Secretary so as to have copies typewritten and destributed. Considering the too general effect of .this escape clause In the original form that we proposed, we substituted anew one which would male the appli- cation of this same idea much more restricted, Our-original proposal was: "In order that any member may enjoy the most favoured Import tariff granted to another member, it shall be necessary that any such member maintains wages, working conditions and social insurance benefits for its labourers similar to those of said other member", We have substiuted for that one of a much more restricted character, Iln the sense that lts aim is only to grant to any country that feels that in a particular case the operation of the most-favoured-natlon clause in putting them 11. PAE J-5 E/PC/T/C.II/PV/9 on the same level as they were under the most-favoured-nation clause is unfair to right to apply to the Organisation to determine that the unfair labour conditions that obtain in a third country are having an Injurious select on the trade of the country making the application, I realise the close relationship that this has to the countervailing duties against dumping; but the. question is more complicated, because the countervailing duties constitute. a method that may be appllied by the country that is lmrporting as against the country which is exporting to them goods produced under unfair labour conditions, We are attempting to deal with the case which is not the importing country but which in its exports. is injuriously, affected by the competing exports of a third country which produces for export goods manufactured under unfair labour conditions, That exporting country will need to be protected against unfair competition by stops. taken by the importing country, Therefore countervailing duties could not be contenplated because It would involve action taken by a country other than the country which is injuriously affected by the unfair competition, we thought the only way to make such protectIve action possible was by putting lnto the Charter aclause which will, In the first place, give the country which is alleged to be suffering those injurious effects in its foreign trade the right to apply to the Organisation for enquiry and exam- inatlon by the Organisation as to whether these injurious effects are actually taking place,. and, secondly, to Impose some 'obliga-; tion on the Importing country to stop it, it may be with regard to the application of the most-favoured-nation clause or some other concession that they may have granted to that unfair competitor. That is a reason why we thought the proper place to put the amendment would be under general emergency provisions- We. should remember that Article 29 contemplates some kind, of injurious effects, and it gives, for in stance, an importing 12. PAE G-6 Country the right to discontinuo concessions granted previously E/PC/T/C.II/PV/9 when its domestic industry is suffering from too great an outflow of goods from another country. This escape or emergency provision is rightly not made of general application, but under certain conditions when these injurious effects are taking place, It covers perfectly the possibility of defence by an Importing country against the kind of competition to which we are referring from Another country against. its internal industry; but it does not cover at all the defence. Of an Exporting country which is compet- ing in a market. That is the purpose of our amendment. While it is only fair that importing countries should be granted. under emergency conditions the right to prevent injurious affects to their own industry arising from too cheap imports or too great an amount of imports, so also we think it is only right to grant the same right to exporting countrIes which will be injuriously affected in their report market by other exporting countries, Therefore we thought the proper place in which to put the amendment was under those general provisions and not under Article 8, We have here several copies of our substi- tuted. amendment, Unfortunately there is not a sufficiently large number of copies. THE CHAIRMAN: Before we dIstribute that, we might have a more general discussion on of this point, because I myself have a few remarks to make on what you have just said. . D. 13. D.1 THE CHAIRMAN: Before we go any further, there is a suggestion that we should adjourn now and re-aseemble in Room 243, as it is quieter there. (The Committee then moved to Room 243.) As I said after the American delegate gave his views the American delegate gave his on the Cuban amendment, I would like to say that I Join very strongly with Mr McKinnon and share his opinion that to have an amendment in this way put in somewhere in the Charter would perhaps open the way even to abuse. At first hand my own opinion is that you would, never have just one country suffering from the type of competition mentioned by the Cuban, delegate, and in that case the escape clause of Article 29 and certainly also paragraph 2 of Article 55 should be sufficient to cover this case. Perhaps should look at paragraph 2 of Article 55 more closely in this connection, I would very much prefer myself to have it dealt with in that way rather than having special con- sideration of it, because I think other countries may come up against the same sort of thing. Therefore I repeat that I join with Mr McKinnon in his opinion expressed here. Perhaps we could hear from Mr Hawkins on the subject now. MR HAWKINS (USA): Mr Chairman, I have not a greatdeal to add to what-has been said. I think I understand the Cuban delegation's idea and the reason behind it. I think that a Charter of this kind should contain provisions which would deal with the subject, I Should like to say, however, that the way in which it is dealt with is of very great importance. An exception to the most favoured nation clause- would leave the door wide open to abuse; it would virtually. destroy it. I do not think that any automatic action would be safe. I would like to call attention to two draft provisions, one of which has just been mentioned by the Chairman, that is, Article 55(2),. and another one which has been put in a draft of a sub-committee of Committee 1, 14. D.2 E/PC/T/C.II/PV/9 and which, when I read it, I thought was very likely put in at the suggestion of the Cuban delegate, though I do not know whether that is so or not. I would like to read that provisions The Drafting Sub-Committee of Sub- Committee I. has included in a draft on employment a paragraph, numbered four, which reads in this way: "Each. member, recognising that all countries have a .common interest in the maintenance of fair labour standards, related to national productivity, agrees to take whatever action may be appropriate and feasible to eliminate sub standard conditions of labour in production for export and generally throughout its jurisdiction." That draft, if it were adopted, would place upon each member the obligation to take whatever action may be appropriate or feasible. That provision, if adopted, in conjunction with paragraph 52 of our draft, if adopted, Would seem to me to provide the sort of machinery needed. It would permit and in fact., would require an investigation of particular circumstances where exploitation of labour was creating difficulties for another country. Presumably, however, the first step would be positive measures to correct that. I suppose that is what the Organisation would first try to do to remedy the situation by seeking to put an end to-exploitation. If, however, the country concerned failed to respond and to co- operate in putting an end to the exploitation of its labour which was causing difficulty to another-country, there-is paragraph 2 of Article 55, under which the Organisation, in the light of those circumstances, could suspend or set aside any obligation of any member with respect to imports from that country. Now, the authority in Article 55 is as broad as the chapter, chapter IV, so that it could set aside any provisions, and take action with respect to quotas, tariffs, or whatever seemed most effective. It seems to me that those 15. two provisions together might possibly go some distance E/PC/T/C.II/PV/9 D.3 towards meeting the Cuban delegate's viewpoint. Positive. action to move the clause of difficulty would, I assume, be action taken under the full employment section, always with the possibility of a sanction if the remedial measures did not work. MR GUERRA (Cuba): Gentlemen, as I see that ive have shifted from the original point which caused the discussion of the amend- ment itself, perhaps the secretariat would distribute copies of our amendment among the delegates. THE CHAIRMAN: Perhaps this clause could be read. : (The Cuban amendment was then read, as follows:.- "In any case of unjustified sub standard.labour conditions in a nation creating, in regard to one or more specific purposes, unfair competition in the international markets, the member nation which considers itself thereby injured can request from other member nations the denial or the suppression to the said nation, in whole or in part, of any advantage, favour, privilege' or immunity , demanded or enjoyed by it in accordance with the provisions of Chapter IV of the Charter. If the request of the injured country is not accepted, it shall have the right to submit the case to the Organisation, which shall investigate it and decide whether or not the said advantage, favour, privilege or immunity shall be granted or maintained in whole or in part.") MR GUERRA (Cuba): Mr Chairman, as delegates have been able to hear, in our amendment we have gone a very long way back on our original position. The reason for that, to which have already referred, was the fact that as it was worded before It was open to abuses, as the Chairman pointed out; and, as I said, it would make the most favoured nation clause practically. inoperative in many cases. In this connection I would like to refer again to the remarks made by the Chairman. In the first place, we think that the amendment as it stands now will not be open to such general abuse and will not leave the door so open for making. inoperative concessions granted at different times under the Charter among the different countries. The amendment as, 16. D.4 E/PC/T/C.II/PV.9 it is now is very modest. It is directed only to giving particular member nations injured in their international trade by unfair competition of this specific kind the right to apply to the country adopting those methods the conditions here laid down, that is, the cancellation of any condessions that may have been granted to it previously. The amendment is so modest that in fact If that application of the member concerned was not accepted, the only action provided for than is to submit a case to the Organisation or investigation and decision as to whether or not the said position should be maintained or not. The Chairman in is remarks mentioned.many different causes or reasons that could be invoked lor trying to carry on abuse of this kind of escape clause, but in this connection.I would only say that there is a very specific reason for these sub-standard labour conditions being considered within the general framework of the Charter. The Conference itself and the Charter is supposed to deal not on-ly with trade but with employment. As a result of the important place which it was found the employment problem was taking in the general discussions in the Preparatory Committee it was found that the setting up of a special committee to deal with that was justified, and- that it should set up a whole chapter of principles referring to employment. This question is not-an end in itself but a means toward increasing or raising the standard of living and the general condition of employment and well-being of the people of the world. We feel, therefore, that if we are going to facilitate world trade at the cost of betraying the real purpose that that expansion should seek, which is to raise the standard of living, our work will be of no avail. We find ample justification, therefore,. for drawing attention to sub standard labour conditions and 17. excessive exploitation of human labour as being totally improper means of expanding trade in specific cases, and as being against the spirit of the charter. This is only an emergency matter. It will be taken not in a general way but in specific cases regarding the countries where these conditions are found to be in e existence. In the second place, under the amendment the final judgment as to whether the injurious effects are really taking place and are really due to the existence of those sub-standard labour condi- tions is put in the hands of the Organisation. We have given a great deal of thought as to the proper place and the proper. machinery to accomplish this aim, In this respect we are not at all particular and we are not insistent regarding the place i-n which we have thought lt proper to put the amendment, or as to the drafting of the amendment lt self and therefore the machinery and the procedure that should be finally agreed upon in the Charter; but we feel very strongly that if the Charter in different places which have been mentioned several times - Articles 29 and 55 (2) - makes an emergency provision for any country whIch is suff erlng injurious effect from unfair oompe- tition of any kind when that country is the importer and gives it the right to protect its internal industries and economy,' which is in several different places recognised, then there is no real reason or Justification for not offering the same possibllity of emergency provision when an exporting country in regard to its industrial export is suffering the same kind of Injurious effect, Therefore we feel very strongly that the Charter in some form should make provision for this. As. I have said before, we have given a great deal of thought to theproper place and the proper form in which to provide for this, In this connection I should, refer to different places that have been suggested a In the first place, we think; that to include some provision of this kind within the general section dealing with employment problems will be faced with two difficulties: in the first place, that general sections, as far as we unde. nd them, are only state- ments of general principles practically all of which are directed to establishing moral obligations in each particular.country regarding the maintenance of fair labour conditions or the suppression of unfair labour conditions. But we know by, long' 19. E-2 E/PC/T/C.II/PV/9 experience and we expect all the other, countries have had the same experience - that the chance of enforcing in any effective way these moral obligations that the countries have undertaken under the general, employments conditions to enforce is very small; that it is very difficult to contemplate the possibil- ity of any country accepting the intervention of the I.T.O or of any other Organisation in trying to establish withIn that country's frontiers proper labour conditions , Therefore, while these moral obligations are a sound bAsis In another place for the establishment of proper machinery for dealing with the- problem, those moral obligations do not in themselves provide other countries with a guarantee. Regarding the questions that arise on Articles 29 and 55, the difficulties are of a different character We.are not try- ing to suggest that there is no possibility of amendment or drafting such ArtIcles in a way that will make it possible to establish procedure and machinery to deal with this problem; but as both Articles stand now they provide for methods of defence by a country which is suffering from that kind of unfair competi- tion when that, country is the Importing country against exports that are pouring in from other countries, Articles 29 and 55 refer to the waving in exceptional circumstances obligations of members undertaken In pursuance of other Articles. That does not afford any ground for doubting that the waving of exceptional obligations only give's to a particular country the right to with- drawany. concession that it has given to other countries; it does not provide at all for putting on a third country obligations to withdraw, from the other exporting competing country any concessions under the Charter.' Sir, as I have said before, we are not particular about the place or the form in which the principle may be set up and the Machinery provided. We are inclined to think there is a great 20. E/PC/T/C.II/PV/9 deal inwhat Mr Hawkins said before about the possibility of re- drarting some of these Articles in such a way as to provide the necessary machinery;. but we repeat that we consider, in the first place that our amendment as it stands now does not at all provide wide open door for escaping from the obligations of the Charter, It gives somebody a right to make a specific request in a specific case, leaving in the hands of the Organisation the final decision. In the second place, the Charter provides in several different places for some kind of protection in an emergency situation for lmporting countries, and we see no reason at all why the same sort of protection, if it is justified In special circumstances, should not be given to countries which are suffering such Injurious effects not as importers but as exporters competing in the world market., (Canada) Mr McKINNON: Mr Chairman, I ask your permission to withdraw, Mr Deutsch will take my place. THE CHAIRMAN: Yes, I appreciate that this is an important question, but I will ask delegates to be as short and concise as possible, because it is already 12.15 o' clock and we still have to reach a decision, I would also like to suggest this as a guiding thought in this matter: I feel very strongly that when enterIng into this agreement we cannot hope to cover every emergency. What we have to look for is the possibility of action against certain abuses, with proper escape clauses if a country feels itself severely affected, The third point I want to make is this: if I have rightly understood. the delegate for Cuba, the object is not to lay down a rule which will apply only to one special country. This is a world problem and we have to find a more general solution in which several. countries will combine, I should like to get some guidance from you as to the further discussion of this problem, 21. E/PC/T/C/II/PV/9 SENOR DON HUNBERTO VIDELA (Chile): I am sympathy with the proposal of the Cuban delegation.I am looking at the draft clause which has been circulated: "(4) Each Member recognising that all countries have a common interest in the maintanance of fair labour standards, related to national productivity, agrees to take whatever action may be appropriate and feasible to eliminate sub-standard conditions of labour in production for export and generally throughout its jurisdiction." Besides this instance, I must refer to Article 11, anti-dumping and countervaIling duties, because when this Article was under dis- cussion I pointed out that this matter was in intimate relation with what 16 called by economists the relative disadvantage of production. At this point we have arrived at a very complica- ted problem, that is to say, the position of the undeveloped countries as opposed to that of the industrialised countries; that is to say, we have to take into consideration the andicap from which the undeveloped countriessuffer as compared with the industrialised countries; and as I listened attentively to the luban delegate, I was thinking of a particular point. For instance, Chilean nitrates are extracted from the ground, while the competitive and like product is extracted ,from the air, I. refer to this as an example of the relative disadvantage of pro- ductlon, and among other products we find examples, similar to that; for instance, coal. When I was in Pennsylvania I could, see that the coal was just under the surface. Indeed where I was living one could even lear the knocks made by the underground. workers. Comparing American coal with coal extracted in Great Britain, for instance, or on the Continent, I have a very inter-. esting book issued by the Stationery Office in connection with the competition of cool among Important countries, and one can see that while in the United states they require one man, in another country they may require throo. That is one point. Referring to the particular point as to nitrate extracted from the ground, 22. you may say that we need ten men Instead of one in order to PAE E-5 E/PC/T/C.II/PV/9 extract the same amount of nitrate in order to compete with the synthetic. I have heard before in this Committee discussion, of the sane point, and I remember that the central conclusion war that in order to equalise the standards of life in the world we shall need to go by. degrees, No undeveloped country can maintain - its exports if they have to fulfil the condition of equalising the standard of life. I think I should refer to this point, although I entirely agree with the programme of this Conference relating to employment and social welfare and in particular with the position presented by the Ouban delegate, Mr. ADARKAR (India): Mr. Chairman, the Indian delegation have some -diffculties in accepting the Cuban amendment, I am looking at this problem mainly from tho point of view of the Asiatic countries against when this allegation of unfair labour was very often made in the past, and I am affraid that If this amendment in the form in which it is presented goes through, the Aslatic countries in particular will be exposed to the gravest discrimin. ation. The effect of the Cuban amendment is broadly this, that the I.T.O. will have no occasion whatever to Investigate the matter if the country which makes the complaint is able to sour. the consent of the country which gives the most-favoùred-nation treatment, and no opportunity whatever will be given to..the country against whom the complaint is made to defend its conduct. The first sentence of the Cuban suggestion reads broadly like the that in any case in which there is this allegation made, the Member nation which considers itslef thereby injured can request from any othor Member nation the denial or suppression of the most-favoured-nation clause in whole or ih part or any privilege, favour or immunity. 23. F.1 We suggest, Sir, that that is a position which is rather F.1 E/PC/T/C.II/PV/9 unhappy, because the country against whom the complaint is made should have an opportunity of defending its conduct, and from that point of view- we would proper the sort of pro- cedure which has been outlined by Mr Hawkins. In the proposal made by Mr Hawkins we see a further advantage, namely, that in the amendment which has been circulated fair labour standards have been related to national produc- tivity. There is a great point in that particular phrase. We think it is wrong to suggest that workers in.all countries should receive the same wage. A wage (including in that expression the ordinary rewards of labour) has to be related to labour conditions, and it has to be related te national productivity. A distinction must be made between a wage which is fair in relation ta national productivity and a wage which is fair in comparison to the wagon paid elsewhere. To pay a wage which is lower than is warranted by the national productivity, which is the general average productivity of all industries in the country, is exploitation, but no exploitation le involved if the wage paid is duly related to the national productivity, even if it happens to be lower, perhaps much lower, than the wage paid elsewhere. So I would statebriefly that a distinction must be made between the productivity of a particular industry and the productivity of a country as a whole. Until the Asiatic countries reach a certain level of productivity it cannot be practical to them to offer wages and other social benefits comparable to the wages and benefits paid by other countries which have attained a higher level of national productivity. We would therefore suggest, Sir, that this matter is very complicated and it would be best to leave it to be settled in the manner of either procedure outlined by the United States delegate. I would say, Sir, that if the I.T.O...is to authorise each member nation,. even wit out conducting an investigation itself to bring charges under the most favoured nation 24. F.2 E/PC/T/C.II/PV/9 clause that may result in a position in which each member nation would be deciding matters which ought properly to be dealt with by. an international organisation like the I.T.O. As you rightly pointed out, Sir, this is a matter which is of interest to all countries, and therefore it should be dealt with properly on an international-level fïrst, before any individual member takes action. That is all I have to say, and therefore I strongly support the suggestion that this matter should be dealt with under the employment clause, and .the pro cedure should. b more or less in line with that put forward by the United States delegate. MR LECUYER (France) (Interpretation): Mr Chairman, if we wish to settle this very difficult and interesting question we should look at facts and at the intention of the Cuban'delegate, Of course, we cannot think of an equalisation of the standards Of living in various countrIes; at least, we- cannot take that as a starting point. It is obvious that if an agreement is achieved under the Charter the standards of living will be very different, not only as between the various countries but also within those countries: for example, it is to be expected that the standard of living. in Senegal will not ??? a long time be the same as that of France. Therefore Cuba contemplate the differences which may occur subsequently, and what is contemplated by the Cuban delegation here is not the progressive evolution which the Chilean delegate pointed out, and at which we all aim, but what is to be feared here is the action of a country which, in special circumstances and in order to facilitate industrial expansion or another kind of expansion, would. maintain standards of living which would-be far different from those which existed at the time, and would be reduced in a sudden and unexpected way, either on account of the. voluntary action of the country concerned or on account of an 25. F.3 E/PC/T/C.II/PV/9 accident even. Therefore an emergency provision should be inserted in this Gharter. There are some emergency provisions in this Charter, but I agree that they are 'not sufficient; they cover only injuries arising from excessive imports. But I believe that the interests of exporting countres should be protected against injury, and I think that a clause .along the lines suggested by Mr Hawkins would. cover the point of view of the Cuban delegation and at the same time would not present the disadvantage of being as general as the Cuban proposal.. MR ALAMILLA (Cuba): The French translation was not accurate, Mr. Chairman. The French delegate ended by, saying that export goods should also be covered, although in a more general way, in the suggestion of Mr Hawkins. MR SHACKIE (U.K.): I would only say that I would support the. general lines of the solution suggested by Mr Hawkins, but I feel that.that is about as far as we can reasonably - hope to go in, reaching a solution of this problem. MR DEUTSCH (Canada): Mr Chairman, I think there is much force in what the Indian delegate has said about the difficulty of, implementing the proposals of the Cuban delegation in those words. We would strongly support Mr Hawkins alternative method of dealing with,ït.- Inthis connection I would like to. refer the Cuban delegate to Article 30, where wide latitude is given to the Organisation to. consider almost any type of complaint by a member country. The second. sentence begins: "Moreover if any Member should consider that any measure adopted by any other Member, whether or not it conflicts with the terms of this Chapter, .has the'effect of nullifying or impairing any object of this Chapter, such other.Member shall give sympathetic considera- tion to such written representations or proposals as maybe, made with a view to affecting a mutually satisfactory adjust- ment of the matter. If no such adjustment can be effected, 26. F.4 E/PC/T/C.II/PV/9 either Member shall be free to refer the mattcr to the: Organisation, which shall investigate the matter and make appropriate recommendations to the Members concerned." That is a very wide clause. It would admit any type of complaint, as far as I can ase, and get it before the Organisation for consideration, which I think is the main object of the Cuban proposal. MR GUERRA (Cuba) I would like to make one or two remarks to qualify some points put forward bythe different delegates.' In the first place, I would like to point out that the French delegate was very correct in saying that we do not think and we do not intend it to be thought that this amendment. calls for a general equalisation of wages and labour. conditions; we start from the fact that different countries have different labour conditions. As I explained. before, we contemplate an emergency provision It is easier to understand our position when you consider that we are facing negotiations directed towards lowering tariffs and for certain countries it means giving up readily the preferences they enjoyed before; and we are in fact contemplating not an equalisation now of the labour standards for all countries but just. an emergency action directed - towards preventing particular .injurious. effects derived from the fact that a country may take advantage of the new situation that will be created regarding the tariff and other trade arrangements that are contemplated for increasing-their. exports, not on the basis of more productivity nor on the basis of more technical developments but just on the specific. basis of unfair labour conditions. I want to call the attention of the Committee to the fact that we had in mind very clearly the point raised by the delegate from.India. Maybe we; have not been successful in fiding the right word, but when we put in the words "unjustified sub standard labour conditions" we certainly had in mind the lack of . relationship between labour standards a particular F.5 E/PC/T/C.II/PV/9 industry and general productivity. That is the meaning of the word "unjustified"; and therefore we think the, point raised by the Indian delegate is not correctly stated here in that way. ' I would like to repeat and if possible make clearer the reason for this amendment by calling the attention of the Committee to the tact that the Charter, in some other place, refers-specifically to the necessity of not exporting unemployment to other countries; and we think that if a country, without any relation to its general labour condition; or its productivity, chooses to take .advantage of the new situation that will be created by the coming negotiations to, increase its exports on the basis of lower wages and exploitation of labour, and thereby injures other countries, there will be a case of the exporting of unemployment, and that is something which .ought not to be contemplated. Such inhuman exploitation can only result in the curtailment of employment in other countries. The Indian delegate referred to the possibility of dealing. with this matter in a one-sided way without any previous decision by the organisation. Maybe our mistake in regard to this particular point was due to the fact that there are some provisions in the Charter which are directed towards protecting importing countries, The draft of the American delegation allows for the importing countries first to take action on their own account and then to report the case to the Organisation. Finally, we would like to say that a representative of the British Government has made a s tatement recently, which lends weight to our position in this matter in the sense that it ratifies the general idea that the interests of exporting countries and their protection against the use of 28. F.6 E/PC/T/C.II/PV/9 sub labour standards should be dealt with by the International Trade Organisation.This is from a statement by Sir Stafford Gripps regarding the future of Japanese industries: "His Majesty's Government are fully aware of the damaging effect which low prices Japanese competition had on our export trade in many fields before the war. This competition derived much of its effectiveness from low labour standards and from Government manipulation of exchange, subsadies and other methods which can be regarded as inconsistent with proper commercial standards. It will be His Majesty-s Governments policy to endeavour ti eliminate such unfair competition not only in Japan but wherever it arises by international agreement and in any way which offers." That goes to show that the general idea we have that: this matter should be dealt with in àn organisation directed to regulating international trade is a proper subject matter to be taken into' account; and more so when the same question has already been contemplated in the Charter, when that- unfair competition affects the general industrial or importing- countries, Finally, I have only to say, as I said at the. beginning, that we are not convinced at all that our amendment as it has been drafted is correct or that the machinery that we contemplate is the proper one. :We would appreciate it if theUnited states suggestion could be put in a. concrete form so that we shall be able to see in what way we could deal with this matter and be able to make a final decision with a view to the concrete formula-that the American delegation may propose. . . PAE G-1 E/PC/T/C.II/PV/9 THE CHAIRMAN: Gentlemen, before we adjourn I think I May state that we have made much progress on this very important and difficult problem, I would now like to invite our Rapporteur to see whether there is any change to bo proposed to discuss alterations with Mr. Hawkins, and take into consideration Article 4 where we have that new addition, perhaps Article 11, countervaillng-clutles, and Articles 29, 30 and 55 (2), I think that is the whole position and we can discuss that once more and see whether lt meets the delegates' points to their satisfection. I only want to say one thing with regard to unjustified labour standards and conditions: I still feel that unjustified labour conditions in certain nations can only be judged by multJlateral consultation:. and not unilateral consultation, I think that is the main point which should be taken into account here.. Mr GUERRA (Cuba); Yes, that is the polnt of- view of the Cuban delegation. THE CHAIRMAN: I see we shall have a meeting of full Committee Il on Thursday morning and that it will be possible for us to meet tomorrow af ternoon at 3 o'clock, oS I hope our Rapporteur will be able to give us then a form of words which will be agreeable to all the delegates, The meeting is adjourned to tomorrow afternoon at 3 o' clock, and if possible we shall deal with Article 18. I would like you, lf you have five minutes to spare when you prépare for this meeting, to read through the summary of our Chairman, Mr Coombs, on page 16 of papar E/PC/T/C.II/PV/7, Those are the minutes of our meeting containing the pointe discussed by our Committee. (The meeting rose at 18 p.m.) 30

GATT Library

rw504sm7131

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Tenth Meeting of the procedures Sub-Committe of Committee II held in Room 243, Church House Wesminister, Tuesday 12th November,1946 at 10.30 a.m

United Nations Economic and Social Council, November 12, 1946

United Nations. Economic and Social Council

12/11/1946

official documents

E/PC/T/C.II/PRO/PV/10 and E/PC/T/C.II/PRO/PV/8-11

https://exhibits.stanford.edu/gatt/catalog/rw504sm7131

rw504sm7131_90050504.xml

GATT_157

E/PC/T/C.II/PRO/PV/10 UNITED NATIONS ECONOMIC AND SOCILL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL COFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the PROCEDURES SUB-COMMITTE OF held in Room 243, Church House Wesminister, Tuesday 12th November,1946 at 10.30 a.m. CHAIRMAN: DR A. B. SPEEKENBRINK (Netherlands) (From, the shorthend. notes of W.B. GURNEy, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.I.) 1. B.1 E /PC/T/T/C.Il/PRO/PV/10 THE CHAIRMAN: The meeting is open. we have before us a report from our Rapportour respectIng: Articles 18, 29 .and 30, which should.cover the previous work of' this.'committee with regard to these Articles. I suggest we start with Article 18, because I think the othor two .Articles, 29-and 30, have to.be. road in conjunction with Article 18.: I do not'. know; whether. everybody has had time to road -the report through carefully,, but.plerhaps we could ask the Rapporteur to explain it to us and to drawc.w attention to special passages of his report to see whether we can vwcct with the new draft.w draf PPORTEURORTEUR: Article, 18 is reproduced iontirecntiraty. I thenk tho t wayst .1ae.towdoal ;ith it eill bc to siake it paragaph by raZrcpby h. The first sentence of the first paragraph has already beeniJ.rori.oana ' ae committee and is nittoo ahie -i mceelyereoproducce haro to- givo context. Thofollowing that illov;iub-paragraph sù-pc',rare'ae(a.). 'ehc toxt of tho U. e. draie f tgc Cllytor'orinina1J. provided that tional commitments nc.1 coriniton permitted to polinittod to st.ual.iaction.way orespect o vith rcspcteto tarif." proferences.' Theie proposed an amendment to . ricuncli.ronthis se effectto thd effoct that- this pldvision.ewunderstood u urequireod to existingthat existînX. intomationaJl obchanged exceptchannd oicapt by àgreemeet between thu eminated in toeniance atocl acecorermwith th- tonis of the obligations. - It are f*la by thelegatedian Diclo.at that t ms provision :ight tend to . gotiations ndZotiaeioeve eI beliovoetea Fronch Dologato, expressed .tho itirieemedthat e soonod to bo contradectory -of tho basgc undortakinZ. I ndmenttha ornndraon proposod be egateuban Dclcr;at was in general supported by.ingdomniteegate 3de Delcatc, the eustelaan Dologate nnd eIso tho Unitod Seates DeloGate:. Tho Uneted Seaeos Doledato cxplaineoethat the intont- ra.,sub-parrI.rphfrom), apwrt tror its vordieg,:wasgthat oxistini, internationals .soblîZatoonse,hoted nQt bc citod ae .a bar ts nôgotiationl, so that al1 oring ics odhorwouldtagrees wonegotiations noaotiato; c ite'wes not intondod to require that couetries violatc existing international obligations. 2. E/PO/T/C.II/PRO/PV/10 In the limt of that discussion tho Chairman summarised the, meeting by In the light of that discussion the Chairman summarised the meeting by saying that he felt there should be an undertaking that countries would noo,0tiato, that thoy would carry these negotiations, if satisfactory, inteottoot; but finally, that the results of the no negotiations, in so far as they would require the nodification or termination of existing obligations, would necessarily have to require. the consent of tho parties to thoso obligations, or termination in accordance with thoir terms In other words, there was not to be any violation of these obligations. 'In the light of that it is proposed that the mattor can be handled. by simply changing the word "action" to 'negotiations", so the rule would road: "Prior international commitrments shall not be permitted to stand in the way of nogetiations with respect to tarif prefereneces" An undertaking to negotiate does not seem to imply any violation -of existing international obligations. No county would be violating an obligations. no couintry would be violating an obligations by an undertaking to negotiate, and it is suggested to the committee that that might be a satisfactory resolution. of the problem. Before taking up the rest of this report, Mr. Chairman I think it would be better to have some discussion on that proposal. MR. HAWKINS (United States): It seems to me the amendment put in by the Cuban Delegate expreessec the intent. I think the reformulation also expressed it, but the proposal of the Cuban Delegate spell it out a. little more, and I wouId be perfectly really to accept the Cuban Delegate's formulation, which I would like to road. He put this in at the last meeting: "Prior international commitments shall not be permitted to stand. in the way of action with respect to tariff preference it being understood that this provision shall not require the termination or modificatoin of existing international obligations except by. agreement between the contracting parties or in accordance with the terms of such obligations." 3. B.3 E/PC/T/C. Il/PRO/PV/10 I would suggest that we adopt that language as stating clearly what . the intention is, thus disposing of the problem which it seems to me we may be complicating unnecessarrily. C1 E/PC/T/C II/PRO/PV/10 MR SHACKLE (U.K.): I should like to support what Mr Hawkins has Just said. Either of these text disagreeable to me. It seemed to me that the Cuban amendment in its 'original drafting exactly expresses the understanding we have had- of this matter ever since .last autumn, when.the proposals were- published, and when we said that we .were in substantial agreement with them. The Cuban amendment exactly expresses what we understood to be the eftect of the passage as it- tood in the proposal, and I should therefore be perfectly agreeable to accept the Cuban amendment. I could also accept the other one, but I think the Cuban one has the advantage of spreading the point out in full detail. THE CHAIRMAN: Personally, I would have no objection whatever to this, but I understood at the last meeting.Mr MeKinnon asked for some time to reflect on this. Has this further study resulted in something? MR BOWER (Canada): We have not had definite Government direction cn the point-. Mr McKinnon is convinced that we never could persuade our Government to accept the Cuban amendment. He is satisfied that the Rapporteur's wording would meet us much better than the Cuban amendment, because,or one thing, we would read something quite different into it, and we do not want it spelt out the way Mr Hawkins and Mr Shackle spell it out, because that is contrary -to our hopes for this paragraph l.a. We want to reserve freedom. iof action in the actual negotiations; we do not want to be hampered by anything. As Mr McKinnon puts it, we want elbow room to negotiate our rates with other countries without referring to third parties. When the negotiations are finished, we would then go to the third party and say, "This is what we are prc-posing to do"; and they will have done the same thing and we will be able to compare with them whese they have give' way and we have given way and accept or not accept the undertakings which we have made with theee third parties. We agree wïth the French delegate t-hat it is a contradictïon in terms to say that. "prior international commitments shall not be permitted to stand in the 5. C2 E/PC/T/C. Il/PRO/PV/10 way of action with respect to tariff preferences". We would substitute the word Iinegetiations" there, and we think it is a contradiction in terms is it is at present, saying', as it. does, that you must observe these prior internatiopaI commit- ,ments before you can negotiate. . MR SHACKLE. (U.K.): I should like to ask the Canadian delegate two questions. Does he not think that a text which is capable of being-read in different ways is rather objectionable and even possibly dangerous? That is my first question. My second question is whether the form of negotiation; which he. envisages all really not leau in the end to very .-much the, same result, because if we assume that a number of pairs of countries have negotiated independently different arrangements affecting preferences, surely at the end they will all need to come together, as indeed he said, and compare what they have done? Now, can we conceive that all that body .o agreements will come into force if they did not agree among themselves - the different interested parties - in what they. had respectivelyy done? Does it not therefore mean you would have to have a last stage of negotiation in which there would be, so to speak,- a balancing out process which in effect would come to the same thing as te 'procedure which would have to be followed in the Cuban amendment? I do not know if I maket that second point clear, but it seams to me in the last resort .you would be bound. to have a certain reconciliation of the different independent negotiation which would ultimately bring it to the same result,` by a longer way round. Those are my two-questions, THE CHAIRMAN:' I think the Canadian delegate should.answer that now, MR BOWER (Canada): I regret r am in a position te deal with -this only éecond-hand. Mr McKinnon and Mr Deutsch have between them spent a great deal of time on it, and I have not been present at all, those discussions; .however, I think I know 'their feeling fairly. well. I agree with Mr Shackle it would be unfortunate ii our version of what l.a. meant and the idea of other people 6. E/PC/T/C. II/PRO/PV/10 were to differ. We would make our understanding quite clear, however. It is that prior international commitments (other than those expressed in the words we prefer) shouId not be allowed, to stand in the way of way new arrangements we eight make with third parties. In answer to the second question, I quite. agree deal that the result would be the same, but it would be a great deal more difficult for us to reach it. Let me give you and illustration. Mr McKinnon is here now, Perhaps Mr Shackle. would like to put his questions again, and then Mr Mc Kinnon -could answer them. MR SHACKLE (U.K.): Certainly. The starting point was.the text which we now have in the Rapporteur s Repcrt on l.a.. On that I had said that I thought I could accept either but that I. preferred the Cuban text as spelling out in full detail what has been our understanding of the intention of this provision ever since the proposals of last December, in which we said we were in agreement. I understood the representative of Canada then' to say that if this wording asit stands in the Rapporteur's report were adopted it would be read by the Canadian Government in a different way from the understanding which we should have of the intention,of the provision I , then asked two questions. The first was whether the representa- tive of Canada did not feel that it was obJectionable ahd. possibly dangerous to have a provision which could be read in two entirely diifferent ways. The second question was whether the negotiating procedure which he had outlined, which consisted of a series of independent negotiations between pairs of countries which would only be brought together at the very last stage would not really lead to the same result as the .different. procedure which we envisage but would reach it by a more roundabout route, in that at ter you had had a complete . series of negotiations you would in the final stage have to re-open them ail ;in order to effect any necessary reconcilia- tions between them. 1. 'asked whether in these circumstances the representative of Canada really thought that there was 7. C4 E/PC/T/C.II/PRO/PV/10 advantage in the method which he proposed. That I think. was a paraphrase of my two questions. MR McKINNON (Canada): Mr Chairmin, My reply to Mr Shackle on * those points would be first, that we would prefer the draft shown on page 1 (I presume this is the document we are discussing); and that anyway prior. international commitments must not be permitted to stand in the way of negotiations with respect to tariff..preferences. We substitute tha word "ne-gotiations" for the word "actions" in the American draft. We would very much prefer that. to the one shown on. page 4 of the same document. I have little doubt, in reply to Mr Shackle' other question, that in the final analysis the n.et result may be very much the same. It is the matter of method that is chiefly concerned. We would have been very glad to take the draft as it stood in the United States document, namely, that "prior commitments shall not be permitted to stand in the way of action with respect to tariff preferences, That would have not contemplated for. one moment that there could. have been consultations with all other parties interested.in a particular preferential situation. We welcome the change suggested, namely, the substitution of the word "negotiations" for the word action, as giving elbow room for the purpose of negotiating. That again will entail at some stage discussions with the. others interested in the-particular preference or preferences involved. 8. . . D.1. E/PC/T/C.II/PRO/PV/10. But it does permit freedom to ,ahead to negotiate to see what the result arrived at looks like and hen o consult with he ohers who are concerned. Does that answer your question ? Mr SHACKLE (United. Kingdom): I think all I have to add is that I still feel that it is objectionable to have an ambiguous text, and I have the feeling, as I said before, that we should arrive. at the same result by a more round. about route. I am also not quite clear as to the implication of the suggestion made by the Canadian delegate as -to whether they would read this passage as having the effect of abrogating the prior agreemnents. If so it is clear that could only be done if all the parties to that agreement agreed. Ur McKINNON. (Canada): You used the words, "this text". Mr SHLCKLE (United Kingdom): The Rapporteur's text, yes. Mr McKINNON (Canada) : Your question was whether or not we would read that as abrogating the existing commitments in the form of trade agreements within the Commonvwealth ? Mr SEACKLE (United Kingdom): Yes. Mr HcKINNON (Canada): Thon the answer is, No. Mr ALAMILLA (Cuba): Mr Clhirman, I believe that we all have the same idea, and I believe that this iden is olea.rly stated "in our Amendment, his is what we say in our Amendment: "Prior international commitments shall not be permitted to stand in the w.y of action with respect to tariff preferences". Either one of the words mey menn the snme thing. Everybody who has a proforence would place it on the table in order to discuses it. Tho implication le that we are going to discuss this tariff which everybody wants to terminate, but they have to 'have a. compensation for that. Now suppose everything is placed on the table, then there is the problem of a third party who would not give their acceptance to it. ln that case are we supposed just to disregardl our international obligations and pass them over ? That cannot bc the case, and I think that the delegate of Canada has accepted that position. If that is so, then what is the logical thing 9. D.2.E/PC/T/C. II/PRO/PV/10. that will come about. What negotiations would take place with the third party to. soo if he would agree. That is covered by the words, "require the termination or modification of existing international obligations except by agreement between the contracting, parties. That is to say. we go to the third party and we try to get thoir agroement, They do not agree. Then what can we do ? We can terminate that agreement, which is in accordance with the terms of such obligation. The case is so clear that it cannot be understood in any other way, and that is what we are saying in very clecar and specific toms in this Amendment, which in a my opinion is the only way in which this thing can be worked out. The other way is to put a Clauso here which can be interpreted in the way the United Kingdom delegate has put forward, which is not What we want, because ve want every country to know exactly what we mean in the Charter and not to put a clause there which somebody will interpret one way and somebody will interpret in mother way. I therefore move to have this drafting of ours accepted as the onlby thing that can show the actual, situation, and thc only way of expressing it in a clear way. Mr. McKINNON (Canada): Do you want a rejoinder from me? THE CHATRMAN: Yes, because thc Delegate from Cuba his imade a proposal that we adopt his draft. I have an alternative proposal which I am prepared to make now, because I think we can express the idea in some other languago, and I am prepared to put it on the table. Mr MoKINNON (Canada); I can only repeat what I have elready said. we have three drafts, the original draft as it appeared in the United States, which was the one first discussed, thon we have the Amendment proposed by the delegate of Cuba, and then the Rapporteur as shorter draft, substituting the word "negotiatins for the word section" . Wo were quite prepared to preceed at once on the basis of the first draft . We like least the Cuban Amendment 10. D.2. E/PC/T/C.II/PRO/PV/10. the second one, and we are quite prepared to go ahead on the basis of the Rapporteur's draft, namely, to proceed to negotiate, which is after all what we all came here for. We do not consider our. hands are tied in one way or the other. On the other hand I have answered Mr Shackle categorically that we do not; read it as abrogating existing commitments. Mr SHACKLE (United Kingdom): It seems to me that as Mr McKinnon has said that he does not regard this as in any way abrogating existing of difference commitments, there is no special point/in this, because it seems to be universally agreed that our hands are to be free to negotiate and not to bring action which is agreed upon in the course of the negotiations, and finally that the obligations are not abrogated. Those are the three propositions as I understand the matter, and if that is se I really fail to see where the difference lies between us. THE CHAIRMAN: I think perhaps we could express the same thing in this way, with a small addition to the text now proposed by the Rapporteur. It would simply say this: "It being loft for the parties concerned to determine the application of this rule to existing international obligations". D. 3. E.1. E/PC/T/C.II/PRO/PV/LO Mr MCKINNON (Canada): Would you repeat those words, placase? THE CHAIRMAN: "it being left for the countries conceerned to determine the application of this rule to existing international obligations. " I think then that wo are oxpressing the idea that it is the porties who. are under certain obligations. to discuss among themselves how they will fulfil the now obligations, That is what the Cuban délegate wants. MR McKINNON ( Canad.): It means the same thing as far as I can see, that in fact it seems to me that is all connoted by the word negotiationss." THE CHARMAN: Yes, but it is. the second phase of it First, you have your negotiationss; you are not prepared to stand in the way; and then it is left to the parties conocrned to apply the rule to their .existing obligations. MR McKIINNON (Cnaida): which is the case, anyway. THE CHAIRMAN: Yes; but they will do it becose there. is some. doubt and some delegates like to have something to go on in this respect. I think it would. cover it. MR SHACKLE (UK) : May. I say a word at that point, Sir? I have a feeling that the suggested added words rather seem to emphasize some. ambiguity in the meaning of this sentence. I would very much prefer that it should not either be or seem to be ambiguous, if possible. DR COOMBS (Aistralia): Mr Chairman, I think there is a real difficulty of.a purely grammntical sort there. The words which I think you used were, "application of this rule." The rule that is referred to presumably is the rule just. stated, that is, that prior international commitments shall not be permitted to stand in the way of the negotiations. That seems just logical, but it does a bit obscure what you mean. You say that the rule is that international commitments shall not be peremitted to stand. in the way of negotiations, and then you go on to say that. the aplplication of this rule to all international obligations will be left to the. parties concerned. But it .would appear to, be a modification of the rule that you have just stated.. MR. ALAMILLA (Cuba): Mr Chairman, I think that if we come to the interpretation 12. E.2 E/PC/T/C.II/PRO/PV/10 of this clause, ït only means this: If I can a country I cannot say; "I cannot negotiate because I have a treaty." That is the firat point; then I cannot say: "I am very glad and I would like to nogotiate, but. I cannot conclude my negotiations because I have a treaty." That is the only thins that we are spring there: that we cannot put the existince of a treaty as a cordition not te negotiate and not to terminatc the ne- gotiations; I believe that this idea is clearly shown in the words we have put dowm there. We will negotiate; we will come to torms. If on exîsting treaty is in the way of those negotiations and. we have alrondy agreed to something that cannot come into existence because there is a treaty, we have to come to terms with the third party or we have to ter- minate the treaty in ordor to cemply with what we have negotiated. If this is absolutely clear, and Canada. cannot ask that the third party obligations be abrogatod by just one aide, then why do not we say it clearly and avoid very great misunderstanding that can come about when the negotiations are hold? TME CHAIRMAN: think that our Rapporteteur has a brainwave: THE RAPPORTEUR (Mr Leady): Shall I let it go? THE CHAIRMAN: .Yes, please. THE RAPPORTEUR: It runs something, like this: "Prior international commit- ments shall not be permitted to stand in the way of negotiations with resect to tariff preferences, it boing understood that action resulting. from such negotiations shall not require a modification or tormination of existing intornational obligations except by agreement between the parties concerned or in accordance with their terms." That would seem to leave freedom to negotiato and would make it clear that the resulting action would require either consent or termination. THE CHAIRMAN: At first sight, I would say that this states it very clearly, so that that would perhaps be the solutiou of all our difficulties. MR McKINNON ( Canada): Would the Rapportour kindly read it again so that we can be sure of the wording? "It being understood that action resulting frora such negotiations" - that is introducing the word "action" again-- 13. E/PC/T/C.II/PRO/PV/10 THE RAPRORTEUR: Yes. MRMcKINNON (Canada): "shall not require modification or termination of the existing, international obligations' - is that right? THE RAPEORTEUR: Yes. MR McKINNON (Canada): "except by agreement between the contracting parties or in accordanco with thr trrms of sùvh obligations. " Mr Chaiman, we take the view that that is all implied in the aubstitution of the word "notiationa". for the word "action" in the original draft as it was bdfore us; but we are quite prepared to go on the basis of the Rapportcur' s amended wording. MR SHACKLE (UK): I would like to say, Mr Chirman, that, subject to looking at the draft in retail and it is always rather riskr to pronounce on drafting ratters at such a point - this does seem to mo to be a satisfac- tory text. MR ALAMILLA (Cuba): If it is difficult for the United Kingdom delegate, who speaks English, it is much more difficult for us. However, we believe that this suggested wording covers the situation very adequately at this moment, and . we only want to have an opportunity to look at it closely, but we are hoping that we will be able to accept it as it is. THE CHAIRMAN: Then it only remains for me to congratulate the Rapporteur once more on the way in which ha has rot us out of our difficulties. Mr McKINNON (Canada): Purely from a grammatical point of view, there might arise an ombiguity by reason of the use of the words "modification or termination." The meaning is and it was the way in which I first inter- preted it "shall not require the modification of existing obligations exceipt by agreement with the contracting parties or termination in acoordance with the terms of such obligations." Is not that the meaning? THE RAPPORTEUR: The meaning is as you say. MR McKINNON (Canada): There might be ambiguity if we liked so closely together. do the modification and termination, and then any that we can/either by agreement. MR SHACKLE (UK): Might I suggest that we could get over that ambiguity by 14. . E/PC/T/C.II/PRO/PV/10 inserting the words "failing that" actor the word "or" in the last line, so that it would then read,"except by agreement between the parties or, failing that, in accodance with the terms of such obligations". I think that that would make it quite clear. MR/McKINNON (Canada): Yes; but that would the delction of the word "termination" in the first place, will it not? MR SHACKLE (UK): Would it,necessarily, because it is conceivable, though unlikely, that there might occasionally be an agreed termination. E/PC/T/C.II/PRO/IV/10 MR. McKINNON (Canada); I think Mr. Shackle's amendment gives an ontirely difforont moaning in that it would require agreement to terninate. MR. SHACKLE (United Kingdom): I venture to think not, because 'in accoardance with the' tenms of such obligations" if .the prior treaty or agreement on has in it a donunciation clause this surely implios that/that donunciation clause unilateral donunciation would be used. MR, McKINNON (Canada): I still think that is a more definite ambiguity than the first' one, and I cannot see why we cannot drop the word "termination" in the first instance. It would then road: "it being understood that action resulting frorn such negotiations shall not require the modification of oxisting, international obligations except by agreement of the contracting partios or termination thereaf in accordance, with the terms of such international obligations.". THE CHIRMAN: I think that as put now by Mr McKinnon it gives tho stages very Clearly. Tho whole procedure may take some time but I cannot soc how you can do it othorwise, unloss you are prepared to torminate all the obligations noir - and I think nobody is prepared to do'that.. MR. SHAOLlE (United Kingdom): Spoaking again entirely offhand, I think the change proposod by Mr. MoKinnon is probably accoptablo. It soems to me when wo say in this sentence "such negotiations shall not roquire modification", a fortiori they cannot requiro termination. That boing so; I think probably Mr. McKinnon' s toxt is acceptablo. I say that again provisionally. THE CHAIRMAN: We will take it that we all agree.provisionally. MR. ALAMILLA:(Cuba): I would suggest this. Could. the Secreatariat- make copies of this last version so that wo can take it home and study it with care THE CHAIRMEN: You will have that in your report in any case, MR. ALAMILLAM (Cuba): Yes, but I think it might be better to be able to take it away and Just figure it out. 16. F. 2 E/PC/T/C.II/PRO/PV/10 MR. ADARKAR (India): I think after theo word "termination" has been deleted it would be of advantage to rotain the latost amendment suggested by Mr. Shackle, namely, "failing that," because that gives priority to agrocment with the parties concornd, that thoy .should try to roach an agreement. If they fail they should resort to unilatoral donunciation of tho troatios to which they are party. The words "failing that". soom to me to be important. It would then read: "it being understood that action rosulting from such negotiations shall not require modification of existing international obliaa- tions except by agreement of the contracting partios, or, failing that, in accordance, with the terms of such obligations." MR. MeKINNON (Canada): Yes, that is all right. THE CHATRMAN: We will have that clause yped out so that we can look at it lator on. I will ask our Rapportour ta continue with the othor modification. THE RIPPORTEUR: Sub-paregraph (b) as and has alreacdy beon cleared by the sub-committee provisionally, subject to a look at what is put in the procedural memo on this subject explaining, it. It will thon be gone over again, so I. do not think there is any need for discussion on that now. Sub-paragraph (o) is suggostod as a possible formulation of the agreement reached in the sub-conraittec, that there should be somo rulo indicating that the binding of low tariffs would be riven equal right with taduction of high tariffs in the nogotiations. The rulo is "Tho binding or consolidation of low tariffs or tariff froc troat- ment shall be racgnised as a concossion equivalent in valuo to the substantial rocluction of high tariffs or elidmination of tariff praforcncos." MR. ADARKAR (India): with rogard to sub-paragraph (b), the Indian Dologation made a resarvation when tha subject was last discussed, It was explained that it is difficult for thu Indian Delugato to accept that all reductions in .most-favoured-nation import tariffs shall operato automatically to reduce or eliminato margins of preferance. The point was that tho objoct 17. F.3 E/PC/T/C.II/PRO/PV/10 of roduction of barites should be kept distinet from the other object, of olimïnatïon or reducïng mragins of profornce. THE CHAIRMAN: Tho idea idoa was we should first have the momorendum and refor to this again. MR. ADARKAR (India): The prineiplo which is expressed here would convey a moning which is not acceptable to the Indian Dalolation. THE CHAIRMAN: The point is, nobody accepts this before we have the momorandum from the Rapportcur. MR. ADARKAR (India): As no as that is understood. MR. McKINNON (Canada): I think the modification we have alroady mado in (a) rather support the suggostion of the Indian Delegate, that the word automatically". might well be deletod from (b) , Sinco the revised wording of (a) now spells it cut stop by stop, as it worq, it would appear to be much more appropriate that (b) should merely read: "[11 nogotiated reductions in most-favoured-nation import tariffs shall operate to reduco or climinete margins of proference." MR. ALAMILL (Cuba): I would feel vory much inclined to accopt tho suggestion of the Canadian Delegate, but I believe we should first have in front of us tho things to be added to this paragraph, or the reforanco that ill be made to an additional momorandun, whatever it is. I think we should loave -all discussion on thc drafting, of sub-paraeraph (b) even it it is only a riuntion that an existin- outsido document is going to enter into sub-paragraph (b) -- until we have the other document before us, when we can study it. MR.. McKINON (Canada): I think the remarks of the Cuban Delegate apply equally to (a) and (b); If we are tentatively adopting the wording of (b), as we seem agreed to do, I should think we might proceed to adopt tentatively (b) with the word automaticallyl delotad, THB CHAIRMAN: That is my idea. MR. ALAMILLA (Cuba): I have no objection. MR HAWKINS (Unitod Statos): I thouch the whole of (b) was left in abeyance until we considored the procedural momrandum. The word "automatically" as 18. E/PC/T/C.II/APRO/PV/10 closely tied up with procedural questions, and I would not. like to see it omitted until we have considered the procedural memorancdum. THE CHAIRMAN: I think we can noto the point of tho doletion of the word "automatioally". and leave it until we have the memorandum. Porhaps the Rapportour has somothing to say on it. THE RAPPORTEUR: -I would simply like to say that if the world "automatically". is dolotod froni this provision I would. approciate rocaiving any suggestion às to how the principle might be described in the procedural memo. I really do not see the way clear to saying, anything about it in the procedural memo if tho word "autoinatically" is deletod bocauso thoro is. no basis for estimating hom it wiould be applied at least, I do not see one. THE CHAIRMAN: I really think that further discussion at this momont is more or less useloss, because before we con have further explanation of what we will have here we must see more clearly how we will negotiate with respect to tariff prefronce. These are the negotiations we are concerned with in sub-paragraph (b). Before we have the memorandam I do not see much point in discussing, it. I really think we should leave it over till we discuss the memorandum. G1 E/PC/T/C.II/PRO/PV/10 Perhaps , now that. we. have the draft before us of the proposal with .regard to Article 18.1.a., we may read it must, and then everybody will see exactly whather it is what we have understood it to be. It reads lïke this:- " Prior international commitments shall not stand in the way of negotïationis with respect to tariff preferences, ït being -understàd that action resulting from such negotiations shall not require tke modification of existing' ïnternational obligations, except by agree- ment between the contracting parties, or, failing that, by terminatieh thereof iei accordance with the terms of such obligations." MR McKINNON (Canada):. This is purely a drafting point, and a smalle one at that, but I think I ought to mention it. The draft now says " .shall not requito the modification of existing international obligations, except.by agreement between the contracting parties, or, failing that, by termination". Can. you modify.'by terminating? . MR SHACKLE (U.K): Certainly because termination is the-most drastio form of modification possible; is it not? MR McKINNON (Calada): It is so drastic a form of modifetion. that I think it is straining the words abit. I am not quarrelling with the substance of it; it is just whether or not one modifies a document by terminàting it. MR SHACKLE (U.K.): I do not think there is really any difficulty, is there? Suppcsing certain' negotiations required some modification before the result of it, could be brought into effect and supposing the original contracting parties could not agree with that modifioatien, then complete termination might well be the only remedy, I think that isj right, is it' not? THE CHAIRMAN: I think we ought to leave something for the Draftinig Comittee to do I think we know now what we mean, and I thinlk when the logel, experts come together onrthat they can phrase it in the way they think will cover the arguments made. We turn new to sub-paragraph c. Are there any remarks on that? "Me only point I can see here myself is that it is a very general àlausar and it just depds on on thr Articles to which the tariffs apply. I could understand that you could have it apply to the same Articales rogard to exchange of good botween. different countrios, but you can have consolidation dation of low tariffs or of taritff-from treatment of unimporaent ccmmedities and you can have a substantial rodaution on important commoditios. MR HAWKINS: MR Chairman this sentence cannot pretend to be more then a:; 20 G2 E/PC/T/C.II/PRO/PV/10 statement of the principle. If you attempt to spell it out you will then . have to say what you mean by a low rate, and we would have a very long draft. 20 per cent might be a low rate in some circumnstances and a very high rate in othor circumanstces, Thàt is something the negotiator would simply have to took .at. It seems:to me that as a statement of principle this in right. THE CHAIRMAN:". Perhaps so could insert the words "in principle'. MR HAWKINS(USA): Yes that would be all right.. MR.VIDELA (Chile) I have: a doubt here. I would like to know why the position of the countries which are.not rociving any proforonce is not considered " here It says here, ".the binding or consolidation of low tariffs or of tariff-froc trcatmont shall be recognised",. and so on. I shoùld like to put on the same lebel the-countrics which do not onjoy preferenoe. THE CAIRMA.N: The second part of it, you will notice,. says "in value to.'the substantial reduction of high tariff s or the elimination of tariff preferencos". I think your'point is met there, as far as I can see it. MR VIDELA (Chile). Yes, it is considred in the second part of it, but in the first placce is dealing only with new tariffs. THE CHAIRMAN: We have no new proforcnces at .the moment; we hava only.those in force; and that s the position we are in when we start our. negotiations; so we can only compare certain things that are there, and I cannot see how we can put that in. . MR VIDELA (Chile): You say there "shall be rccognised as a concession equivalent". I would like to have some roference.to the countries -which do not roccivo any preference. . .. . . THE RAPPORTEUR: What you would like is that the binding of most favoured nation treationt or the granting of complcte most favoured nation treatment should be considered - is that ,it? MR VIDELA. (Chilo): I moan the'preferences, because we are considering only the low tariffs and tariff-frce .treatment. THE RAPPORTEUR: You want to say "the binding of preference-free treatment"? MR VIDELA (Chile): Yes '' THE RAPPORTEUR: The reason for not including it here is that this is a rule designed to deal with, selective negotiations. The question of proferonoe-froo 21 G3 E/PC/T/C/PRO/PV/10 treatment is dealt with in a general. rule under the most favoured nation clause'which all countries agree. to apply as a multilateral formula and not te be dealt with on a selective basis except with regard te oxisting preforcnoes which are to bè 'negotatcd down, so that therefore it is difficult to see now the multilatoral adherence to the most favoured nation clause can be used in this selcetive way apart from the weight given to that in tho commitment to nogotiato for the elimination of prefcrencos. MR:SHACKLE (U.K.). Ono thing I would say thero is that the grant of most favoured nation troatmcnt is not in itsclf inconsistcrit with having absolutely prohibited. high tariffs; and I thinik that if what you are saying were to be carried into effect it would make trad. impossible. THE CHAIRMAN: I think the Rapportour-has oxpressod what is moant here in a very cloar way, and I think it is clcarly understood that only in very exceptional circumstances cold you have neve preferential treatment. That is covered by that other clause under Article 8. MR VIDELA (Chile): I think it was the delegate of Balgium who referred to this originally .and I was thiiking only of the roason why theo countries which have no preference at aI and are not enjoying preference arc not included, as well as the low tariff countries. H.1.E/PC/T/C.II/PRO/PV/10. THE RAPPORTEUR: I think the proposal. would mean that you would add to paragraph (c) something like this: "The binding or consolidation of low tariffs or of tariff free trcatment or of preferential free treatment shall be rocognisod as a concession". I think the objection to it is that that implies that the granting of preference from treatment is to be be dealt with selectively on a product by product basis on these negotiations. In other words, a qountry would have the right to grant preference free troatment or not to grant preference free treatment, but that docs not square with the other previsions already agreed upon, that every country will, grant complete preference free treatinont except in respect. of certain preferences which are to be negotiated. I ; think if you put an Amendment like that in here it would undarmine the whole principle of the most favoured nation clause, which we have already agreed upon. THE CHAIRMAN: The Chilcan delegate made mention of the Belgium delegate's remarks. I think it will be time enough to say some- thing on that when we come to the Main Committee II.- The Netherlands are in the same position as Belgium, and'I .think we should insist that it is quite sufficient to have the clause as it is here. There is only one point loft, and that is the main point, that we forsake the right to have quantitative restrictions I think that again should be a point which should be left until the sub-committee on Quantitative restrictions have completed their work to such an advanced stage that we can judge what, can be donor with quantitative restrictions, we are in this very grave difficulty, that we cannot definiiely approve any of these Articlew before we see the other parts of Chapter IV in a definite shape. Mr .ADARKLR (India): Where is one point in connection with these negotiations for elimination of preferences on which it might be- desirable to obtain the view of the United States delegation at this stage, unless you desire otherwise. The point raised by the 23. H.2 E/PC/T/C.II/PRO/PV/10. Australian delegate, namely, whether in the course of these nogotitiïons it would be pormissiblec for one. part of the British Commonwealth whiceh is at present giving preference to another part, to give preference to a third part of tho Coninonwealth which is not enjoying it. To take an instance. Supposing Australia is giving the prefrence to the United Kingdom on a particular product but is not giving preferenco on that product to, say, India. would it be be poissible for Australia to extend eitherr the saie or a reduced margin of preofeence to Indie in the course of these negotiations. Assuring that the preference in question is not completely wipe out in the course of these negotiations, and also if it remains in existence then only such measure of preference shall be granted to India between Australia. and any other country. Mr HAWKINS (United States): This question, I believe, came up in the full Comittee, and the answer which I gave to it, as -I recall, was this. Article 8, as drafted, would prevent any new preferences in addition to or above thoso existing on a specified. .date yet to be agroed upon. Such preferences being, in. other words frozen as. from that date, On the basis of that formulation-no .new preforences would be permissible.. In other Words, the ansverto the question. of the delegate of India is that in the circumstances he cited, the preferences given to one part of a Commonwealth could not be extended to another pert which was not already enjoying it. Mr ADARKAR (India): The Indian delegation has some difficulty in accoptinm that position and would like the question to be left open for the consideration at a later stage. we are unarble to see how it will affect our trade at this stage, so we should certainly like that question to be loft open for consideration. we think that there should be no objection in principle to the extension of the scope of a preference to another part of the Commonwealth, so long as the existence of that preference is récognised, 24. H.3.E/PC/T/C/.II/PRO/PV/10. Mr LECUYER (France)(Interpretation) Mr Chairman, the question arises in a sinilar way as to the relationships between Prance and therest of the french Union. I must say that we have not envisage the possibility of extending preferences existing between France and French Western Afrioa to Franco and Indo- China but if thé proposal suggosted by the Indian delegate were to be accepted by the Conference, we should like to be able to have the benefit of this suggestion as. well. THE CHAIRMAN I think that clearly shows that we are on very dangerous giround. here,' I understood that when we discussed. Àrticle 8 we àdded a clause with regard to new prefererices in exceptional cirecumstances. Now as far as I can see, in the few remaining months left before we meet together in Geneva, I the cannot see that countries would start. to extend/preferential system. I think that would be contrary. to the. whole idea of these common negotiations. If the negotiations in Geneva resulted in agreement, we expect to put certain Chapters, of this Charter ;into effect, and then Clauso 55(2) would also be in force if we decide to. have that system working in the way it 'is envisaged in the Charter. I think ve cannot do more than that, otherwise I do not know where i will end. I.1 E/PC/T/C.II/PRO/PV/10 MR HAWKINS (USA): I would like to say that we agree entirely with what you just said, th at the effect of the proposal to create new preferences which would only be added for purposds of nojotiation aince their would not be permanent, would be either to reinforce the position of some countries which would then try to get something for .then, which is not a very desirable preliminary situation for the.negotiations of the kind we have in view. THE CHAIRMAN: And may I add here that I always had the idea that the only thing that could bo done bofore the geneva -meeting is what might happen in the case of a country like France, for instance, which has abolished. tariffs for the tirme bieing and has many specific duties that you might draft out new tariff systems which would simply translate into ad valorem dutiess the former specific dutiés. That is practically the only way we could do it, unless you hava the càse of a customs union where again you have to bring a customs union into. effect. I think that was the only case mentioned, and as far I know I think one .could go ahead with the new tariffs. Otherwise we would have kind of truce until we made any chango. Perhaps it is as well that the Apporteur should take care of these points and put them in a memorandum to prevernt .any misundrstanding. MR ADARKAR (India): Mr Chairman, in pmlposing this particular amendxmnt the intention is not to have an opportunity of creating new preferences in advanced of our Geneva meeting. It is not intended th seek new tacticall ot bargainin.g advantages by extending the scope of existing preferences. It is a matter of one's onw point of view, I think; but preferences which already exist should be permitted. to be extended, and certain extensions need not be regarded .is new preferences. The reason why I say that it is. not a new preference is this, that when you create a new preference you create a handicap for a particular foreign country which does not at present exist, and. when you extend the scope of existing preferences you do not create frosh ;preferences. There is no change in the duty which is levied on the product imported by the foreign country. The duty awpplicable to an importing country is the same and does not require any modification outside the negotiations, That duty remains the same, only the preferential 26. I.2 duty is madeappllicable to a part of the Commonwealth which at presentt is not affected in that way. THE CHAIRMAN; Let me. tàke a clear example it is quito therotional, but. it may give you an idea of what I have in mind. If sugar from British India should enjoy a. preference in accordance with oxisting preferences over other Dominions - take South .Africa, for instanco, and this is entirely theoroticl - then the Netherlands Indias sugar industry, the Cuban sugar industry, and other sugar industrios would frol the affects. The.t is oxtending the possibilities for the Indion sujar industry to sell atthe proferences in other markets. MR ADARKAR (India): But they are already feeling the offects of the preferance. THE CHAIRMAN: Yes, but now they will feel then even more. Now I agree with Mr Hawkins, that we would then have to baragin again and then India would. Say "Lcok here, as this is concession fron tho Indian side, if I would agree to abolish the preferences, what then?" It is strengthening, their position as for as bargaining is concerned, but I cannot see that that arises. MR.ADARKAR (India): But that is not the position, Sir. THE CHAIRMAN: No, I know, but that is the effect of it. MR -MDARKAR (India): We do not prnopose to holdup the work of this sub- comitteo on this, but I should think that we ought to be free to raise this issue later on, either in the .full Cordttoo, or othorwise THE CHARMN: yes, that is right. Gontlomon, can wo then agree to adopt sub- paragraph (c), with the addition of the words, in the boeinning or the. middle of the sentence, "in principle,'" or samething like that. MR ALAMILLA (Cuba): What are the words you .are adding? THE CHAIRMAN "in pirinoiple." MR McKINNON (Canada): After the. word "'shall"? THE CHAIRMAN: Yes - "shall in principle bo recornised as a. concession equivalent," and so on. Is that adopted? (Agreed). Now, Gentlemoe, we have for the time boing covered paragraph 1 of Article 18; we hava still pararraphs 2. and 3, so that it is now the turn once more of tho Rapportcur. 27. I.3 E/PC,/T/C.II/PRO/PV/10 THE RAPPORTEUR: Paragraph 2 has already beon appreved by the Conmmittee and there is no change. Now the amendments to ,paragraph 3 are designed to take into account the addition to paragraph 1 of the now subparagrah (c). The first mendoent is in-the sixth or seventh lino. The original draft read. "The Oragnization, if it finds that a. Member has, without sufficient justification" and so on. It now roads: "If a member has failed to negotiate with such coplaining momber in aecordanec with the roquire- ments of paragraph 1 of this Article," and so on, to make it perfectly clear that A low tariff country is not to be roquircd substantially te roducecits tariffs in return for a tariff reduction by othor ciuntrics, on the one hand, and, on the othor hand, that a low tariff country moy make a complaint againt a high tariff country if it fails to negotiate. The second amendment relates to the change in the phrase "tariff re- ductionsl' te "tariff boncfits, " so t1mt a tariff bonofit or tariff bindin- oould be vrithhold as well as a tariff reduction. . additional oewndmnent is necessary to make it perfectly clcar. "If such banrifits are in fact withhe so as to result in the application te the trade of the othor Member of tariffs hirhcr than would othcrvwise have been applicable, such other Member shall then be freo, to withdraw from the Organization," That would mean that if a low tariff country were successful in getting the agreement of the Organizration to its comrmlaint against another Member, that is, that it was justified, it would be perittad to raiso its tariff s above the level which existed prior to the nogetiatïons, be- cause it had mnerely granted bindings in those negotiations and would have no other compulsory device toaply., But the affect of it is simply to avoid putting a low tariff country in an unfavourable bargaining position with a high tariff country. THECHATRMAN: I have only one remark to make here and that is the say that porhaps it is conveniont to have sixty days notice in this Organization, because I con imagine that a letter from one country might tàke a month to get here, and it might not be road until after the negotiations had taken placo. THE RAPPORTEUR: That is the only reason for making it within sixty days, so that 28, 1.4. E/PC/T/C.II/PRO/PV/10 it is not indefinite. THE CHAIRMAN; No. I was only thinking: that it might take.a long time before it was received. MR ALMILLA. (Cuba): Mr Chairman, we had the same problem when doalig with several Articlos, and after we had exhcustively doalt with paragraph 2 of Article 79 in cormittee V we decided in every case where we had the same thing just to make reference to this paragraph 2 of Article 79 which now reads "sixty days after recoipt of the notification by the Secrotary-General "Therefore, I think that we might make a roference here to say, "in accordance with the second paragraph of Article 79." J.1 E/PC/T/C.II/PRO/PV/10 MR.ALLANILLA (Cuba.): I want to make it clear that the provision of Article 79 (2) is six months and not 60 days." THE CHAIRMAN: we need 60 days here, but we ought to include when it has been done by the Secretariat; it mkes it a more definito case. MR. ALAMILLA (Cuba): Of course, I can see the difforenco. THE CHAIRMAN: I think that is a usoful altoration. Are thore any remarks on the other proposed changes by the Rapporteur, or is tho meeting agreed that ho has again put into this now draft, in an admirable way, our obsorvantions of provious meetings? MR.. ADARWAR (India): I have no remaraks on that particular umondmunt. Tha last tima we discussed this subjeet Mr. Hawkins gave an explanation which I think would considerably branch the difference between the points of viow, though it would not wipo it out completely. The explanation vas that in judrinïw the adoquacy or othcrmiso of the concessions offoraci by mambors tho rosults; already achieved by the mombors of the Intarin Committoc at tho sprin- negotiations would be takon as the standard. It was explaincd by Mr. Hawkins that the, countrios. roprosontod a cross- 3sotion of intarnational.trade, and that v-hat aoreras botvicun tho neotiïtions will sot the standard. As a matter of clarification, I do not think the wording of this section would givo rise to that without some cxplantion; otherwise one of the mombors of tho initial. nogotiating would also be subjected to some penalties. I may not be undorstanding this section properly, but that is what I would liko spocifically reooonioad. MR. HAWKNS (Uniteci Statos) I condor if the Indian Doleeato has considarod Articlo 56 (2), Which is raferred to in Article 18. It may not compketely meet his thoughts, but i think it holps. Paragraph 2 reads: "Any othor Mombor of the Orgnization shall be ontitled to be a momber of thc Committee"- that is tho Intcrian Committee- J. 2 E/PC/T/C.II/PRO/PV/10 "When, in the judgmen of the committoo, that Member shall have comploted negotions pursuant to paragraph 1 of Article 18 comparable in scope or offeet to those comploted by tho original mombors of the Commitoo." MR ADARKER (India): It is only by inforence why no make tho poin cleaar? MR. HAWKANS (Unitod States): I think it could. be. MR. ADAKAR (India): That would be a proper atmesphoro for the initial nogotiations to take place in. MR.HAWKINS (Unitad Statos):. There is no objection on our pait to spolling'that out morc clearly. -THE CHAIRMAN: Is tho Inclian Delorato a:rocablo to aacopt this Article on tha undorstanding that we will clarify the position in Article 569 MR. ADARKAR (India) : Yes. THE CHIRMAN: Then I may say that this is adopted. That means that once more we have clearod articlee 18, but we will have to refer to it azain when the sub-committoo on quaetitativa restrictions has finishod its wiork, MR. ALAMILLA (Cuba): lie tha Joint Coanittue. THE CHIRMAN: Yes. We ara in a very unsatisfactory position at tho moment in viow of tha tact that there aro so many other meetings gong on in regard to other committecs, in which mobers of this committee have to take part. porhaps it might be possible for Delegatos to arrange for other mambers of their Delegations to take part in other committee meetings. Owing to the meetings of other committes we shall not be table to moat until Thursday, whon we will still have Articles 29, 30 and 33.. If it.goes on like this i cannot guarantoe that we will finish our work before even the end of next wook. think. the Secrotariat will hava to ja into this problem, bocause I. cannot guarantoc any strict procedure undor the present arrangement. MR. HAWKINS (United States): This committeb ought to meet every day for at least half a day. . MR. McKINNON (Canada): 'If we do not meet a loast half day every day Delegatos will have to go home with the work unfinishod by the target date. 31 . . J.3 E/PC/T/C.II/PRO/PV/10 THE CHAIRMAN: I am agreeable to givïng the Rapporteur time tomorrow to propare the procodural momoradum, but I. would like to meet for the whole of Thursday in order to get on with it . I suggest that Mr. Shackle and Mr. Hawkins discuss the coin. I suggest that the Socrotariat to arrange for other meetings this wook. MR. McKINNON (Canada) would it be possible to meet all day Thursday, startink at 10 o' clockin the morning? THE CHAIRMAN: I am quite agrecoble MR. SHACKLE (United Kingdom): A difficult there is that Dologations have mootings in the morring. Our Delegation meets at 9.30 and it is diffioult to get through the businos in loss than an hour. That is a rather necessary part of the machinory in Delegations, for the purpose of keeping in touch and so on. THE CHAIRMAN: we will procood quickly on Thursday. Mr anwhilo, the Raplportour will try to propare the momorandum on tariff negotinations procoduro, and will also contact the membars of the sub-commmittee for any remarks they might have with regard to the other papers which he has already submitted. MR. NcKINNON (Canada).: Will the order of businoss on Thursday bo. Articlos 29 and 30 or the procodurel membrandum? K.1 E/PC/T/C.II/PRO/PV/10 THE CHAIRMAN: I would say 29 and 30, if possible and the precedure, because it will have to be typed and distributod. If that is agreeable, gentlemen, we will meet at 10.30 on Thursday morning, and oarry on in the aftornoon until seven ocllock or something lika that. MR HAWKINS (USA): We are going ta be running out of time and evoning meetings will bo necessary. The only problem is that. advance notice has ta be given. I think this is a pretty full woek for most people, but we might bear in mind that we shall need to have evening meetings next week; MR McKINNON (Canada): What about Saturday afternoon? THE CHAIRWDAN: We can meet at any time convonient to delegates but I would only say this we must have a real programme before us, and not sit for an hour of two and then adjourn and have to refresh our minds on it all over again at the next meeting. MR HAWKINS (USA.): Could we have a whole day on Saturday? THE CHAIRMAN: Yes, I think that would be all right. I understand that I am invited to the meeting of the Technical Sub-Committec tomorrow morning? MR VIDELA (Chile): Yes, you have been invited to attend as Chairman of this Sub-Coanmittee, for the discussion of Article 32. Tho meeting is at 10.30. THE CHAIRMAN: Then I shall bring Mr.Leddy along with me. Then this meeting in adjourned, until Thursday morning, at 10.30. The'meeting rose at 1.05 p.m. 33.

GATT Library

jt081fr9416

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Third Meeting of the State Trading Sub-Committee of Committee II held at Church House, Westminister S.W.1 on Monday, 11th November,1946 10.30 a.m

United Nations Economic and Social Council, November 11, 1946

United Nations. Economic and Social Council

11/11/1946

official documents

E/PC/T/C.II/ST/PV/3 and E/PC/T/C.II/PRO/PV/15+E/PC/T/C.II/ST/PV/1-3

https://exhibits.stanford.edu/gatt/catalog/jt081fr9416

jt081fr9416_90050511.xml

GATT_157

A.1 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL E/PC/T/C.II/ST/PV/3. PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPOLOYMENT Verbatin Report of the THIRD MEETING of the STATE TRADING SUB-COMMITTEE of COMMITTEE Il held at Church House, Westminister S.W.1 on Monday, 11th November,1946 10.30 a.m. Chaiman: MR R. J. SHACKLE, C.M.G. (United Kingdom) (From the Shorthand Notes of W. b. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westiinster, S.W. 1, 1. A.2 B.1 E/PC/T/C.II/ST/PV/3 THE CHAIRMAN: Although the Czechoslovak Delegation is, not represented we had better start. We have in front of us a draft report of the Rapportour's which gives a preliminary notion of the course to be adopted in regard to a couple of the points raised, and goes on, as an appendix, with a redraft of article 26. What procedure would the committed prefer? That we should first of all ask the Rapportour to give any such preliminary explanation as he wishes on any part of his prefatory passage and then to an to discuss tho redraft of Article 26 in detail? Would that be regared as suitable? If nobody has any alternative suggestion I will ask the Rapporteur to say anything he wishes to say by way of, supplementing the first four pages of this document. THE RAPPORTEUR: Tho purpose has been to note as many of the general and specific points of agreement or ociment as were made in the sessions of the sub-committee. With respect to item A (2) on the first page, it might be said that subsequently the Czechoslovsk Delegate submitted an explanatory note which unfortunately we were unable to get into this report in its present statt. That explains the reasons for the Czechoslovak amendment which was suggested. Item A (3) is a matter of general agreement that something in the nature of Articles 26 and 27 be retained. Item A (4), I think, is self-explanatory. The points with respect. to Article 26 might require some comment. The redraft, it will be noted, attempts ta meet with the suggestions under B(2) and B(3). No alteration has been made to allow for anything in connection with Articles 8 and 9 9 with respect to the purchase of commodities by a govern- ment department which are not for rc-sale. -Ve, are prepared to discuss that point a little further. It is felt that there is no particular attempt here with respect to national treatment, which is the idea of Article 9, and this is meant to be a counterpart of Article 8 in terms of m.f.n. treatment. The point raised in connection with B(6) is one of general applicability not only to sections dealing with quantitative 2 E/PC/T/C.II/ST/PV/3 restrictions but also together actions of the draft charter, and we felt that at the present timo, when the charter is subjected to considerable scrutiny on the part of various committees from various points of view, the matter of consistency is one that might be left to the Interim Drafting Committee to see that appropriate cross-reforences and relationships are established, as between these provisions of the draft chartor and other provisions. That seems ta us a general problem which will have to be oped with in due time. We thought that group would be the one most suitable for that purpose. The question raised with respect to the third sentence of Article 26, section 1, was that that third sentencemight be omitted because it would seen to establish a more inequitable burdon on state enterprises as compared with private enterprises, and we have set forth here some reasons which we feel are applicable as considerations directed towards keeping the third sentence which is under discussion. That is to be found over on the fourth page, particularly item B there at the top. I think that is fairly self-explanatory. The matter, of course, is subject to discussion. THE CHAIRMAN: Might I at this point ask whether itmight be convenient to pass from the section of the preface which deals with Article 26 to the revised text and then turn to Article 27 later? It might perhaps be best for the order of discussion. Shall we, then, pass'to your re-draft of Article 26 and then we might have a discussion on the prefatory part regarding Article 26, and then on your new taxt? If it is agreed, we might do that. Would you like to go on to discuss your re-draft of Article 26 new? THE RAPPORTEUR (Mr Armstrong): We made a small alteration in the phraseology - a matter of style. The. original starts off, "If any member establishes". We thought we might put it mare positively, "Any ember establishing", and so on. That alteration is self-explanatory and we think it is in accord with the suggestions made at the previous meetings. The change in paragraph 2 has been made in accordance with the suagestions at the B.3 E/PC/T/C.II/ST/PV/3 previous meetings. The item which would appear particularly subject. to discussion is the third sentence of paragraph 1. THE CHAIRMAN: ThanK you. May I now ask delegatos for any remarks they would like te make upon either the preface relating to Article 26 or to the re-draftod text? I had one point that I would like to raise myself on Article 26. We have, I think, agreed that preforential state trading margins are to be negotiable in the some way as preferential tariffs. I think there is a cerellary to that: that just as preferential tariffs remaining after the tariff negotiations are made subject to an exception from the m.f.n. rule in Article 8, so, I tale, it, one would need to attach to Article 26 an exception in favour of a static trading preferential margin in so far as it remains after the negotiations. Is not that so? MR JOHSEN (New Zealand): I think that is perfectly right, yes. I think also you would probably have to provide horse for possible discrimination for exchange reasons so far as imports are concerned. TBE CHAIRMAN: Do we have anything corresponding to that in the private trade section? Is not that again to be covered to some extent by such, things as quantitative restrictions on balance of payments grounds the provisions for the transitional period? Is not that the analogy? MR JOHNSEN (New Zealand): As long as it is covered, that is all right. THE CHAMAN: There is a cross-reference to section c. somewhere. It is suggested it should be widened so as to cover all the other relevant provisions of the charter. MR JOHNSEN (New Zealand): That is only in respect of monopolies. THE CHAIRMAN: Oh, yes, I soc. Perhaps we may need a cross-reference, then, with 26 as well, to cover, as it werc, what you ray have to do in the transitional period while there are special balance of payment situations and inconvertible ourrencies. I should lilce to invite further views upon that. MR HAWKINS (USA): Just how would you word that? I am not quite clear as to how you would handle it. MR JOHNSEN (New Zealand): You might may something along these lines: "Nothing in this lrticlc shall preclude :tho application by a state 4 B.4 trading enterprise of discriminatory practices provided such practices are in conformity with other articles or other solutions of the Charter." MR HAWKINS (USA): To get your analogy, the only preferences that would exist as regards tariffs would be those remaining after existing preference hadbeen deal with on the agreed date - 1939 or any other date on which the negotiations took place in other words, remaining after negotiation. You do not want too phrase this as to permit the position of any now preference in state trading operations to any extent desired. You must have a starting point for this If, there were no preferences given now thore would be no occasion for it. MR JOHNSEN (New Zealand): It would have to be consistent with the remaining Articles. MR HAWKINS (USA): Yes. THE CHAIRMAN: There is a possible case where there is a change from a prefit basis of tradiig, with tariffs, to state purchasing marging, and I take it that where a preferential tariff existed before that change a proeferential margin would be regarded as an existing preference for the purpose of that provision. Is not that so? MR HAWKINS (USA): Yes. MR JOHNSEN (New Zealand): I should think. that would be the position. MR HAWKINS (USA) The only point I am trying to .like is that if you care going to have an analogy the analcgy should be complete. As regards preferences, there can be ne new preferences evolved beyond those existing on the date agreed as a starting point, whatever it- may bc - July 1939 or any other date - and those existing on that agreed date will be subject to negotiations. Then your exception covers any remaining after the negotiations. As long as the analogy is kept straight through as regards state trading preferences then I think it is all right. THE CHAIRMAN:Yes, MR HAWKINS (USA): It is goins to be a little hard. to draft that, I am afraid. MR JOINSEN (New Zealand): Yes; I think you have got to relate it generally to. the othor provisions of the charter. MR HAWKINS (USA): I think that possibly the best way would be to make provision in the other section. 5 B.5 E/PC/T/C. II/ST/PV/3 THE CHAIRMAN: I was wondering about that, because we have so far moved the other way; we have rather tended to shift everything to this state trading section. There is also this point. I think it is here in 26 that you lay down the principle of quality of treatment in commercial considerations; so that on the face of it it seems to be rather there that any qualification for the romaining preferential margins should come in. Of course, I suppose it js arguable that under commercial considerations the very fact that there is a preferential margin left would influence a commercial firm and therefore should influence a state trader in exactly the same way. But I am not quite sure whether there may not be some need to qualify the sentence about equality of treatment. MR HAWKINS (USA): I think the difficulty here is going to be the difficulty of getting the same degree of precision as regards preferences and state trading as you have in regard to tariff preferences. For example .(I do not know whether this is a fact or not, but it is just to illustrate my point), if a country as of now has a general policy of giving preference to purchases in some other area (it is olny a broadly stated policy and it does not say how much it gives, and there is no mathematical principle involved), how are you going to make that subject to negotiation in the same way as you do tariffs? . . 6. C.1 E/PC/T/C .II/ST/PV/3 . How are you going to measure any residue that is left after the negotiations have taken place? I have some doubt whether you can apply it. THE CHAIRMAN: You are thinking of cases where at present preference is given not by tariffs but by quotas? MR. HAWKINS: A country may just prefer to make its purchases in some particular country, and it may be prepared to pay quite a bit more, without saying how much more, to --- MR. JOHNSEN: That would be inconsistent with this article, which says that it shall be guided by commercial considerations. MR. HAWKINS: That clause would preclude any preference in purchases. MR. JOHNSEN: Preference of the muture you suggest. MR. HAWKINS: What you are trying to do is to qualify that in a way analogous to the manner in which tariffs are treated. My question is whether you can do it. Even though the principle may be the same, are you able to get the same degree of. precision as when you are dealing with tariffs, where you have to specify margins of preference? THE CHAIRMAN: That is true of all state trading provisions, that their exact observance is harder to check than that of provisions about private trading , but that is more or less inevitable in dealing with any subject in a new field. I should have thought that as far as laying down terms are concerned, where one probably cannot be fairly precise, the general principle should be to go by analogy with your rules for private trading, as far as possible, while recognising that it may be more difficult to keep a check on their exact observance. MR. JOHNSEN: I think the next sentence in the Article really covers the situation. It says that any member interested is entitled to ask for information as to the procedure followed. 7. C.2 E/PC/T.CII/ST/PV/3 THE CHAIRMAN: I can see some- difficulties here. If we assure that be Article 19 goes through, you would/be changing over from preference which had been given purely by quotas or partly by tariffs and quotas, to the state trading system, and you would have the question of what was the equivalent of a pre-existing quota preference, which obviously is difficult, but I do not think it affects the point .we are discussing now, that in so far as a preferential margin given remains after there negotiations, there should be a saver for them under the principle of equality of treatment. MR. JOHNSEN: I would support that view. It seems to me you have got to make some provision in this Article to link it up with the other provisions not only in regard to tariff preferences and quotas preferences, but also other forms of preferential treatment. MR. HAWKINS: I think I could accept the view, but I cannot see how you can implement it. It may be there is a way, I would suggest that Mr. Johnsen or you, Mr. Chairman, prepare a kind of statement that might go in here. I cannot see how it would be worded. THE CHAIRMAN: I had thought myself that, given for the moment the rest of this Draft Charter, this, so to speak, was entirely consistent with it, except in this one respect, that you had to provide in Article 8 for an exception from the Most Favoured Nation Rule for preferences remaining after the negotiations. You had to word it a little differently, it is true. Until other committees of this Committee decide to make alterations in the sections of the Charter which refer to private enterprise, I do not see that there is really any special problem for us to consider, beyond just introdubcing here a counterpart to the exception from Most Favoured National treatment which would introduce this qualification in respect of preference margins remaining after the negotiations, for the purposes of the state trading rule. Is not . 8. E/PC/T/C.11/ST/PV/3 this rather left at large untill we see what changes are introduced into: the private trading article as a result of the work of other MR. JOHNSEN: I think you have got to bring the state trading into line vrith private tradïi& in respect of preferences or discrimination. mr. hawkins; I am quite agreeable to that. It is a question of how you can do it v4thout doinL a lot uore than is intended. It may be it can be worked out, I am accepting the principle subject to its being stated in some way which is in some degree measurable. Let be offer a suggestion. It dight be a preference in'state trading operations not greater than, in effect, the preference would be under the preference remainig on the product after the tariff negotiations. That is the araloL-y. mr JOHNSEN: I think it is always to be assumed that it is just be the preferences reqaining, after the negotiations. I should have thought that as long as there was a provision for any member to make representations and to ask for inforïmation, that would safeguard the Position. the chairman : I should have thought so. It would be up to the state trader to argue that in sizing up the commercial considerations he had taken into account , and not ' given' undue weight to, the preferential margins that remained after the negotiations, in the same sort of way the commercial firm would have regard to differences between M.F.N. and a preferential tariff. I do not see any difficulty in principle. I see that it any be a complicated thin to check in practice, but surely that is common to the whole subject of state trading. mr. hawkins: that is not any ponint. It may be we can work this out. my question is how you will state this in the draft. mr. JOHNSEN I should imagine the easiest way would. be to state it along, comprehensive lines, so that you catch in everythinng,. 9. C.4 E/PC/T/C.II/ST/PV/3 MR.HAWKINS: You mean by that, I take it, that the preference in state purchases should be preference to a degree not greater than the preference which would be accorded to private enterprise operations,, given the margin of the tariff pennissible. MR. JOHNSEN: Yes, whatever is permissible under any other Articles in the Charter.- the chairman: I wonder whether possibly the subject divides itself into two parts, the first being the counterpart of the preferential tariff, whch I should have thought it would not be difficult to deal with as a ,.atter of drafting. The second is such other exceptions from equality of treatment or most Favoured Nation treatment as may appear in other parts of the Charter. It is a little difficult to see just what form of words you need for that until one knows what other. exceptions there are in other parts of the Charter, On the other hand, you rdLht provisionally cover them. by some general form of words. It is no use attempting a draft here, but I should have thought that, about the preference margins, the thing to do would be to base one's text on article 8, as it has now emerged, adapting. the wording so that references to tariff preferences become references to state trading; margins, mr johnsen: There may to quota preferences as well that- might require to le negotiated. the chairman: we still have to have our discussion on that, The quota questions wereleft to a small group to discuss, and-I do not think the small group has so far met. It is a little difficult to see just how to deal with that until the group has meet and discussed 't in a preliminary way. On the other hand, we have already a definite point here which is capable of being. dealt with as regards the preference margins corresponding to preference tariffs. 10. C.5 E/PC/T/C.II/ST/PV/3. MR. JOHNSEN: ThEn you have quantitative reLulations in regard to the balance of payments, and any discrimination that might be required either during the transitional period .or subsequently for particular purposes, That ;ust be covered. I think that must be provided for in this article. There should be a link between the two provisions. There may be other provisions in the Charter as well which require to tle linked up, and that is why I think it would be preferable to make any provision here Leneral, rather than to refer to certain things, mr hawkins: How general would you jake it? mr johnsen: We will have to have other meetings, I take it, to discuss drafts of some of these articles - at any rate, article 27. Perhaps in the meantme we could have an attempt to formulate so something. the chairman The sort of articles that strike. one at first sight as being ones to which you may need to make a cross reference are, first o' all, the ones about Most Favoured Nation treatment, possibly the one about national treatment -- I am rather doubtful about that -- Article 18 about; tariff negotiations, the whole of the quantitative restrictions section, and then, I think, possibly also the provisions about emergency action -- Article 29 -- and it may be the anti dumping. Article. It sounds rather a far cry to suggest that questions like anti-dumping might affect state purchasing enterprises, but I think that theoretically they ,might, considering that it is a question of commercial considerations, such as price, quality, and so on. Suppose that you got sudden dumping , if it had to observe commercial considerations absolutely, it might have to take in the dumped consigments. It sound rather a far cry, but I think it is logical. but there is a prima facie case for considerinL a cross reference te the article about anti dumping,. I think, also, possibly the one about emergency action. Perhaps we ought to think over this further. Shall wé ask the Rapportcur te consider those points and reflèct further upon them ourselves with a view to considering them in a further instament of the Report? Can we now carry the general discussion any further? 11. C.6 E/PC/T/C.II/ST/PV/3. MR. HAWKINS: I think not. I think it would be helpful if the Rapporteur could get for formulated any ideas that you Mr. Chairman, and Mr. Johnson have. I think he might want to consult with you on this. the chairman: I think the general principle is right, that where you have exceptions in the sections which relate to private trading, they should have some counterpart in the state .trading section. mr TUNG (China): with reLard to article 26, the last time I referred to the question of Government 'purchases for public use. In this redraft I see that there is no exception made to that effect. Could we take diat into consideration? the chairman Thank you for mentioning that point. we have now in articles 8 and 9 a modified version which I think takes an exception for procurement by governmental agencies of supplies for governmental use and not for resale. I am not sure whother I have quoted it textually accurately. I think that is how the revision of article 9 runs, and, there is a cross reference introduced into Article 8 which brings the same exception into it. 12. D fols. D.1 MR. TUNG (China) Has that been done in the Procedure Committee? THE CHAIRMAN: Yes. MR. TUNG (China): I do not understand that. There is a cross-reference in Articles 8 and 9 to make an exception for Government purchases for public the chairman . I do not think it speaks of public use, it speaks of govern- mental use and not for ré-sale.. That I think is the phrase the Sub-Com- aittee has provisionally adopted. THE Rqpporteur; I believe so. the chairman : I think article 8 has been modified to correspond. mr . TUNG (China): That revision of Article 8 and 9 could be adopted as amended , I think it is all right. We need not mention it again hero. If not, however, I wish to make that reservation. A State might buy steel from abroad, for instance; it is not done for commerical consider- ations. I give that as an example, and if such a transaction is covered by Articles 8 and 9 it is all right, if not I should like to have that phrase inserted, somewhere. the chairman I am wondering whether one should not have a cross-reference to Articles 8 and 9, "subject to Articles 8 and 9" or possibly some words of that kind, because without it we may bring back in the general terms of' Article 26 something which has been excluded under Articles 8 and 9. mr TUNG (China), Yes, there should be either a cross-reference to that or some phrase here - it does no harm to repeat it. the hcairman: maybe not; it is a question of drafting as to whether wo should actually repeat the exception here. - 13 - D.2 E/PC/T/C.II/ST/PV/3 MR. TUNG (China) We might perhaps introduce in the second sentence of Article 26, beginning "To this end such enterprise shall..." some such phrase as with the exception of Government purchases for public use", If not a cross-reference will satisfy me. the chairman: Shall we note the substance of the point, if it is agreed, and leave the precise drafting in the first insatance to the Rapporteur? Later it may have to be taken in the Interim Drafting Committee. mr hawkins (United States): It is a rather important point of substance. taking it out of Article 9, which was the most difficult place to keep it since it would require that a Government purchaser could net even buy for its own nationals, it is a little less difficult in'Lrticle 8 where the obligation is only to apply fair treatment as among foreign suppliers. that was the purpose in article 8 and now it is out of both of there, and if we also took it out here the affect is that Government purchases, even though they might be very extensive, could be made in a flagrantly discrim- inntory manner. That is a matter of some consequence. I know we have discussed all that before, and we have resolved thc situation in Articles 8 and 9 by loaving it out, but now ---- mr JOHNSEN (New Zealand): Just how has it been left out of Airticle 8? Do you remember the wording? mr hawkins (United States): It is knocked out of the last sentence of Article 8, and then in Article 9, where it was incorporated by reference te article 8, we have taken out the reference te Government purchases.. the chairman: .was there not a further small verbal change in Article 8? I think I have it hore somewhere. THE raporteur I have it hore, and I will read article 8 as revised .- 14 - D.3 E/PC/T/C.II/ST/PV/3 "With respect to customs duties and charges of any kind imposed on or, in connection with importation or exportation or imposed on the international transfer of payments for imports or exports and with respect to the method of lovying; such duties ard charges and with respect to all rules and formalities in connection with importation or exportation and with respect to all matters affected by the pro- vision rolating, to national treatment in A tiolo 9,any advantage favour priviloge or irrunity granted by any member country to any product originating in or destinod for any other country shall be accorded immediately and unconditionally to the. like product originating in or destined for all othor member countries." Then the sentence beginning "Tho principle underlying this paragraph ..." down to tho end of the sentence is omitted. MR. HAWKINS (Unïted States): That sentence was the one imposing most. f avoured nation treatment in contracts for public works. THE CHAIRMAN: Tho change that has been made is affected by the provisions of Artiolo 9. Those are new words and as I understand then they have the effect of taking out of Article 8(1) the same area of subject-matter, as it were, as is taken out under Article 9 by the words "Except lawa and regulations governing the procurement by governmental agencies of supplies for governmental use and not for re-sale." So they are taken out of both those articles; is not that the effect? THE HAPPORTERUR: Yes. THE CHAIRMAN: We are then left with the question, then, that having taken it out of Articles 8 and 9 the general most favoured nation and national treat- ment provisions, are they to rermain out altogether or are they to be put in somewhere in the State trading Articles, and if so to what. extent? MR. JOHNSEN (New Zealand): There again I think this raises the question of linking then up with other Articles of the Charter. The best way to do that is by some comprehensive provision rathern than a specific reference to any particular Article.. - 15 - D.4 E/PC/T/C.II/ST/PV/3 MR. HAWKINS (United States): The question seems to me to be this: as things now stand, we have dropped any obligation whatsoever regarding purchases for Government use. That is dropped out. There is no provision which limits in any way purchasing for government use. The question now is whether to carry that exomption over into Ârticle 26? I think the article as redrafted does not contain that exception, in other words, it would cover --- MR. JOHNSEN (New Zealand): It would cover everything. MR. HAWKINS (United States): It would covor everything, and would provide for non-discririnatory treatment in respect of Government purchases from abroad. whetherfor re-sale or for Government use. The question becomes, whether you want to strike out or qualify this, to eliminate the application of the most favoured nation provision to purphases for Govern- ment use. MR. JOHNSEN (New Zealand): Yes, I think it has to be made consistent with Article 8. THE CHAIRMAN: I had the impression that the discussions in the Procedure Sub-Committee were intended to cover the substance of this question, and that the logic of the procedure in the Sub-Committee's conclusion was that these matters of, procurement for governmental use and not for re-sale wore to be excepted from the national treatment and most favourod nation pro- visions. I think that the Sub-Committee imagined that that would be extended throughout the Draft Charter, but if I understand it aright, the question is should we reopen the question of substance now? MR. HAWKINS (United States): That is the point. I gather from the comments so far that the Delegate of China did not want to reopen it, but wanted to exclude from the operation of the most favoured nation principle, whether in Article 8, 9 or 26, the question of purchases for Govornment use. - 16 - D. 5 E/PC/T/C. II/ST/PV/3 MR. TUNG (China): Yos. MR. HAWKINS (United States): That leaves rather a large gap in this document, because Government purchases could be extremely extensive and could cover many millions or hundreds of millions of dollars' worth of purchases for public works - for power installations and so on. The purchasing Govern ment can discriminate as between foreign suppliers; it is perfectly free to discriminate flagrantly. That in affect is what we are saying. MR. TUNG (China): That may be, but usually such a Government rmust promote a big loan from outside in order to affect such purchases? In such cases they are bound to have agreements. If they get a big loan from one country it may be hard to get one from another country, and in such circumstances it may be quite impossible for a Government to apply most favoured nation treatment in its transactions, although of course in principle they should stick to them. MR. JOHNSEN (New Zealand): Was not this question thrashed out in the other Committee? MR. HAWKINS (United States): More or less. I think it was dropped out of the other two articles in order to get rid of a troublesome question. Could I make my point clear? I am not urging that the exact language that we have here applies, I am only pointing out that is subject as important as that should not be simply ignored. I should be quite content if there were some provision in very general language to the effect that given all the circumstances of aparticular case Governments should sèek to afford fair and equitable treatment among foreign suppliers, and that questions coming up in this field should be subject to discussion and consultation within the International Trade Organisation. We shoud have something, so that it is not entirely blank. I would, even go so far as to say that matters arising in this field should be referred to or be made the subject of consultation in, the International Trade Organisation, to the end that the foreign supplier countries should be accorded, in general, fair and - 17 - D.6 E/PC/T/C.IIST/PV/3 equitable treatment in the light of all the circumstances. THE CHAIRMAN: Would any other Delegation wish to comment on the subject? MR. JOHNSEN (New Zealand): I think there might be a difficulty in discussing it with the Organisation if it was a question of holding up contracts. Subsequent discussion would not be of much avail, and you could not discuss it beforehand, Any member of course has the right to raise a question of that nature, under the Charter. MR. HAWKINS (United States): I was nct suggesting advance consultation. MR. JOHNSEN (New Zealand). Under this allocation of payments clause any member would. have the right to raise the issue. MR. HAWKINS (United States): I would be content with something even more general than that, then, just to keep the subject within the competence of the Trade Organisation, if we could find some suitable language for the purpose, such as "It shall be one of the functions of the Organisation to consider questions arising in connection with Governmental purchases for public use." MR. TUNG (China): I think the apprehension arises from this tern "public use", but if you have a qualifying phrase "not for re-sale" that will immediately case it. No Government could abuse that phrase "for public use and not for re-sale" . If they imported certain articles and sold them to their own nationals, they could not do that bacause it would be for re-sale, but they could import for purposes of' public works. MR. HAWKINS (United States): Perhaps this is a simpler solution, so that we can pass on. I suggest that the Repporteur be reque sted to consider whether there is any other provision already in the Draft Charter which would.normally bring this subject within the competence of the Trade Organisation, and if 'so, we could drop the matter, - 18 - E/PC/T/C. Il/T/PV/3 THE CHIRMAN: There is one point I should like to mention before we leave this, and that is in an earlier stage of this discussion I remember that the United Kingdom delegation did put forward a suggestion that in this matter of -governmental purchases not for re-sale there should be a rule that any preferences given should be reasonable, and that was to be decided as between preferences given to homo suppliers and preferences within existing, preferential groups. That would I think, by its use of the word "reasonable" give the I.T.O. a competence to.consider these questions. As a matter of fact, that amenlment was not further considered when this proposal to exclude governmental purchases not for re-sale was passed in the procedures sub-Committee. I am wondering whether there is any value in our considering that idea of introducing. some such expession as "reasonable preferences." Of course, we are here reopening a subject which was discussed, and no doubt the proceedings in these sub-committees are subject to review by the main committee later, so that we are not by any means debarred I take it from opening the substance of this question again. I remember that there was a paper which we submitted to the Procedures Sub-Committee when this question was under consideration for the first time, some amendments to Articles 8 and 9 which were intended to deal with this point. They suggested the exclusion of goods not for re-sale. Although they intro- duced a reference to "reasonable preferances" they did make that suggestion. Perhaps I may 1eave it with the Rarpporteur to look at that paper and consider whether any useful idea might emerge from it. Shall we leave the question there, then, for the time being? Has anybody any other point that he wishes to raise on Article 26, in- cluding the redrafted text in the Rapportour's report? MR TUNG (China): Do I undorstand that "state enterprise" in the first sen- tence of Article 26 morely means those state enterprises dealing with trading, or whether it also includes manufacturing businesses,. because : the words "or produces" here would seen to cover manufacturing businesses. 19. E. 2 E/PC/T/C. II/ST/PV/3 THE CHAIRMAN: I think the answer to that is Yes - is it not? It does cover manufacturing as well as trading. MR HAWKINS (USA): It would apply to a case where the state organization is a manufacturing organization; it applies only in respect of its purchases abroad - foreign purchases. MR TUNG (China): A state trading enterprise engaged in production of certain articles - but the whole reference will be to purchases and sales? MR HAWKINS (US.A): Foreign purchases and sales. MR TUNG (China): Not to the function of production? MR HAWKINS (USA): No. MR JOHNSEN (New Zealand): As I understand it, the Chinese delegate's remarks would infer that the words "or produces" should be eliminated. Is that the idea? There is no relationship between the local production and importation. MR HAWKINS (USA): No. MR TUNG (China): I do not understand why the words "or produces" are put in there, or whether they are intended to apply in the case of production, or just for purchases and sales involved. UR HAWKINS (USA): There is no limitation here on what a producer does in the production field; this relates solely to his purchases and his purchases abroad, and his only obligation there .is as to foreign - supplying countries and non-discriminatory treatment. That is all this relates to. MR JOHNSEN (New Zealand): You could eliminate the words "or produces" without destroying the sense at all. MR HAWKINS (USA): You would not destroy the sense, but if you eliminated. the words "or produces" then an organization engaged in production would be perfectly free in its foreign purchases to discriminate among foreign suppliers, or it might result in that. MR TUNG (China): Dpos this also imply that a loan should be fairly and dquitably distributed among other nations? 20. ...

GATT Library

sz453nx7636

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Third Meeting of the State Trading Sub-Committee of Committee II held at Church House, Westminister S.W.1 on Monday, 11th November,1946 10.30 a.m

United Nations Economic and Social Council, November 11, 1946

United Nations. Economic and Social Council

11/11/1946

official documents

E/PC/T/C.II/ST/PV/3 and E/PC/T/C.II/PRO/PV/15+E/PC/T/C.II/ST/PV/1-3

https://exhibits.stanford.edu/gatt/catalog/sz453nx7636

sz453nx7636_90050511.xml

GATT_157

GATT Library

kz918vs0118

Preparatory Committee of the International Conference on Trade and Employment : Verbatim Report of the Twelfth Meeting of the procedures Sub-Committee Committee II held in Room 243, Church House, Westiminster, on Saturday, 16th November, 1946 at 10.30 a.m

United Nations Economic and Social Council, November 16, 1946

United Nations. Economic and Social Council

16/11/1946

official documents

E/PC/T/C.II/PRO/PV/12 and E/PC/T/C.II/PRO/PV/11-12

https://exhibits.stanford.edu/gatt/catalog/kz918vs0118

kz918vs0118_90050506.xml

GATT_157

A.1. E/PC/T/C.II/PRO/PV/12 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the TWELFTH MEETING of the PROCEDURES SEE-COMMITTEE COMMITTEE II held in Room 243, Church House, Westiminster, on Saturday, 16th Novermber, 1946 at 10.30 a.m. CHAIRMAN: DR A.D. SPEEKENBRINK (Netherlands) (From the Shorthand Notes of W.D.GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S. WT. 1. ) 1. XXX B-M E/PC/T/C.11/PRO/PV/12 THE CHAIRMAN: I will open this MEETING with A word of thanks to to Mr. Loddy, our Rapporteur, who has done such useful work in preparing this draft. I think Delegates will require some time to study this draft before we have a discussion on it. On the other hand , we are very short of time so we cannot postpone it till, say, next week. I was wondering, therefore, whether it would be as well to adjourn the meeting, to give everybody a chance to study the draft in detail, and meet again this afternoon at 3 or 4.30. Perhaps 4.30 would be proferable, which would give everybody aple time to study it and decide on the questions they nigtht wish to ask. If we do not do that we will get a very confused discussion. In any case, we will have Monday morning in which to discuss it, and perhaps even Monday night. MR. McKINNON (Canada): Shall we not go on tonight? THE CHAIRMAN: I think tonight will be all right. I am quite prepared to start now. What would Delegates prefer? I feal that if we study it Mr. Loddy. would be available to give all kinds of information for which Delegates might ask. I do not see much use in starting the discussion on this draft until everybody has really digested it. MR. LECUYER (France): (into. pretation): I agree that it is indispensable that we should have time to consider this document. It is a difficult document, and for me the difficulty is greater because I have to have it translated into French. However, difficulties oecur even for those who are familiar with english. The importance of this document is such that we certainly nead several hours in which to study it. I would like to say at the outset that, although I have only perused I think it is a remarkable document, and even before the discussion I think we should thank the Rapporteur for the work he has achieved. It is A document remarkable for the clarity and method which it displays, and I think that after the Conference it will remain as tho basis of many studies. In order that we may have enough time to study it I would suggest that we meet not at 3 and not at 4.30, but at 5 p.m. this afternoon - and we 2. F.2 E/PC/T/C.II/PRO/PV/12 could even go on tonight. I am always at the disposal of the committee. In any case, I think we should have time to examine this text. THE CHAIRMAN: I am also prepared to meet tomorrow, because I am here at the service of Delegates. I do feel that it would be preferable to adjeurn now to avoid confusing the discussion, which would be a pity, Would Delegates he agreeable to adjourning now and .meeting again at 5 o'clock this afternoon? MR. McKIMNON (Canada): The Canadian Delegation would be agreeable to that, provided we could go on tonight. MR. ALAMILLA (Cuba): I on willing, to work .at 5 this afternoon, tonight and tomorrow, because I believe this is something that we have to clear up. MR. ADARKAR (India): I agree that even before we start the discussion of this most complicated document we should thank Mr. Loddy for presenting, a very lucid analysis of the problem involved. I suggest that after tonight's discussion it would be convenient to adjourn till Monday morning so that we might have time to consider some of the issues involved here. during the weekend. THE CHAIRMAN: We would meet on Monda.y in any case. I want to have this cleared up as soon as possible because it still has to go into the main Committee Il, whether the other nations will have certain questions to ask. It is a very important document, and we should have ample time to discuss it. Every country taking part in this conference will want to examine it at the beginning of next week, therefore we should clear the text as soon as possible. MR. ADARKAR (India): We will not have time to discuss this in Delegations while our discussion in the committee is going on. I think it is most essential - at least from the point of view of the Indian Delegation - that we should have Sunday free for quiet study and discussion with the other members of the Delegations. MR. McKINNON (Canada): Could not we face the issue whether we meet on Sunday at, say, midnight after we have been discussing it for several 3, F.3 E/PC/T/C.lI/PRO/PV/12 hours, when we can see what progress we have made? THE CHAIRMAN: I am agreeable to that. MR. ADARKAR (India): Yes. THE CHAIRMAN: It is agreed then that we adjourn and meet again at 5 o'clock this afternoon. (Tho Meeting rose at 12.02 p.m. For Verbatin Report of afternoon session, see E/PC/T/C.II/PRO/PV/12, Part 2) 4. A.1. E/PC/T/C.II/PRO/PV/12 - Part 2 THE CHAIRMAN: We have now had some time to study the paper which our Rapporteur prepared. for us, and we have now to agree to the way in which we shall disscus it. The first part is more of a summary of what has been agreed to, or is in the Charter, with. regard to tariff negotiations. The second part is more difficult because there we come to the actual Procedure. I would like to deal with it in two parts - first, the more general..part. After hearing any general observations oh that, we can then go on to the more difficult part. The First part will be down to page 6, and the second part from page 6 onwards. Are there any remarks on the first part before we go on to the draft itself? , B follow. -5- B.1. E/PC/T/C.II/PRO/PV/12. MR. ADARKAR (India): A number of observations have been made in these six pages which are not acceptable to the Indian Delegation. As you will remember,. Sir, the whole principle embodied in paragraph 1 of Article 18 was regarded as unacceptable to us, unless very substantially qualified, and the same principle finds repeated expression here. Therefore, if there is no discussion on the first six pages, it should not be assumed. that those pages.are acceptable to the Indian Delegation, THE CHAIRMAN: To be quite clear on this: we discussed .Article 18 and so on, and we had some argument on that, and I understood, that you reserved your position on that; but I did not understand that the whole thing was unacceptable to you, as you now say. MR ADARKAR (India): I said that the suggestions contained in that paragraph that all members of the Organisation could negotiate for a substantial reduction of tariff, was not acceptable to soon members, at least of this Committee, the point being that, so far as India is concerned, she is unable to agree that members could negotiate for a substantial reduction of tariffs irrespective of the peculiarities of their position. It is quite true that the negotiaons are going to proceed on a selective basis, and still the intention is that the nett result of the whole process of negotiations should be a substantial reduction of tariffs, that those countries which will not use tariff s for the purposes of their economic development may either have to maintain or to raise tariffs; and although they may be able to offer certain reductions, the nett result of their negetiations with other countries cannot be capable of being describe, as a substantial reduction of tariffs. Therefore, since that very principle is in question here, I find it difficult, Sir, to endorse remarks such as the one which occurs on page 2 under "Basic commitment to negotiate", that "Each Member would be committee to enter into negotiations, upon the request of any other Member, directed to the substantial reduction of tariffs and the elimination of tariff preferences". As it stands, it states something ;which is quite inconsistent with the particular economic policy that countries like India have in view. 6. B.2. E/PC/T/C.Il/PRO/P/12. THE CHAIRMAN: If I may comment on this one moment, I think that when we discussed this was always said that every member should put forward his argument for not having certain items in negotiations, for even being obliged. to raise. certain tariffs, and generally give. an argument as regards this position (that is What we always-obail a selective basis I think); and that when we discussed the question of the substantial reduction. of. tariffs, that was meant in a more. general way, that the outcome should be a substantial reduction of tariffs as a whole, If I may remind you, in addition, the binding of the low tariff should be equal to the reduction of the high tariff that works in the same way because that country could reduce its.tariffs. Is not that right? MR HAWKINS (U.S.A): Yes, that describes it. THE CHAIRMAN Perhaps we could clarify it a little bit more in that paragraph. that Mr. Aadrkar mentions. I think it has always been our understanding. MR. ADARKAR (India) The expression made by you would clarify the poisition so far as countries with low tarifts are concerned, but where a country, like India, likes to retain full liberty to use tariffs to whatever extent is necessary: to assist her economic development, it is by no means certain that the results of her negotiations with other countries would be capable of being described as a substantial reduction of tariffs, It may be that even after the negotiations that tariffs may remain at a fairly high level. We. are unable to subscribe to the principle, that; a substantial reduction of tariffs by itself is a desirable objective, irrespective of the stage of econonio developent that the different countries find themselves in. MR. HAWKINS (U. S. A.) I can only say that I think that represents a very fundamental difference in view points. I see no way. of reconciling that viewpoint with ours, THE CHAIRMAN: That would mean that in that case they would not take part in negotiations. MR ADARKAR (India): Mr Nehru has suggested an amendment in the memorandum 7. E/PC/T/C.11/PRO/PV/12. relating to the Spring negotiations, and that merely visualised negotiations on a selective basis. India would be quite prepared to participate in the Spring negotiations, or in later negotiations, on the understanding that, she would be expected to do nothing more than to offer such selective regulation in her tariffs as are consistent with the needs of her own economic development and the general purposes of the. International Trade Organisation... THE CHAIRMAN I think that formula would be acceptable to.every country, .but not with the other additions that you put here. MR. HAWKINS (U.S.A.) I am a little confused. I understood the Delegate of India not to say that India would/be prepared to enter into negotiations with the, objective of effecting a substantial reduction of high tariffs, or the binding of low tariffs. If that is the understanding of his position, it seems entirely and absolutely inconsistent and at. variance with the provisions of Article 18. THE CHAIRMAN: Yes, MR HAWKINS (U.S.A.): I do not think it does much good to attempt to cover up what seems to be as much an issue as that, MR DEUTSCH (Canada): I do not think any amendment . would meet the position that the Indian Delegate has just set forth and I would suggest that he simply reserves his position on this paragraph which is, after all, only a preamble to the main part of memorandum- MR ADARKAR (India): IT give precise shape and form to the amendment I have in view: it is this, I cannot draft it at this stage. But may I indicate briefly what exactly we have in mind. It is just this, that the suggestions contained in this memorandum, that a substantial reduction of all high tariff s is desirable, irrespective of the, purposes which the high tariffs serve, is not acceptable to India. The other sggestion. contained in the same memorandum, that all members should, negotiate for substantial reductions of tariffs, irrespective of the: needs. of their economic positions, is also not acceptable, India would like to use tariffs as an instrument :.8 ., B.4. E/PC/T/C.II/PRO/PV/12. of economic development, and she would therefore like to reserve full liberty to maintain or to raise tariffs to whatever extent is necessary to achieve that object, She would therefore agree to nothing more than negotiating for such selective reductions in her tariffs as are consistent with the needs of her own ecocomic development and the general purposes of the International Trade Organisation. C. fs. 9. E/PC/T/C.II/PRO/PV/12 This is quite in conformity with the stand which the Indian Delegation has taken with regard to the Spring, negotiations at other meetings. DR. COOMBS (Australia): This matter is some interest. While listening to the Indian Delegate my first impression was that the point he was raising would have been covered. by the phrase which is certainly in Article 18 in its original form, but it does not appear in the first port of this document, There, in Article 18 (1) the words which I think are fairly important are mutually advantageous." So far as I can see, those words-do not appear in the first three pages of this memorandum, where references are made to these negotiations. It does seem to me that that is a rather important point, because the inclusion of the words mutually advantageous "would imply that if a duty was of sufficient importance to a country such as India then the price which would. be required, so to speak, in negotiations to warrant their reduction of it would need to be very high indeed, - in fact, perhaps impossible - before a negotiation in relation to that particular item could be rewarded as mutully advantageous. I merely put that point forword. as a suggestion. It does seen to me that the mission of those words is at any rate something- which requires some explanation, since they were quite clearly part of the previous draft. TIM CHAIRMAN: In any case, we could. take over Article 18 (1) to a grater extent than on page 2 of this memorandum Still, even then I wonder whether we would be entirely out of the difficulty. DR. COOMBS (Australia): Precoding each reference to negotiations could. we have the phrase "mutually advantageous"? MR. ALAMILLA (Cuba): I call attention to the fact that on page 5 it says: "General nature of negotiations The Charter provides that tariff negotiations shall be on a reciprocall and 'mutually ad.vantageous' basis,2' I think that clears everything, that has been said before, because this is not a reproduction of the Charter ',but only an explanation of it. 10. C.2 E/PC/T/C.II/PRO/PV/12 THE CHAIRMAN: We also got a selective, procluct-by-product, basis. I think that again meets it. But the fundamental position of the Indian Delegate creates some problems. In what in said about the -general nature of negotiations I think we have covered your point, Dr. Coombs. DR. COOMBS (Australia): I do not know whether that necessarily make the references which directly procede it entirely satisfactory in the absence of such a clarification. It does seen to me that there is an essential difference in meaning between negotiations directed to the substantial reduction of tariffs and the elimination of tariff preference, and mutually advantageous negotiations directed to the same purposes. THE CHAIRMAN Mr. Adarker if we chance paragraph in the way proposed by Dr. Coombs and have further reference to part 5, and perhaps where noted be put in those words, I think you would still liku to reserve your position. we could then go on with this memorandum without embarrassing you too much. MR. ADARKAR (India) Of course, it would be consistent to reproduce the language of the Charter. At the some time even with regard to the language of the Charter our point was that it should make some rccogrition of the fact that the level of tariffs depends on the stage.of economic development of each country, and the purpose which the tariffs serve. It was for that reason that I suggsted there should be a link up with some arrangement that is contemplated in relation to the economic develop ment. But since that is not being done we shall have to consider some amendment of this portion here and now. Cr', we might leave it -over with - ~~~at a the reservation that we come back to it/later stage; or, alternatively, the Indian Delegation might be permitted. to reserve its explanation. MR. McKIMNON (India): Surely the point of the Indian Delegate is met by the sentence on page 5, which says the negotiations should be conducted on a "basis which will afford an adaquate opportunity for taking into account the circumstances surrounding each product on which a concession may be considered" . , . , .. «~~~~~~Il C.3 E/PC/T/C.II/PRO/IV/12 You see it says "each product. If the country, cosiders that the. product is not one on which it might or should give a concession, then that product does not need to appear in the schedule to tho agree- ment that may be reached. THE CHAIRMAN Thore is only one dificulty. This morning I received a paper which "perhaps I might mention now. It was . draft message to Committee Il from the Joint Committee on Industrial Development, reading as follows: "In tho light of recomendations regarding instrial and. general economic development which the Joint Committee Proposes to make to the Preparatory Cor.nmittoc, tho Joint Committee requests. Committee II to make a provision in Article 18 of the chapter dealing with Commercial Policy, so that in relation to the unertaking to reduce tariffs and to eliminate import tariff preferences, the Organiza- tion and other Members should, when considering the contribution which a Member can make to a reduction in tariffs, 'takce into. account the height of the tariff of that Member and the need if any, of that Member to use protective measures in order to promote industrial and general economic development." There is then another paragraph with regard to article .20, which does not concern us here. That. is a message received officially in craft. I think it comes from the Joint Committee on which Dr. Coombs has taken part in the discussions. Perhaps this is the real point which the Indian, Delegate is making We must no see what to do with this amendment. MR. McKINNON (Canada): That means that for the moment we are abandoning tho procedural memorandum and reconsiderig Article 18? THE CHAIRMAN Yes, because if we want to clear this we have to discuss that as well. In any case, we have to return to it later. We cannot leave it open, since we have received this message from the Joint Committee and. I do not think we can cover that in the main Committee Il. We should. deal memorandum with it here. We are supposed to deal with Article. 18, and this/is an addendum to Article 18. Has the report of the Joint Committee been passed by the main Committee or is it simply something from a drafting group? D.1 E /PC/T/C.II/PRO/PV/12 MR. COOMBS(Australia): It certainly has not been approved by the Joint Committee as a whole. I think the position is that the Drafting Committee went through the Rapporteur's draft of the report his morning and directed him to make certain changes and amendments in it, and that process of amend- ment is still going on. THE CHAIRMAN: Which countries were in that Committee, may I ask? MR. COOMBS (Australia): Speaking'from memary, they were India, the United States, the United Kïngdom, Australia, France and Brazil.. THE -CHAIRMAN: This'is rather a funny situation, in one way and another. The joint body accepted that, but members of several Delegations present here are raising certain difficulties in this Ccmmittee, MR. COOMAS (Austr'alia) : I have only one sugestion I would make, While I think committeee II is bound to take notice of a message of this sort, it is not ;oind to deal with the problem in precisely the same place as the Joint Comittee has suggested, I am not quite sure what you view is .about the place in which that'proviso should be made; I think the Joint Committee las suggested Article 18, but if it seers more appropriate to you te embody it in the procedural memorandum, that is entirely for Commitee II to decide, THE CHAIRMAN In any case we cannot get out of it; we have.to.. discuss it here in connection with those first pages that we are concerned.:with now, MR. HAWKINS (United states): I think there is a very necessary and.definite relationship between this proposal for consideration.in connection with Article 18: and the nation taken by the Joint Committee. As far as I know the Joint Committee- i producing a draft the effect of which would be that tariff commitments or other commitments might bc modified in cases in which it was desired by a country to develop a particular industry Is that, in general, roughly what the draft now will provide? MR. COOMBS. (Australia) I .think so, yes. I am a little uncertain about the position in relation to message to other Committees. I am afraid I have forgotten at, the moment procesly where we have got to, I think perhaps it - 13 - E/PC/T/C.Il/PRO/PV/12. would be as well if we left that point for the moment while we confer with the Secretary of the Joint Committee and find out previously what the present position is. Certain draft Articles were approved by the Drafting Committee but not. by the Committee itself, and I think there were certain messages also approved by the Drafting Committee, but on that point I am not entirely certain. The Draft Report.itself is still. in.process of . preparation, , If .we pass on for a few minutes I will try and find out. THE. CHAIRMAN: ., Then we. will leave that point open Are there any other remarks on the first part, of the momorandum we are now discussing? MR. HAWKINS (United States): There is one point; I am not sure of its relevancy but I think I should mention it You remember that there was a question of quota preferences on certain products, which was raised in the full meeting of the Committee, and a small. group was set up to discuss those preferences and suggest what right be done about them. Is this the appropriate time to bring that up? THE CHAIRMAN: I . think it would perhaps be wise, because wo shall be concerned with it in any case in this memorandum., MR. HAWKINS . (United States): My only reason for bringing it up is that the Delegate of Chile had a particular interest in it and all I can do now is to report the. the number of those preference quotas .use to speak, preferences given in the form of quotas rather . than tariffs, is very limited. It applies only to meat. I can only report it as a fact, without offering. any suggestion as to what to do about it at the moment. I do think that fact should be before the Committee. THE CHAIRMAN; Is that Article 19? MR. VIDELA (Chile): Article 8 (2)(a). THE CHAIRMAN:. I cannot quite. follow here it should be. Article 8 (2)(a) refers to "Preferences in force exclusively between territories in respect of which ..... shall: provide a list. of such territories.... incorporated in an annex to this Charter". I cannot quite follow it because I think it came under the Ccnmittee on quantitative restrictions, of which we are still awaiting the report, -14- D.3 E/PC/T/C.11/PRO/PV/12 MR.HAWKINS (United States): I am not clear where it comes up, Mr. Chairman. Mr. VIDELA (Chile).: If I may explain - this was referred to a special sub- commttee when we were discussing Article 8, and that special sub-committee was composed of for members, the United Kingdom, the United States, New Zealand and Australia. When the opportunity aroso I asked to be invited to that sub-committee because Chile is one of the exporters of meat. Besides Chile there are two or three other countries, Argentine, Uruguay and I think Newfoundland, We have had a quota imposed by the United Kingdom since 1933 and this .quota was increased. in recent years. I have here documents up to 1939. Under Imperial Proference an allocation is given to the countries conerned, I think Australia and New Zealand principally, and then there is a percentage or quota for foreign countries. of that percentage or quota, 60 or 62 per cent was allocated to Argentine, 15 per cent to Chile, and I think 14 per cent to Uruguay, with a small quota to Newfoundland. -15 - OM E1 E/PC/T/C.11/PRO/PV/12 THE CHAIRMAN: Yes, but May I just interrupt you now, because I think this comes down to a quantitative restriction. MR VIDELA (Chile): But it is excluded from. the quantitative restrictions. THE CHAIRMAN In any case it is perhaps a matter :for a special Sub-;.committee but it would have to come back to the Committee on Quantitative Restrictions, because it i in effect a quantit- ative restriction and not a preference, because preferences are entirely within the Commonwealth and not with other countries. MR. VIDELA (Chile): Is it Article 8? THE CHAIRMAN: I should like to have first a report from the Committee on Quantitative Restrictions which is dealing with Article 19, and if they.think they cannot deal with it, and that it should be dealt with by us, then we can go on with it. MR. VIDELA (Chile) But were have finished with Article 19 in the Committee on Quantitative Restrictions and we did not refer to this matter, because it ras referred to a special Sub- Committee. MR. HAWKINS (United States): I think the history.of this is that in the full Committee this question was raised by the Australian delegate and it was left with the four countries named to consult about it. Now there has been.no time to have what you might call a committee meeting. I raised the question now because I had found out by inquiry from some of the members .what the scope of these quote arrangements are, and they are very limited. They are limited simply to moar. Nov- I am only reporting that to this Committee for its information and we have no recommendations as to what should be done about it, so the question that arises is whether. since it involves a preference, it should be dealt with by this Committee, or by the Quantitative Restrictions Committee because it is a quota. 16. E/PC/T/C.II/PRO/PV/12 THE CHAIRMAN. Mr. COOMBE is not here, but personally I should say it belongs to the Quantitative Restrictions Sub-Committee, because in my opinion it is noting else but a quantitative restriction, and let them deal with it, and if they cannot deal with it let them refer it to us, but for the time being I Would not liko to occupy much-needed time .with this memorand- um at this point. MR, ALAMILLA (Cuba): Mr. Chairman, I would like to make a general remark in relation to this document. We have been going over it, and with regard to the first six pages I would.only have to offer a very few drafting modifications, but I am very much afraid that if we start to road over this memorandum we are only going to roopon every one of the questions :with which we have been dealing at all our previous sittings, and that is not going to serve any purpose. We have drafted .the Articles and we have to stand by them, and I think the reopening of the question now by reading all.these matters is only going to complicate the situation and not to clear it up at all. I am very much afraid of that. I do not oppose it if you rant to go on with it, but I really suggest we should try only to reach an agreement on some kind of procedure and leave all these explanations to be given as subsequent explanations in order that we all have a perfect picture. of what we have done, instead of taking what we have already, with so much work, agreed upon, and trying to interpret it as a kind of supplementary Charter. Mr. MCKINNON (Canada): Mr. Chairman, I have been waiting for an opportunity to suggest, with all due respect.to the Chair, that our discussion is ontirely out of order. we met to discuss the Procedural Memorandum. we took four hours or three hours off to read it, and I think we are thoroughly out of order. However instead of making that point of order I would strongly support the point of view put forward by the delegate of Cuba, 17. E/PC/T/C.II/PRO/PV/12 that we. should not attempt to go into very line and word of this as if it :-was a now Charter, which it does not purport to be. It is a paraphrase of the Charter, or of the main provisions', kindly provided by the Rapporteur so that we did not have to review the whole Charter, but leading to a discussion purely on procedure. THE CHAIRMAN: I entirely agree .w-ith you, Mr. McKinnon., The only thing I asked for was general remarks on the first part, and only then came the question of that new amendment from the Joint Committee, which had a definite bearing on the memorandum so we had to discuss that. So if there are no other general remarks to be made this can be left. I think perhaps before it is adopted the language may have to be more in conformity with the Articles ;we have adopted, to prevent any misundersatandings, but I think a closer reading will see to that, MR. ALAMILLA (Cuba): I would not like to think that we had to approve these six pages, because,then we should have to go into every line but I think it should be considered only as a memorand-am offered by the Rapporteur in order to clear our minds. That is my suggestion. MR. LEOUYER (France) (Interpretation): Mr. Chairman, I quite agree .with what the. delegates for Cuba and Canada have said. We are not here to approve this document. This is only an instrument of work for our .Sub-Committee and it is not a document .which later on will be submitted either to the Preparatory Committee itself or to another body, I think, therefore we have to consider the procedure to be adopted, in the subsequent negotiations. It is most interesting for. us to read and consult this document, and if any particular. delegation-has comments to present, let them..do it, but we are not here to approve it formally. 18. E/PC/T/C.11/PRO/PV/12 THE CHAIRMAN: I only find one difficulty-here,gentlemen. We, -when we go home, :will have to give our Governments an idea of what willl go on in Genova, ,what we have to prepare our- selves for and what will be the rules governing these negotiations. ,You cannot do that simply. on a report of a Rapporteur which has not been approved by any Committee of this Conference. I think they would say "That is all very nice, and it .was a nice idea of Mr. Loddy's, but we. want to know whether this is really the. procedure and whether these are really the .guiding rules which will be adopted'. I think that is the difflculty. It is not so much the fire part of it, but the second part of it. In my opinion we must certainly reach agreement on that if possible, other- wise I do' not know. where we will be in Geneva. I do: not know what Mr. Hawkins' idea is? E/PC/T/C.11/PRO./PV/12 MR HAWKINS (USA): Mr Chairman, you have just expressed my ideas. It seems to me that. you need. at least an outline on agreed procedure, and that it should not be only ideas or the Rapportour or of this sub-Committee but of Committee Il and of the whole Preparatory' Cormmittee. The Propar- atory Committee is going to take over this very difficult and complicated task of negotiations, as I understand it will, and there should be agree- ment as far in advance as possible as to what procedure is going to be followed. Then countries can ,prepare accordingly. Now I recognize that there are questions here which will be. difficult. to resolve; it may be that we cannot, and have not the time, to resolve .all of them but I should think we ought to try to resolve as many as we can. MR VIDELA (Chile) Mr Chairman. I am not preared to give my approval to this report, unless I am quite satisfied that the quotas are. going to be elirmated. or are going to be negotiated. But I must say that I am, quite satisfied -with the propartion of the report and I join in the congratulations that have been offered to our Rapporteur because it is a very clear and very comprohensive document. In that connection, I wish to say that I fully agree with the Cuban delegate in regard to accepting the drafting of the report, but not to approve it. THE CHAIRMAN; Yes. I would like to have the views of other delegations here because I do feel that it is very important the point that has been raised. If we do not approve a document of this kind, may be you will say, "Yes but. the more general remarks we make are with reference to the Chapter"; but I think it has to be taken as a basic document and. if there are any misunderstandings then the various countries will bo able to deal with them But we know know exactly when we go home what will be the. rules that will guide our negotiations and also what we have. to prepare for. I think that is all we are here for. MR SHACKLE (UK)f) Mr. Chairran, I would like to say that I think this. sub, Committee was set up for the express purpose of approving procedure - indeed, that is its title - and I think that we should not have discharged our 20. F.2 E/PC/T/C.II/PRO./PV/12 task if we did not approve a document setting out the procedure which we contemplated for the tariff. negotiations next spring.lt is very necessary, in fact, that we should have working rules agreed before we go into those negotiations next spring otherwise, we shall not know where we are; so that I think certainly so far as this paper; deals with the modus operandi of, the negotitions it is very necessory that this sub-committee- should approve it. THE CHAIRMAN: Any other remarks? MR ADARKAR (India.): Mr Chairman., I am sorry to take up the time of the sub-Committee, Sir. This document falls into two parts, as you have stated: the first five pages deal with general observations, and the portion from page 6 onwards deals with rules to be observed in negotiations..~. But even in the first five pages, Sir, certain points have been raised which were intended. to be covered in this memorandum for the proper understanding of Article 18,; for example, on page 2 you will find, Sir, there are two paragraphs which deal with the procedure in the event of failure to negotiate and machinery for carrying out procedure set forth in (2) above. We were given assurances that the particular manner in which paragraph 3 of Article 18 was to be interpreted for the purpose of these negotiations was going to be explained in the memorandum, and the explanation we find here; so that it is portions like this which are of vital interest. Whatever the misunderstandings or misconceptions we may carry in our mind in regard to Article 18, these portions will con- tinue. That in one point, Sir, Secondly, in paragraph 2 of the Intro- duction there are certain matters which are within the purview of other committees. For instance, there is a statement here that Members of the I.T.O. would undertake "to abandon generally the use of quantitative and exchange restrictions for protective purposes. That is a point which is I understand being very hotly debated elsewhere, and on which to my knowledge there -has not yet been any. agreement. Matters like this could not properly be included here, and we are not competent to approve of any portion which contains such statements.; The reason why I drew 21. F.3 E/PC/T/C.II/PRO./PV/12 your attention, Sir, to this discussion on page 2 of the procedure in the event of failure to negotiate is because it was understand in the course of our discussion of paragraph 3 of article 18 that the United States representative would like the result of the negotiations next spring to be taken as a standard with reference to our judging. as to whether or not a. member had failed or had not failed to carry out his commitments under paragrah 1. It was explained to us that the countries which will be taking part in the spring negotiations represent a fair cross-section of international trade and what they will agree should be regarded. as fairly representative of countries in various stages of development and therefore that should be taken as a guide on which to decide whether or not a member has or has not failed to carry out his,, commitments. That particuler idea I expeted to find incorporated. here. It is not here. What is stated here is: "If a Member should fail to carry out its commitment under 1. above, those countries which had carried out such comitments by negotiating tariff agreements could be authorized to withhold the benefits of such tariff agreemets from the non-complying country." There is a singular reasoning involved here: that a country should fail to carry out its commitment under 1. above has to be interpreted in the light of paragraph 1 and paragraph 1 only; and it is, therefore, all the more necessary that we should qualify this explanation. But even then, when it is explained that the results of the initial negotiations would set the standard for other countries, even when it is explained that way, the principle night not be wholly acceptable to the Indian delegation, because the point of view which they have throughout been advocating is this, that the ability of a country to offer tariff reductions should be judged largely, if not wholly, by the zmzx±±z reference to the requirements of its own economy, and what other countries have done cannot be regaded as a fair standard. The standard should be not merely what other countries have done, but also what the country itself can do, with due regard to the obligations it has to its own population and the obligations it has to improve its own economic conditions. 22. F.4 . E/PC/T/C.II/PRO./PV/12 MR ALAMILLA (Cuba): I would like to make point on this, and may we can avoid a discussion. We have been studying this memorandum as much as we can in the fow hours that we have had, and we find that up .to page 10 there are only interprotations of Articles that we have dealt with here for a long time and in regard tu which coach one of us has exrplained his point of view and ideas, and we have drafted it in such a way that they may be subject to interpretation in the future Now, from page 10 on is when we really start with procedures. I believe that we ought to do this: Nov that we have drafted the Articles, let us leave the interpretation and lot us start on: page 10 and forget all the rest; let us deal only with the rules of procedure and let us study those rules of procedure. Then we come. to Miscelloneous Rules of Guidance. . I think that is a very modest title, but I think. after that we come to some very useful rules which we could really study And try to reach Agreement on. 23. G.fols. G.1. E/PC/T/C.II/PRO/PV/12 THE CHAIRMAN: As a point of order has. been raised I must answer it. To a great extent I agree with the-remarks of the Cuban dele- gate, but we cannot forget that there were certain points on which some delegatas made certain observations, and it is right that viw should take due note of the remarks more. Therofore I think the discussion we have had . has been useful, but I do not suggest that we read this paper novi paper by pafe and adopt each clause. that was not the intention and we could not do it after only a. few; hours study. I am quite prepared to leave the discussion on the first pages now, but not permanently. MR. ALAMILLA (Cuba): : May I rermark again that I do not want to avoid discussion. The only thing is that reservations have been made on those points which care under discussion. .All the work has been done, and by redrafting this again in the way of a memorandum merely means going back on our work. Therefore I suggest we keep that part. we cannot approve it because, if we did that,, we would have to go over it word by word and re- open the discussion. Let us get on to the memorandum on procedure and discuss it. The other part would be presenteed by the Rapporteur. It is very useful and we can take it home and study it, but this part on procedure is something on which we should really take action in order to be useful to the future negotiations. THE CHAIRMAN: It still leaves the point raised by the Indian delegate that he expected clarification of Article 18, and the position of certain countries in this memorandum, and that point we cannot skip. However, I think we have discussed it now and we must make some headway, so perhaps we can now come to the second part and perhaps the third part also of this memorandum which gives miscellaneous rules of guidance for the coming negotiations. We have three rules already. We ought to start from page 6 - 24 - G.2. E/PC/T/C.II/PRO/PV/12 because they are put in there. There is also some clarification and elaboration of what is in the. draft Charter. MR. ALAMILLA (Cuba): I am sorry, but I believe - THE CHAIRMAN: May I continue for a moment? We can return to that later on if need be. Do members feel able to study the mis- cellanous rules of guidance and then come back to the first pages of this memorandum later? MR. ALAMILLA (Cuba): Very well. MR. SHACKLE (U.K.): It seems to me that the matter on pages 6- 8, and also 9 is very important, and it is essential that we should get it clear because it interprises a great deal of -a few senten- ces in Article 13 which are by no means explisit in themselves. In fact, as regards the first sentence of Article 18 (1) (b), "All negotiated reductions in most-favored-nation import tariffs shall operate automatically to rcduce or eliminate margins of preference..." we left explicitly on the understanding that we would first discuss this memorandum on procedure and then return to that afterwards. So we cannot exempt ourselves from discussing pages 6 - 8. MR. ALAMILLA (Cuba) I do not object. THE CHAIRMAN Then we will start with pages 6 - 10. Those pages are now open for discussion. SENOR VIDELLA (Chile): Is the quota. to be negotiated or eliminated? If is is to be "eliminated", the word "automatic" will. be redundant, but if "negotiated", I attach very great importance to it. I think that is within the scope of this discussion. I have here a note which says: "No sheep or mutton or lamb shall be imported into the United Kingdom except under a licence issued by the Board of Tade unless accompanied by a cortificate in a form.. THE CHAIRMAN: I have taken note of your point, Mr. Videla, and you are free to raise it at a later stage of the discussion. -25- G.3. E/PC/T/C.II/PRO/V/12 MR. SHACKLE (U.K.): The last paragraph but one on page 6 roads: "The second rule to be followed in the negotiations is that negotiated reductions in most-favored-nation rates of duty shall operate automatically to reduce or elemminate margins of preferernce." There is a point arising on that sentence. I think we ought to be clear about the word "negoticated". If I understand this aright, there are two ways in which most-favored-nation rates of duty many be reduced. In the first place they may be reduced by direct negotiation; in the second place, if a preferential rate of duty on the same commodity should be reduced then, in virtue of the fact that the margins of preference must not be increased, it will follow that the most-favored-nation rate is brought down to the same. extent that the preferential rate is brought down. That, so to speak, is an indirect way of reducing the most-favored-nation rate. I take it that when here the word "negotiated" is used, that refers only to the first meaning; that is to say, the reduction by direct negotiation and not to the indirect one. I would like to know whether the Rapporteur thinks that is a correct interpretation. If so, I think we might possibly slightly amend the wording to make the point clear. THE RAPPOREUR: Yes, that is a correct interpretation. MR. SHACKLE (U.K.): In that case, might I suggest a slight alter- ation in the wording? that we knock out the word "negotiated" in line 2 and make it read reductions in most-favored-nation rates of duty where these are the result of direct negotiation", and then continue as before. THE CHAIRMAN Do you think that is agreeable? THE RAPPORTEUR: Yes. THE CHAIRMAN Then this amendment is adopted. SENOR VIDELA (Chile): May I reserve my position? THE CHAIRMAN: We take note of the. reservation of the Chilean delegate. MR. SHACKLE (U.K.): I have one or two other questions to raise on -26- G.4 . E/PC/T/C.II/PRO/PV/12 this passage. My first question, which I would like to get clear, is this: that although in a particular case a request a modification of a preference will be made to the country which gives the preference, it is the country enjoying tho preference which stands to.lose; by the reduction of the preferential margin and, consequently, it is entitled to be compensated for. that reduction. that leads me to my second coint, which is that if adequate compensation is not forthcoming, the country which enjoys the preference is entitled to withhold consent, leaving the country according it a straight choice between refusing, on the one hand, to make a concession on the item and, on the other hand, announcing the preference agreement with the other country, with all the consequences that would entail. I would like to ask whether that commends itself to the Rapporteur as a correct inter- protation of how this process would work out"? THE RAPPTEUR: I think that the provisions in. the Charter--answer that point regarding the effect of prior international commit- ments and negotiations. Who first rule was that prior inter- national commitments shall not stand in the way of negotiations- The second was that action resulting from the negotiations shall be understood, to require either, the consent of the party to the preferential agreements, or termination; of the preferential agreement in accordance with its. terms. If. you have those two principles, and follow them to a logical conclusion, you will find that they have to be granted. or the preferences thrown out. Just that, choice. H. follows. - 27 - H.1. E/PC/T/C.II/PRO/PV/12. MR SHACKLE. (United Kingdom):. Thank you., I think that perhaps a point which may not be entirely. cleared up in that way is the question: From whom the compensation would be looked for? Would it be looked for from the country which accords the preference or from the country which enjoys it? THE RAPPORTEUR: I wonder. if that is a point on which you can lay down a rigid rule. "All countries concerned will be a part, to the multilateral negotiations envisaged" I should think that would be a question that would take care of itself, since every ccuntry would see exactly what it was getting before it was expected to give .up what it had. MR SHACKLE (United Kingdom): Yes, Thank you. THE CHAIRMAN: Are there any more questions to be asked or observations to be made? MR. ADARKAR (India) With regard to this rule that 'all reductions in most favoured nation rates of duty where these are the result of direct negotiations, shall operate automatically to reduce or eliminate margins of preference": I have just one more cement to offer: the object of these negotiations is to achieve a reduction or elimination of the existing margins of preference. For this, two things are necessary: firstly, that there should be some agreement with regard to the date with reference to which it should be decided what the existing margins are. Secondly, that those margins should be reduced. These I believe to be the only two or the two most imoprtant things. On this basis, there are more than one ways of achieving the reduction in the existing margin of preference. We could, for example, take the rates existing on a"particular date, say the lst July, 1939; the rates as given in this example happen to be 50 and 30. Then we could achieve a reduction in the preferential margin of 20, the difference between 50 and 30, by reducing the most-favoured.-nation rate from 50 to 45 and the preferential rate from 30 to 28, the margin being reduced, from 20 to 17. That is to say, the original margin was 20, and that is the difference between 50 and 30. We now reduce the margin from 50 to 45 and the preferential rate from 30 to 28. That is one way 28. H.2. E/PC/T/C.II/PRO/PV/12. of. reducing the margin, The other way of reducing the margin is that which is suggested here by the Rapporteur, or which is. contemplated in the Draft Charter of the United States Government; that is, when the most-favoured -nation rate is reduced from 50 to 45, the margin should be automatically reduced to the difference between 4.5 and 30. The original margin was 20. Now it is reduced to 45 minus 30, which is 15. This is only one of the ways of reducing the margin, I do not understand. why we should agree to this particular way of reducing the margin, even, though it is likely to result in a greater reduction in preferential margin than the first method which I described. It may be that this will result in a greater reduction of preferential margins, but is it not at least equly probable that the disadvantages involved in this method may make it necessary for certain countries to be extremely cautious in regard to the reductions they offer in the most-favoured-nation rate? I think the method suggested in this subparagraph (a) .on page 6 is likely to hamer the process of reductions of tariffs more than the method suggested by me; that is to say, all that we insist on is that preferences resulting from' the negotiations should .be'sna).ler -than the preferences existing at a particular date. We shall than have fully complied with the commitment which is implied in the Charter, namely, that we should negotiate for a reduction in the margin of preferencee ' THE CHARMAN: That point was left open when :we discussed it in the first discusssion on l8 Article 18. It is right for any Delegate to raise the point now. 'I would invite the observations of other Delegates to this point'. We have to choose between two systems with regard to the elimination or reduction of preferential rates. and here I would like the advice and comments of Mr. Hawkins. MR HAWKINS (U.S.A .): If I understood the point correctly the method used . by.the Indian Delegate in his illustration would result in a reduction of the preference from 20 to 17; whereas under the autmatic rule it would be only 15 and of, course that difference is an important consideration the preference is smaller under the automatic rule than under the other, and that 29, H.3. E/PC/T/C.II/PRO/PV/12 is the purpose of it. MR ADARKAR (India): May I explain the point a little further?. If, in the example which I have given, the most-favoured-nation rate would be reduced to 45 only and not below 45, then the country giving the preference cannot possibly consider a request from the country which at present enjoys the preference to reduce the proferential rate below 30, because if it reduces the rate below 30, if it reduces the rate to;28- then it can keep the most-favoured-nation rate not at 45 but must keep it at 28 plus 15; that is 43. It will make it impossible. for the contry to offer any reduction to the country enjoying the preferences, and to that extent,will hamper: the.expansion of trade if by a natural flow of trade there are prospects of trade development between the countries which are at present joined together by a preferential. arrangement. I.fs. 30. L1 E/PC/T/C/11/PRO/PV/12 THE CHAIRMAN: The idea of the drafters of the American Charter was that everything that was done. should tend to eliminate preference, and the preferential rata would in no case be decreased again so as to get a smaller margin of difference between the most-favourod.-nation rate and the proforential rate. That was tho idea of the American Charter, and we norw have to choose between two systems - or in any case, make our position clear. No doubt countries not enjoying the proferential system would like that system eliminated as soon as possible, but that is not the point here. We ought here to invite the views of these countries having preferential systar.ts, namely, Mr.. Shackle and Mr. McKinnon, and perhaps Cuba. MR. SHACILE (Unitod Kincd.lo): Our undorstandinC in this matter was that if in thc first nogatiations, let us say, the Sprinrz neotiations, a reduction has been made from say, a most-favoured-nation rata of 50 to 45, and the preferential rate is supposed to remain at 30 - for tho purposes of the example - you then have a preference margin of 20 which has bean narrowed to 15. Our understanding is that that would not prevent subsequent no(;otiations for the reduction of tho lprcfronti.iJl rata ta sor. lower figure - let us say SO. But if so the r.most-favouroci-nation rata would automatically, as it were, have to be brought down in ordai ta * keep the reduced preforenco margin of 15. Tho most-favoured-nation. rate would automatically have to come dawn from 4.5 to 35. -.i I riht in understanding that to be the contention? THE CHAIRMANS Yes. The Indian Delegate proposes a different system where you reduce the margin of preference but nat sa riuch as with tho system proposed, by the clrafters of the àanorican Charter. IL ADRKAR (India): May I say, in ordor ta av6;id r:dsunderstan.iiLr,, that it is not my intention to propose a system the effect of which will be necessarily a lesser reduction of the proferential margin then would be the case under the Amrerican formula. My intention is to keep the two. objects distinct. One object is to reduce tariffs - to rationalise tariff so to speak, to bring them to a lower level so as to increase 31. I.2 E/PC/T/C.lI/PRO/PV/12 consumption not to produce protection. The other object is to reduce the extent of inevitable discrimination. These two objects could be kept distinct by the process which I described. It is quite possible for a country to say, "I will offer a reduction from 20% to 17 but leave it to me, or to negotiations as to how to Sivc cftact to it." It uay bc thnt this particular plan suits it best, ncincly, to partly reduce the iprefcrentircl rate, ancl to partly roc.ucc the iiost-favoured-nation rate. \Ihy should wo compcl a country in tht position to subscrioc to this particular rulo, that very ti:L: it offors any reduction in th, most-favoured-nation rate it hàs, by that v¢ry process, agreed to a particular margin? The agreement to reduce any margin shoulcl not bc a by-procluct of this agreement to reduce the rmast-favourec-nat-.cn rate ta a particular level.. NlI.. HLIKNS (United States): I think probably the clifforcnce in viewpoints here arises £rom one statcmont which was rnlade. It is possible, of course, to kecp the preferential nmrgin distinct from the most-favoured- nation rate; but it is very difficult to find cases in which thero is not a double interest in neCotiatin;g that most-?avoured-nation rate. The purpose ordinarily is to agrce a protection in tho home arlacet, and ta recluce the preferential marginn: in favour or a third country. Novw, if you do not Pollow the rulc that the reduction in the most-favoured-nation rate automatically operates te roduco or elim.inate the Droerential martin the -cfeot thon becomes as PollGWS: the country negotiates a Most-favoured-nation rate dovmnwards, and later on the country concerned reduces the preferential rate and thereby tonds te impaire - it coulcl even destroy the value of the: production in the most-favourod-nation rate. MR. lDAIUCKAR (India): liould you explain that further? ,iould not the situation in which the margin is reduced from 20,, te 17,J bo better than one in which the margin remains 20,;? MR. HKOEMINS (United States): Se far'as the country that is negotiation the most-favoured-nation rate is concerned it may result in a very material impairment.of his concession if that preference is widened. I.3 E/PC/T/C.II/PRO/PV/12 MR. ADARKAR (India): It is not widened. MR. HAWKINS (United States): I thought you said -there was a further reduction in. the preferencial rate. MR. ADARKAR(India): It is not widened 1-1. S;i,-lCNS (United States): If' thorax is no *;idcnin,~ o:2 thc 'irrcf'arcntirtl . LA. i~flÀi'.KR (Inaia): It vwill 'I, raduc'cl, TL';' CHIiM'L.N: Thora is a narroviin: of' tho m.iar(:in, but not so nuch as i:E ia adopted thc Anorican rulo. vir. 14cKinnon, hava you any vicas on that? i McKINNON (Canada): No, I hava nto1hinr, ta _dcl ta what I hava said Sa r.iany tir.mas in thc corxiittac. iîtr. Shacklc aslad Mir. Lo.cly t:o questions, ]iiiercly as a matter of intcrprotatiun, and liir, Lodcly's answiors wVra prociscly those I should. hava 2.,ivan loysalf' ;asod upon ivy intareratation of the Chartcir as wva ariondod it in coni;iittec. I quitc ap-reeci.ata the point of viwvi of the Inclian Dlcf;al tc. Tho rocluction of marginal preforrance inay be achicvcd in diffaront vrays. Ls I uncÜbrstand himn, ha is attoanltinï ta put on tho onc hancl the nca;otiations on the riargins of pr*feranoa jar se anc. on tha o;thr ncgctiations in respect of thc ratas of c.uty. la hava nothing to add. .. sugGestcal several times in full Cor.'ittee that wc should prefer to scç:a tha word automaticallyl" out. There was sor.te sup,.ort for that at tha tinc, ancl I can only intarprot tho rcr.arks of the Inilian Daloteta - and, ta sonar oztont, thosc of lIr. Shackle - as again advancing reasons wrhy it mij-t lha Ctcsirablc that tha word "automatically" should ého rcr.îovel frow. thc provision. TH3 CHLMAN: This is an important chance of thcaprefarcnca system, and 'therelforo I must hear the views of thc ;,norican Dolagata in order 'to noc whether we can reach agreement on this point, or whether we will have a disagreement which would; be a pity. 33 I.4. E/PC/T/C.II/PRO/PV/12 Mr. HAWKINS (United States): I hesitate to very dometic on a point but I see a difficulty there. The effect of taking out the word "automatically" will be to result in smaller reduction or margins. The Inclian Dolccatc' s loinit is iiorjtortcXnt, bocauce thorc coulc'. io a ru:-.uction ofr i.uLtrïin without it; Ithinl; it ;will bo slualler, lbut it vill cqwratu. l i.-I1UNNON (Canada): On that ï:iinht, I ni ht aCd. that i-baCily woul1l havae hoccn tho casa in nZc,çtiations of thc tyoc th.t wc in tho Canaclian Delegation thought were o'zisrvoc by the original Charter in its draft form J fols 34. J.I E/PC/T/C.II/PRO/PV/12 You may remember that at one meeting last week the question was put to Mr. Hawkins as to whether it was possible or probable that these negotiations would be simultaneous, that is to say, affecting not only the most favoured nation rates but possibly affecting the preferential rates of duty. Mr -: lawins replied that ho s am no reason wvhy they should not., I simultaneous, and quite pessiboly iIlany c thoil would cla. l o foeel thr.t if there are to members *lbe sirmultancous negotiations all the' way round the circle, b2tweeh/not only inrQsect of' iost favoured nation rates but also in respect of preferen- tial rats, the force of the %word "automaticaoyy" is largelylessened, and i.t ,lnay not always operate automatically if ve are to have completely siultaneouu; rcgotiations. .R. iZ"A(1i2. (India): I certainly endorse the roiiax'ks just trade by the Delegatc of Canada, that if the neGotiations are to lbe 3iitultancous .the word "auto- rati.ally" viould ncît only be superfluous, Ït would be rather inrconriruous, because if every reduction in the prçferential a.rmin is te receive the consent of tnd approval oi' the'country .ihichl is at prea¢ent enjoyinL the margin, i.aich is certainly the i.plioation of the first rule, thon the vord *"autoiïiatica.ly" has no significance at all. iî.R. i.'C.iNrJON (Canada): Perhaps I should have added that the reason I said that noGotiations muat now prestunally be sii.1ultaneous Etrisos frcra the fact that in the draft Chartor as wo first saY it vwhen the mzatings started. aach country had co1.l.lcte frcodor.4 te negotiate, As tho Article has noew been wiicnded it is clearly contc&.il)lated venr laid down that each country nc.otiatinS muat seek the permission of othor parties interested buofore it can negotiated the mnarLins. That,is, nagotiato in mz final sonse. Tharc- fore the r;:sult of that aoeno-drant is to iiiakc tho negotiations nuoosscXilY simultaneous. It will involve a series of vcry coieplicated negotiations with the result, as I say, *that the word- "!autoiiatically" mmy not nove çperate automatically, if I ma-y put it that wayi- MR. GUERRA (Cuba): I want to add another observation to that, think also that the word "automatically" had other. importance in that the draft -5 - J.2 E/PC/T/C.II/PRO/PV/12 Charter as we first saw it did not contemplate the possibility of any preferential rate remaining in force after the negotiations. Now that the Article has been amended, it is possible, although the object is to reduce or eliminate them, that some preferences will remain after the negotiations which will not lie subject tu the operation of' Article 18. In that case, if so:uc porcforonces artu possible, I think the wor. "automatically" loses iL.Portance, bocauso it will not operate in any vway aCainst those preforences roi.,.aining after the negotiations. l'R. IALUINS (United States): I do not think the Article contcaéplates that tho first sot cf negotiations, next Sprin-, doalinj viith tariffs and preferences will b1e the only oncs. It is concelvable that somi:e pro- forences rany stand for quito a lonG tiste, but wo should always kceep open the possibility that, they rmay not. In other wordss it is net only Just onc process that is inrvolvod hore; ovfik tho years thero amay be fr'oquenS hogotiations on this subject.' THE Rij?'ORTEUR: I wonder whether Lhr. 1%icinnon' a interpretation of' the Charter is entirely correct in regard to prior international coiïauitrients? It scci.es to me that the statement does say that prior international con- U itr.ents shall not stand in the way of negotiations. 1:,i I:;CXININON (Canada): The Charter made it action, not neLotiations. THE RIJPORTEUï: The one vie agreed on i.iade it negotiation, which woulà mean that if the Margins are te be insisted upon by ite. negotiation that would tend to defeat that prineiplc. ! MICKINNO01 (Canada): You rc-,c;.JDer that in the Co:%mittee net only ats thc lsord changed fro:il "action" te negotiationo" but thére was a very considerable addition to the sentence which h had' the effect of r.iaking necessary situltanèous negotiations. 1'ithin the Charxter, thore ought te be negotiations in respect of preferences. TIIE CHLI1IUff: I think thore ij still confusion in this question. If WOv read this paragraph through we sec, in the version Ls it is hore in the Charter, references to the automatic reduction of preferences together with the most favoured nation rate. There is a definite proposal now -36- J.2 J.3 E/PC/T/C.II/PRO/PV/12 by the Delegate of India to separate these two things and keep the obligation to eliminate or reduce the margins of preference in the Spring negotiations, whether we negotiate only preferential rates or whether we negotiate most favoured nation rates but the principles should be that the margin of preference should. be reduced but here again one cannot use the word '"autoluatically"' in the s ai-e way as you would reduce tho iuost fàvoured nation rato. This is a definite proposal haro on which wo ougit to give our views and try to reach a d.ecisioh4 I have not heard fro. Mnr. i.KclUiinon and iri Shackle and other delegates uhethor thoy support the Indian pro- posal or not. iiM. SwtCiG.UE (United KUngdoi.i» I should rather lilce td £et a clarifiacation of the wording of 'xrticle 18 (1)(a) in view of lvhat the Rapporteur has soid. The wording as it nomv stands in the draft, I think, is this: "Prior international eoru.biitïients shali. not stand in the way of nego- tiations with'respect to tarif±i preferences, it being understood that action resulting frou such negotiations shall not roquire the nodifi- cation of existing international obligations except by agreement beetween the contracting parties or, failing that, by termination theroof in; accordance with the ten-is of such obligations." I think, as regards thc first part of the sentence, "cori;i.iiti.ients shall not stand in the way of n-eatiations", it is.porfe6tly.clear that that alans that the r.-erc fact that prior international. ecmrnit.ients exist shall not be taken by a country as a reason for sayin, it will not negotiate. Then we come to the second part, "it-being understood that action resulting from. such negotiations shall not require the modification of existing international obligations except by agreelment..." and so on. . . .37 - J.3 E/PC/T/C.II/PRO/PV/12 Well, as regards that it seems to me that that probably should be takon to moan that the country which enjoys a prefer- ence - if it is a bound preference at least - has the right to say that it does approve or not approve a particular reduction. It is true that it ought not to, as it were unreasonably with- hold its consent having regard to the general term of the bargain offered to it otherwise, but that it has subjectto that, the right to say that it does or does not approve a particular reduction or degree of reduction. Am I right in thinking that that ie t'ie correct interpretation of that sentence in tlhe vie'à 0f the Rapporteur? THE RAPPORTEUR: I think that is right. It ':nuld have to, because the result of the negotlatioris as a iTholo 7,ould need either to obtain the appzcval of the country, or, failing that, the obligations would d have to be terminated But my point r.as not on that. It v'as on the question' of applying that rule on a product by product basi6 in particular negotiations .throughout, rather than having a review of the rosulte of the rregotiations in the light rf tho advantages to be gained. MR. SHAOKLi (United..Kingdom): Yes. MR. ALAMILLA (Ouba): Mr. Chairman, I saynagain that rre are coming back to all our previous discussions. I did not rant to go back to page 6 or to start ..ith page 10, but I am not going to prase the point any morc... I say that I dc nct see that there iB any difference botrreon negotiating in one vray or in the other. I beliçva that re have aieared the point perfectly. We are going to conme to the negotiations. A nation ma' have a prefGrenoe tc put rver the table to negotiate. Ancther nation may have a tariff to put over the table to negotiate. They all negotiate. On that nogotiation betlveen trvo specific countries it happens that one country consider that it must reduce the tariff of a third country. Then it calls this third country and say "I rant 38. E/PC/T/C.II/PRO/PV/12 to reduce this preference which you have, and therefore will you come to the negotiations and let us all be together here." That nation would say "yes, here is my preference also to negotiate", but do not tion has to get a price for/putting its preference on tho table, just the same on the table. Onoc they are all there, it may happen that this nation rnay say "The price is not enough' j, and then the nation that v!ants to reduce The preferences or eliminate them, If the negotiations do not succeed has a clear vray out, and he canes \under the appropriate clauses. I think this is absolutely clear and I do not knor, rrhy vie have to come back' again to the same problem, THE CIAIFAI':1. But it still leaves the point of the Indian delegate, and I have to turn to that again. MR. McKINIZON (Canada): Vould you tell us the point of the delegate of India? THE CHAIRMAN1: The point is this. If you have a most-favoured- nation rate oe4O and a proforential rate of 30, and you agree to lover the most-favoured-nation to 35, t'he preferential rate at the same time cannot be altered more thah 5. MR. McKINNON (Canada) : Under the .-ord " autorpatically" the prefer- ential rats mrhust étay ."here it 7as. THE OHAIRMAN: The Indian delegate rrants to have it in this way, that first-you can negotiate to bring dovtn the most-favourod- nation rate to 35, and thon you can also in another agreement' bring doren the preferential rate to 28. Then the margin viould bc 7, and not 5, as in thèe Ancrican proposal. MR. MoKIN\i'ON (Oanada).."» Just on thc rord automaticàlly", I. vould like to state again in a fer: ''ords tho Canadian position. We v:euld prefer to sec the v:ord "automatically" removed. THE OHAIRMAN: We knoev the complications vihen vie remove it. MR. McKINN~JON (Canada): Well, ;re actually made a motion to that 39,++++-dggdfgdgdfgdgdfgdfgfgg E/PC/T/C. II/PRO/PV/12 effect at one meeting of the Committee, but it was not carried. If the ord "automatically" were removed the Indian delegate's arithmetic would be correct and we could proced. along.the lines'he suggests, but as long as the word "automatical:ly" is there ho is prècluded from doing -".hat ho 17ould like to do, THE QHAIMii';iL: Gentlemen, the question is again put, r.ill Vre delete the .-.ord l'automatically" or not? Tho Indian delegate is in favour .of that, I imagine. The Cuban delegate?. MR, ALA1ILLA (Cuba):. I;o are 'illing to doloto it. ;.o do n-iot sc.p any.problom in- doing sr. MR..LECUY'R (France) : Ycs.. MR, MrcKIiïTl0Ol (Canada): *Yes. MR, HA..XTS (United States) : .e prefer to retain it. MR. SHACKLE. (United Kingdori): I havoc a point I v,;ould like to make on this. I. am not to bu understood as pressing :for. thc deletion of the sord automaticallyly, but it nevortholoss does seem to mc that it may ir practice be found to have the effect of limitin- the scopo of tha nogotiations and actually, bv anid largo, of producing les reductions than if it voro there. That is my feeling. IT is rather hard te make any sort of quantitative estimate, but I feel that in gQneral the effect' of this -ord "wa.tomaticnlly"1 may bo somewhat to limit the scope and result of thc negotiate ona, but I rvuld not press any suggestion to remove it. MR. McKINWOIK (Canada): We are in the saine position. We are not pressing it, but we quite agree -ith Mr. Shackle that the retention of the word -';autornatically' mnay linit tho scope of the negotiations and tighten the. negotiations, 0f I may use that .word. MR, alamilla (Cuba): we are in exactly the same position. 40. E/PC/T/C.II/PRO/PV/12 THE CHAIRMAN: So I think the only one who proposes to retain it is Mr. Hawkins, and I think he is a very important partner in those negotiations.' MR. VIDELA (Chile): And I support the United States delogate, THE CHAIRMAN: So we have two in the other camp now MR. HAKXINS (United States): I think all you oan do in the oircunstances is to lot it stand this r:ay, .4ith a report explaining these complicated arithmetical illustrations to the full Oommitteo, THE CHLIRMAI'I: Yos, but I only .rant to say one thing, that if rva viould leave out tho r ord llautomatioallyI, those examples v!ould then be revised. MR. ALAAMILLA (Cuba): With regard to the examples, Mr. Chairman, I wouldd like to say that the examples are not necesar,' y right, because the vray I understand this thing, it does not matter rho proceeds to negotiate first. Therefore, I think these differences that are made if one negotiates firet or second do not mean anything at all, because ':hen I tart to negotiate and I have a binding international obligation, I have to conclude that obligation first if it is in the ray of the other negotiations. Therefore, I do not care who negotiates first, and what I would say of the examples is this: it does not matter v!ho negotiates first, because if thore is a binding obligation that obligation has to bc agreed upon or eliminated. So I will skip two pages and strike out the two examples. MR. ADHUXAR (India): Mr. Loddy gavc an explanation to Mor. Shaokle, :.that overy reduction in the proforential margin hnvlng to receive the approvaal of' the country enjoying the preference would not apply to negotiations in respect of individual products. 41. E/PC/T/C.Il/PRO/PV/ 12 MR. McKINNON (Canada): Oh, yes. MR. ADARKAR (India): But only -to the results of the negotiations takon as a whole. Was that. your explanation? MR. HAWKINS (USA). Yes 42. L. 1 E/PC/T/C. II/PRO/PV/12 MR HAWKINS (USA): Yes. MR ADARKAR (India): Tho negotiations are being conducted simultaneously, and I suppose these other considerations would go on. THE RAPPORTEIR: I had thought that Mr McKinnon was reforming to a case where a. proferencc-granting country was coanror.tca vrith a request for a reduction in the r.iost-f:.xvourod-nation rate acl a simnultancous roqucst f oio a reduction in thc prfrorantiu. rata. That request was not made for the purpose of preserving the rmargin of preference, 'which might othar- wise be reduced or elir.Linated, but for the purpose of reducing thc protection in the hoane rnMrket. That was the kind of sir.ultaneous negotiations I thought we vrcr talking about. !.OE MoKINNON (Canada): Not necessarily - it could bc that, though. MR iZ MRX.R (India): The other object of conducting the negotiations simultaneously rmcy be ta Zivo thc country at present enjoying a proferenco rn opportunity of watching its own intarosts, and in that case tho consent of the country enjoying thc proferance would have to bo talcen o'n a znore or less product-by-product basis. If there; is no tgreeinont thon n vcry difficult situation vrill arisc. Tha country which is giving tha prcfr- ence vrould ha:e to dechda vwhhothar it should àbrogatc the viholc of the agreement vrhich it has vrith the country enjoying the prcfcrance, or w;hather it should just clisvappoint thc county *rhich is asking for the reduction in the margin uf preference. THE RS.PORTEUR: I think that thore is a very grcat mechanicn.1 difioulty irrvolved in that process that you arc enviiaging in thc negoti. tiohs, and that is this question as ta whlether the country enjoying thc jtcference will agree ta its reduction or cliriin-mtioki; Jrhat vrill dpend upon vihat country obtains from sor. othar country in tie negotiations as a vrhole. Therefore, it seems clear that the country must be froc ta go ahead on 'a conditional basis until they .see havr the negotiations are coming out. Then, to be sure, you must have a careful review of what the affect is, and such a review must necessarily involve an examination of the products affected. But my point was simply that if, before offering any country 43. L.2 E/PC/T/C. II/PRO./PV/12 a reduction in tho most-favoured-nation rate, which would reduce or eliminate the margin of preference in each case, you obtained the consent of some of the the countrics enjoying thc proforonco, it soer.is to r.o you vrill novor got anyvhoroa, bccausO tho country enjoying the proforenoc vrill not bc :blo to giv¢ its ceonsont on the orncmorandum until it finds v;hcther thc country wvhich originally roqucstod tho reduction in tho nost-favourod-nation rate vîrs doing sor.w thing f.or hin, and the stage in the. negotiations bright not have bcon roachod. where he can toll that. Thoroforo, I should thin'c thrtt thc negotiations vrould proceed with some freedom until enough progress had been made to see whether the results were Justifiable. Mr adarkar (India): That would certainly bec concodcd. The country enjoying the proforence would not bc procludod from, particip;:ting in the dis- oussion. THE PuIf PORTEUR.: No. MR \LItILLA (Ouba): I just vuant to rofor to this because I think you start herc Nvith certain details vwhich I think %vill act us into a lot of tzvubloi Thcrofore I greatly profor. the d.olotion af ll these details and that vr should jgst road through tho cxsilcs and tance the principle of thc thing, which I boliovc is vcry clear L,.nd very simple, In Yr, opinion, vihich at onc tire I thought vas ,Zrcvoiling, it doos not rmoitter vrho starts the ncçotiations. *e should not rtrlcc distinctions as te vrhother this onc starts first or th.lt ono. Tilat does not r.=ttor, because the countries conocrncd might think that if thcy started firat or if th4y started second so-mlthing right hayocn to alter the position. That is vwhy I would. lilce to havoc fror.i this p:Dge 7 up to thc lettcr C on page 9 completely talJcen out of thc document, to be substituted by the goneral statement to be set out in clear lucid English, of the position I have boen trying te set out in those discussions. the chairman The Rapportour will answer that. The rapporteur: The only reason for the olaborate illustrations and explanations as to what would happen under the rule was because I think L.3 E/PC/T/C.Il/PRO./PV/12 the Australian delegation and some others requested such an explanation to be put in the procedures memorandum before they gave final approval to the rule in the Charter. That is the only reason for that If it were generally accepted that the rule is desirable, I do not see any reason why all of this material in the procedure memorandum should not bc climinatead and replaced by a short :md sirmple àtate:.nt. MR McKINNON (Canadat): Dc iné the viord 'automatically"? THE RAPPORTEUR: No, rotoining t-hu wrd "%utona.tically." MR XcKINNON (Canada): We have taon s,)ncing z litt uf tii.z on 'r Loddy's draft and his perfectly correct illustrations in regard to vihat I might call the arithmetical working of the rulc. But îic have now,.-tva.ndorad vary deeply into a different subject altogether, namcly, that wc change the rule. If there is general .;grecr.ient around this tabla, I thinc that it would be dosirablo ta havc the rula changod by dcletinr the Yerd "auto- matioclly.` But, as I understand it, tho United States delocate faeals ho has ta record his dissent on that point. MR HAWKINS (USA.): That is correct. MR NLMIILLit (Cuba): M7y I offor an explanation of' what I thought also the word "autorna.ticolly" meant? Th;.t once a reduction Wlas made in a-na item, it vwas applied autor;w.ticlly ta everybody alse in thc negotiations. That is why I do not abject to it. I think that if I give in regard to a specific product sorie reduction in tariffs or in preferences, that which I give ta one country has ta bc giSven automaticJ.ly ta ril countries. THE CHAIPMAN: Novw, Gentlimen, I think that we arc just in this difficulty with regard ta the rulc ta be ,iied. Thorc is novf a difference of opinion, and Mr Hawkins has suggcatud that it would bc simpler ta lcave it to the main Corumittec ta decide on thca iule; but I think that if he is not able to give his consent no;r ho vrill not be able ta do so in the main Committee, unbss ho has sore time to reflect upon it. In regard to this memorandum, there are two possible waysin which we0 might reach agreement in Geneva before we start our negotiations, and I think that would be the only way to deal with it, to have a main rule on common negotiartions. But 45. L.4 E/PC/T/C.II/PRO./PV/12 I do not think that it is right that we should spend so much time upon it because without a. rule we do not know where we are. I think that is tho only possible toa deal with it at thei.-or.rint, th:.t r:c, should hr.vc c1l thoso rulon vrorlcodt out, ,-xnd thon thc choice vrill h.ivo toe bo 1.uc.de in Geneva 'about vmhich systero to rfdopt. 14R HIi.L0WKIiq (USA): iAnd if it is not po3siblo to roach soi0io conclusion, boiorc, hero .lay bc othoropp)cart-uhitics or discussinS'it. T1D3 AIiI.Ji1N: I nM glad ta lcx.vo tho point opon, thea. Thivro ;oe e'lso ri1l those oxomploc, bccn.uso thcy -.5nly onl t:jnc rulo omd not to the other rule. Then it all depends on what an agreement we reach alter on. I would skip that for the moment and come then to the other rules that are in this part of the paper, M. fols. M.1. E/PC/T/C.II/PRO/PV/12 MR. SHACKLE: May I raise a. few points? It is as well we should tie up a few points on pages 8 and 9. before we leave. the,. First of all on page 8, line 3, the figure 10 should read 20. THE CHAIRMAN: That is right, 1SR. SHILCKLE (U.)K.) Lt thc fbot of tho sac pagc, thc fifth linc fra:i the end.' 'lhe sontunoc in qucs1Aion roadz: "thc country granting tho prcfcronco should do so only if it is prparocd to conuiicr, on its merits, and apart froii1 thc effect on thc preferonco, a lator request for a reduction iii tho moct-.favore.d-nation rate." It is my feeling that thc worc's "and apart from the effect on the proferonco" wvoulc bc better omitted.' Tho reason is bpoausu very o±Nton the object of the rcqucst will bc a reduction of thc proforence, If the offcct on thc prafcronec is. to bc: morc or luss ignored, .hMt would deprive th(, country. affected by. tho reduction of the preforonco of o say in tllC noagotiatiotis, vihich I think would not bc right. For that reason I suggest that we tako out tho:;c words "and apart froin the ef fct on the prefcrenco". I do not k-how wrhothor thc Rapportcur vrould like to discuss th;t point novf, or whcthor I should proceed to sny third point? '1:X CIIR..;Z: Proceedl.-: il{. SA-ICKIE (U.,.): My third point is this, at the tope or op»ae 9, which reads: "the country grantinL; thc profcronco should not rosist agranting a reduction in the most-favorcd-nation ratu solely in order to maintain a margin of proforence and apart from tho dff'tsct on domncstic industry.' I thinlc it would bo better to substitute for tho vrords resistt granting" (in the second line) the words refusee to entor iàto.negotiations for". Otherviise it soerils io me that the rights of, tho country enjoying preference would bc ovor-riddon. the chairman are there any othor remarks with regard to.these, pages? mr adarkar (india): There is one point of clarification I would like to raise on page 9, line 12 of (c) which starts '. '4.7 H.2 . E/PC/T/C.II/PRO/PV/12 "Also, the rule would not prevent county .. from requesting, or country B from granting , a reduction of the margin if preference greater than that resulting from the negotiated, reduction....... ....bring tho maargin of proforonce down to l0per cont - that is to scy, fro.n 50 te 40,Whcn tho prercrential ra.tu is 30, the reduction in the most-f'avorodnc-tion rate from 50 to 4.0 vould autoia ical.y reduce thlc margin of preference fron 20 - 10, and thon it <ocs on- "and might also acgroe that the margin should ncverthdlu;.s not czclccd 5 per ent." ,o is il contemplated that eff oct should bc given to that by increasing the profcrential rab fro.i 30 - 35? '2'HE M.;PiUTUR: Not necessarily; t.iat could bc left tp the countries concerned. Thore i5 a double interest. You have in thG most- favorcd-nation rate an imtcrest in getting the maximum rate which is dcsigncd to increase airports into the country granting the preference. You have a furi;her reduction windir the pre- feronco than would result throuCh thc. reduction of the most- favored-nation rate. The furthQr reduction of the preference te 5 per cent could bc achieved either by a furthc4r unilateral reduction in the inost-favorcd-nation rate, which coUld be later brought back without violating maximum most-favored- I\ nation co.rnitments, or by rasing the prcfrential rate by something in between. lmR. iMARMU2 (India): Thon\it.' i! contenplated that 3sem o? the | ost-favored-nation rates moy no£ bc bincling? A country mal agree to a reduction in the tâargin fra.i, say, 20 to 10, or froe 20 - 5 but may net bind itself with mgard to the actual rates? the rapporteur there is no reuirescient in the rules to prevent that. the chairmanN I thout ht that at an earlier stUrc it was said that you should never do it by raising the preferential rate. mr mackinnon (Canada): 'there is nothing clefinite to that offuct. -4.8- 11. 2. M.3. E/PC/T/C. II/PRO/:PV/12 MR. McKINNON (Canada): The general working out of the rule would usually work the other way, but it is not precluded. SENOR ALAMILLA (Cuba.): WE are not discussing, examples now? This is simply an illustration. THE CHAIRMAN: It is simply to find out whether it is allowed or not. THE RAPPORTEUR: It was just to make it clear that this rule does not prevent that. SENOR LId.LMILL. (Cuba): Whero are we st-rtinE; from on pago 8. M Cfli.LIRLtLN: 'l'ho second and th¢ third rules. SENOR 4.LiMILLL (Cub.): But I thought 2fr. Shackle referred to the first one on page 8. IR. MuKINNON (Canda): Everythirig fror, tire start of rule 2 to the foot of page 9 relates to rule 2. Thore is not much profit in discussing our Rapporteur's comraents on rule 2 v;hcin the stage we have reached is that vr gSnerally favour a revision of rule 2, s0, supporting the Cuban delegate, I v*ould like to suggust that vw go on to thc consideration of rule 3 at the foot of page 9. TIB CHW.II~L.N: Ihave only one question to ask. It is in connection with pagC '.O, at the end of the first paragraph, wherc we status we woUI.' e "entitled to expect the reduction cf a 'high' tarifff. Should r sry "be entitled to"? MR. MICKINNON (..,tada): 'hat viould change the sons. TIE CHi.IEIhN: But "to expect" is a little different. MIR. MoKlNNON (Canada): I am supporting your point, Mr. Chairitnan. TH1E CHLIRMlN: Vie then come to rniscellancous rules of' guidance. It is nowv 7 o'clock. Whon would members like thoir dinner? Mf'ter soine discussion as to whether the Committee should meet aitain aftor dinner, or ad,1o-rn until Sunday aiorning, the ChairMan adjourned the meeting; until Sunday, 177th Novoriber at 11 a, m. The meeting rose at 7.10. .p.n. il 9. N& 0.1 E/PC/T/C.II/PRO/PV/13 (Part 2) THE CHAIRMAN: The meeting is open. I. think we have covered the form of the tariff schedules, so that now have, to discuss the status of preference tial rates of duty. MR MCKINNON (Canada): To open the discussion I would refer to the last lino in paragraph 1, There appear to be two methods which night bc followed: the firet method provides that "Tho prefercitia. rates still rcm.aining might to incorporated in thc rmultilateral schcd.ules, qualified by the rcquiret.ient that they apply only to the products of the countries rôcuiving proforrad troataent." The second is: "The proferential rates still rmiaaining z.Li£ht be incorporated in separate schedules which viould ap)ly only to the preferred countr.cos." The Rapportour's coai.i.ent is that except inr cases where olainistrative consider- ations make this impracticable, it is believed preferable to follow the first of the two rmethoas indicated, a sinrile schedule containing both the raost favoured nation rate and the proferortial rate would seeir to facilitate the work of both traders and goverr.aentz. As a :.:atter of the r.îeaning of wvords, I was not sure what the Rapporteur rant there by traders - you nean the trade a.ter its conclusion, as an easy iamans of reference to the rats? THE RPMRTEUR: It is just a rmethol cf prcsntation, sc that you can sce what ïr thuro. vR. XCKINNON (CANADN): FrP.r our point of view wc should much prof er to show the ost Ravoured nation rate in the schedules, ayl the proferential' rates would be shown in schedules relative to the countries cxncerncd in the preferential areas. THE CHEJRdLN: You would favour the second tnethod? IVR. C1CKINNON (Canada): Yes. THE CH&IRifiN: What is the opinion of the United Kirldera D.legate? UR. SHUCRE (United Kingdoa): I rmust c.vnfess that I ,had not thought this point out closely but I OLV inclined to agroc vith .;r ;&cI'IUnnon. 1. point which ecurs to m.e is that, supposing that the kind of process which the United - 39 - 0.2 E/PC/T/C.II/PRO/PV/13 States Delegation envisages, in which in certain instances the most favoured nation rate negotiated in favour of a country was to be automatically reduced, the reduction of the corresponding preferential rate would not be in your schedules. If you printed the most favoured nation rate on the one hand and the preferential rate on the other, it would be a misrepresentation of the position. The rate on which the most favoured nation rate would be charged would be something below the schedule's indicated most favoured nation rate. That would happen I think if you had a single schedule embracing both. PLOM E/PC/T/C. II/PRO/PV/13 THE RAPPORTEUR: That is true, but that would not be misrepresent- ation exactly. It is true that the actual interpretation of the rates would not correspond with the maximum rate shown in the schedule. THE CHAIRMAN: Has the Indian delegate any remark on this? MR. ADARKAR (India): We would prefer the second alternative. MR. VIDELA (Chile): I do not desire to say anything at the moment. MR. GUERRA (Cuba): In general we would favour the first method; in order to make easier the handling of the tariff, but I would be glad if the Canadian delegate would explain the advantages which he sees in that. It may help me to form an opinion. THE CHAIRMAN: It is simply a question of procedure, of what is/the best thing here. MR. McKINNON (Canada): On that point, it is not a matter we need decide today at all, is it? It will be open to each country to adept the method of showing the rates that it is granting in the manner that is most administrable from its point of view. THE CHAIRMAN: I would prefer to have a common system, because that would facilitate the work of the Secretariat. MR. McKINNON (Canada): No, the Secretariat will not be doing the work until after it is all completed.That is to say, they will copy it. . MR. HAWKINS (US). AS far as we are concerned we will vote with the majority, whichever way it is. MR. McKINNON (Canada): Mr.Deutsch is suggesting it should be left optional; that there is no necessity that everybody should fwllow exactly the same method of showing the rates. MR. ADARKAR (India) I thought we were here considering only the form in which the agreed rates should be set out in the schedules to the agreement. MR. McKINNON (Canada): Yes, that is why wethink it could be left optional. 41. E/PC/T/C.II/PRO/PV/13 MR DEUTSCH (Canada): There is nothing to be accomplished by having one way or the other. THE CHAIRMAN:Then it is just a question of which method could be decided upon after the tariff negotiations, and we should have to do that at the end of the meeting in Geneva, so perhaps we can put in here something like that. MR. HAWKINS (US): Why not leave out the last paragraph and not pass on it now? MR. McKINNON (Canada): Yes. MR.SHACKLE (UK): I presume that the order in which the agreements about tariffs would first emerge would be rather like ordinary bi-lateral trade agreements. They would be schedules as negotiat- ed between certain named countries, and then there would be a further stage of consolidating the whole result into a single list, but in the first instance they would appear as separate agreements resulting from negotiations. MR. McKINNON (Canada): Yes, that is the first stage. It is a question of whether in the second stage they are consolidated into a sort of mass list. MR. HAWKINS (US): Well, I do not understand it really, because to have not covered this point of procedure yet, and I think we might hold it in abeyance and not anticipate it. THE CHAIRMAN: Yes. Then we come to the very important point of "Procedures for Conducting Negotiations among the Members of the Preparatory Committee". I have one question to ask here. What is it we are supposed to do? Do we in the first instance only put forward the .commodities on which we are prepared to grant concessions, and in the same way mention the commodities for which we ask concessions,.or do we have to mention the real concessions? De we start at this moment only with saying that we want to negotiate on this and that? I ask this bacause we have here a reference to a schedule of proposed tariff concessions to all other Members. I think we have to be very 42. . . P3 E/PC/T/C .II/PRO//PV/13 clear what is needed here. MR. GUERRA (Cuba): I would like to ask, is the Second Session referred to here supposed to be the one in January? MR. HAWKINS (US): No, April, in Geneva. Mr. Chairman, I think we might dispose of this little bit. As we see it, it would operate in this way. Between nor and April, and certainly as early as possible, countries will be making requests of other countries for tariff concessions. MR. McKINNON (Canada): Has not that been done in respect of what your people call List No. 17 MR. HAWKINS (US): Yes, and then there is the list of rates which will be the next list. The nett result of the requests, put together, would be a list of specific requests for reductione on such and such products. Each country will get that from 17 others. MR. McKINNON (Canada): When do you contemplate it? That is the problem. MR. HAWKINS (US): December 15th, I think. THE RAPPORTEUR: think so. MR. McKINNON (Canada): To put it in term of a particular country, so that it is easily illustrated, your demands from Canada, shoring the actual rate you are requesting, will be received by us then? THE RAPPORTEUR: December. MR. McKINNON (Canada): And our demands upon you should be received by you then by December 15th. MR. HAWKINS (US): Yes. so that by December 15th each country would have requested, products and rates from all the others. Now each country goes to work on that and formulates, in the light of those requests, a schedule of offers to all the countries, and that is put on the table at the opening of the April meeting and that is the basis for negotiations. You would have 17 of them on the table. . . -.. -.. 1 - - E/PC/T/C. II/PRO/PV/13 MR. GUERRA (Cuba): That is how I thought it would be, because if we only knew for the first time at Geneva the things that were being requested it would not be possible to get anywhere, and it would be very difficult for small countries which have not se many people to deal with these matters. I think it would be a good thing if we put something in here about December 15th. THE CHAIRMAN: This first stage is that each member should submit a schedule of its proposed tariff concessions to all other members. I think the first stage is what we have just discussed; that is, what you ask from another country. MR. McKINNON (Canada): The first stage really comes before that, THE CHAIRMAN : And that would have to be done by a certain date and in very concrete form - that is what you ask - and the second stage is that you peopare in the remaining three months that you are prepared to offer to countries, and that we should put point-blank, cards on teo table, no haggling, no horse-trading. We say "This is what are asked; we are prepared to offer this".' I think that should be very clear and should be incorporated in thie Memorandum, otherwise there is a very great danger that in Geneva will start very modestly, feel our way, and say "Well, perhaps it I canan consult my Gomenrent at home I may go ewhmarat fuht"er', and se on, and ahww rould complitamm natters to a verg aaent 'extent. SCHACKLELE (U:)II think there is a serious difficulty here. If you are to p downor a schedule of proposed tariff concessions you can oy dodc that on somassumption.n. What is that assumption te be? Is it ttallail your requests to the other-couneeics are granted? If now, rhat could it be? HAWKINSXIUS:: It is not a schedule of firm offers ln theesanse that y arear committed toit from e monemont you lay it dowI. iis all assumptions,s, and you cannot verify those assumptions uhtil you look at the other 17. The fst week or two would bebe 44. E/PC/T/C.II/PRO/PV/13 taken up with going easy with the schedules and looking them over, and then coming back and looking for advances in the other fellow's schedules. MR. MCKINNON (Canada): Can we meet the point by enlarging the first paragraph in this way: "Lists of concessions requested having been exchanged by December 15th, each Member should at the opening of the Second Session submit a schedule of the proposed concessions" ? That is the meaning, is it not? THE RAPPORTEUR: Yes. 45. Q. 1 E/PC/T/C. II/PRO./PV/13 MR QUERRA (Cuba): Mr Chairman, I agree that the first stage should be as to what we should ask for, and I think that it would be very helpful to make it possible for everyone to see what his position is and at the same time we forward what we have to offer in return for that. THE CHAIRMAN:It raises a very important point and I think a difficult point, especially for those countries which have to rebuild the whole of their administration after the war. The question as: Is this list definite? Are we allowed to add anything more to it, or is it a provisional list, because I think that is also a point we have to decide here. MR HAWKINS (US): I should think it would always be open to add to it.toit. HAIRMAN: Then I thinkon Ik it is a good thing to put that i paper.apoc MR AAERRi (Cuba): Either add to it or sub from it. It is only an oany.m basisl basis for negotiation. INSINSKI!S (US ): The only thingthinkI Khinl, that lt seouEd bu stressed thnt any offers seoued bc pst io ao soun as possible, wiathout mking it absolutely rigid, st thetis time for countries to consider the er the on before they formulate their offers.ffers.s . I think we would like to have some sort of time limet.me limitimeliDit. 0f course, in exceptional casbs you caw still wring forvard requests, and yourmry fine ehat weee you roccive ethe list from som other countries sesecially ehcountries which have been out of touchoen out of touch uduring the war o eurwillthc wecessary to allow themrw tu ellov; thcm furth Io timn.we have to put i7 haething to cover that tu cavef that matter. Then ma second remark i would make k I emuldmake is thatco is tha essionsgoffered it would be very wise if yould bc vcry wise if you the meeting really ee the eacting rc.lly starts, so that you will be able toa eve the eccretariat aechanlist in a common this lismmon a co.rio tate the proceedings on. Thte edc prolateweon. Therefore, when wec, wihanvm uld be a very wise thing that March cea very wisc taing that M=rch 20th should be the deadline. MR onceived that da): We ced eot canccivcd thnt these lists would go to 4. Q. 2 E/PC/T/C. II/PRO. /PV/13 the Secretariat at all. Surely they would be only shown the countries with whom one was negotiating, at the start at any rate. MR HAWKINS (USA): That is aIl of them - all seventeen of them. THE CHAIRMAN: Yes, all the countries. MR McKINNON (Canada):Not necessarily. MR HAWKINS (USA): Yes, one schedule. MR McKINNON (Canada): I wonder if it would be one schedule in the early stages? MR HAWKINS (USA): That was the idea Then you see other countries will look at that from the point of view of how it is affecting them they will look at it simulateneously, and if they do not like what is effered they can take it up on this point. MR ADARKAR (India): One schemic for all the seventeen countries? MR HAWKINS (USA): Yes. They would not be labelled by countries, and in our case it would run right down through the Tariff Act. THE CHAIRMAN: Only you would say that you would, in principle, negotiatie with that country and that country on that concession. MR HAWKINS (USA.): That would be automatic because if we put our offers on the table we are naturally quite happy; but it is other countries that might have questions about thon and they can take those up with us. THE CHAIRMAN: But you will follow the principal supplier rule? MR HAWKINS (USA): Yes; you can do that in making up your original list. THE CHAIRMAN: Yes. If you do not cormpilc and coordince all these lists you have to do that following the principal supplier rule and you say, "You are supposed to trade with that country and with that country on this and this concession, according to the principle supplier rule." Would that t be so or o6t? MR HAWKINS (USA): Not neccsarilyl. THE CHAIRMAN: ecause Cyou want to acilitate the proceedings; youwvant to have these negotitLions as simple aspossible. Therefore,, I am a little bit in the darkmyself as to what you really mean. 47. Q.3 E/PC/T/C. II/PRO./PV/13 MR ADARKAR(India): Mr Chairman, I think it would be necessary to have a separate schedule for each of the countries from whom a country wants concessions for this reason, that the principal supplier rule would then be more easily applicable, and that would simplify the procedure, and for the other reason, that when you come to specify the actual rates you desire, it will be necessary to specify more or less the actual tariff items in the tariffs of the various countries, and for that also it will be necessary to prepara a separate list of demands for each country. THE CHAIRMAN: But I till wonder whether we could not have at the earliest possible moment a kind of Steering Committee for these negotiations, because I think that if we have all these lists on the table and, we have to find a starting point in all these difficult negotiations, we shall find ourselves in great difficulties. We have to fixed a starting point in all these neagotiations, so that we can see what will be the main lines to be followed in those negotiations, following and subjectt o the eprincipal supplier rule. So that I think perhaps it would be wise to have a Steering Committee for that. MR McKINNON (Candaa); What would the Steering Committee do,Mr Chairman? THE CHAIRMAN: It would facilitate procedures for the various countries when negotiating with this and that country on this and that item, in the first instance, following the principal supplier rule. MR McKINNON (Canada): But I do not think that we should be tied down in advance to any method of negotiation; that will arise at Geneva, according of the conditions we meet there. THE CHAIRMAN: My only point is that we aecsupposed to deal, in about four months' time, with I do not know how many similtaneous negotiations, and if you do not have a kind of stering committee there we will be sunk. That is always a point that has troubled me. MR SHACKLE (UK); Mr Chirman, it is very difficult to see how you can get any result out of these negotiations unless each time, as it were, between each pair of countries, you have the results in a sort of self- 48. Q.4 E/PC/T/C II/PRO./PV/13 contained provisional understanding in the first place. One quite sees that that will have to be reduced later on, but will not it become meant complicated if you do not have these provisional understandings between pairs of countries in the first instance? I am thinking entirely in the air now and without any authority, but is not that almost a necessary first phase? MR GUERRA (Cuba): Mr Chairman, I think; there are two things here: the first thing is this, that I think that if the negotiations are going to be simitaneous - and they cannot be otherwise - every county will necessarily have a list of requests for concessions that every other country makes from every other, because if each one will consent to the others everything will be completely interrelated. For instance, if Canada is going to negotiate with the United States on some item, we have to know, for our negotiations with Canada and with the United States, what Canada and the United States are dealing with; so that, necessarily, the first thing is to have clear views regarding particular products. The negotiations themselves may eventually proceed first between certain particular-countries and the information regarding the general question of requests and the general concessions contemplated for each country will have to be given to every one of the countries participating, be- cause otherwise you cannot have simultaneous negotiations and you cannot tell what your position is likely to be. You will not know what you are going to give to any one country, whether it be through direct negotiation or otherwise. So that, in the first place, there will have to be generally distributed a list covering every country and what they are prepared to do and that will have to go to all seventeen countries. That in the first thing. The second thing in that I think it will be necessary, if we are not going to spend too many years conducting these negotiations, to have some kind of steering committee in the sense of putting some sort of order into the procedure of the negotiations, because it may be necessary taking a particular product with which we in Cuba are familar - sugar - to have negotiations in regard to that product with two or three countries 49. Q.5 E/P/CT/C.II/PRO./PV/13 who may be the principal suppliers of that product. Therefore, I think that the list of requests of certain countries may probably be quite small because some countries are mainly interested in a limited number of products, and it may be impossible to speed up the negotiations in that form, so that it will be necessary to set up certain forms of procedure or a certain order in the discussion and in the actual pro- ceeding. of the negotiations, if we are going to get anywhere; otherwise we shall get all mixed up and we shall be discussing entirely different things. We cannot go country by country; I think we have to do it product by product, in the sens that one product will be finally settled for all countries, and then proceed to other group of products, so that a certain order will be established. Otherwise, we shalI be in a sort of free-for-all situation, and real mess. R.fols. 50. R.1 E/PC/T/C.II/PRO/PV/13 THE CHAIRMAN: I have given some thought to this, and I think we have to choose between two systems. One would be to choose countries which would start the initial negotiations while the others would await their result. For instance, the United States might start by saying "We want to take this in this way. Here is our list. We are one of the countries which are supposed to make real concessions, so ve will start negotiating." That country then makes a choice of thr othrr countries and the commodities with which it wishes to trade. After what, perhaps the British Commonwealth of Nations, being in a peculiar position by reason of Imperial preferences, might do the some insofar as they are not covered by the first series of negotiations in which the United States is the principal participant. Or it could be done in the way suggested by the Cuban delegate (Senor Guerra), product by product, taking all the complications of the special product, whether most-favored-nation rates or preferential rates, into account. We must make a choice of how we shall proceed with these negotiations, and I think that can only be done by a steering committee going over a list and deciding which is the best way to tackle it in order to save time and to get quick results. I am afraid that if we wait until we get to Geneva, we shall lose a month simply settling procedure. That is what is worry- ing me. It is not so much my country because we shall not be the principal supplier for many articles, so it may be quite simple, for us. MR. McKINNON (Canada): When you say that we shall lose a month, Mr. Chairman, is that based upon the conception that the steering committee would be working before we start at Geneva? Perhaps a month before? THE CHAIRMAN: A few weeks. Mr. McKINNON (Canada) : Perhaps we shall need a steering committee, or - 51 - R. 2. E/PC/T/C.II/PRO/PV/13 Something similar, once we start negotiating at Geneva, but I cannot see what a steering committee would do before we are there and ready to negotiate. THE CHAIRMAN: If we had a deadline, say 20th March, that would be the time when the secretariat would have all the papers in its possession. MR. McKINNON (Canada): and turn them over to a steering committee? THE CHAIRMAN: Yes. MR. McKINNON (Canada): I think that would be bad. THE CHAIRMAN: Otherwise some of the delegations may kick their heels for a few weeks. It is very important that we should know exactly how who want to deal with this. SENOR GUERRA (Cuba): Another alternative to a steering committee is to set up a kind of exchange, on the floor of which everybody would be dealing with a certain product, and would have to keep the delegates informed of what was going on between the different people negotiating. We must have something which will put some order into it in order to speed up the negotiations. Otherwise you must make a sort of exchange and say, "We are going to dis- cuss wheat" . Then one country will offer some, another country will offer something else, and they will get together on agree- ment. One of those things will have to be done. THE CHAIRMAN: M. Lecuyer has asked to any something, and then I will ask Mr. Adarkar to speak. M. LECUYER (France) (Interpretation): I think we should discuss this from a parctical, point of view. As I understand it, there have been two suggestions. The first is to have negotiations between country and country, the other is to have negotiations product by product. The chief practical consideration is the number of negotiates which the different countries will be. able to provide. I sec thc necessity for several teams, and not every country could send more than one. Of course it would be very .L e R.3. E/PC/T/C.II/PRO/PV/13 easy for the United States to have a number of terms, but it might be rather difficult for other countries to have more than one term of negotiators to bring to the. Conference. take the case of France. We might have a maximum of two teams, but supposing we have one team. This one teem would be in- sufficient to cover product by product but could be used in the following way. Imagine that the United States had, say, 8 or 10 different teams. Opposite those teams there would be a team for each of the different countries, and we would begin bi- lateral negotiations in this way: it would be country by country but, of course, inside those countries it would be distribution by products. For instance, France would reserve a certain number of products which they wanted to discuss first with the United States. Other products would be reserved, say, for Belgium or the Netherlands. It would start with bilateral trade negotiation which would later be multi- lateral. It will be necessary for the conductor to allow this kind of bilaterl. negotiation. country by country, timing into consideration the products and their extent. I agree with the Chairman that a stearing committee would be necessary, and if such a coim ittee only camie into effect in the spring, I ram afraid it would be extremely difficult to start. With regard to thc objection of the Canadian delegate, this steering committee would only have to collatc all the papers that come in, but if- they have to start only at the beginning of thc spring Conferencc,. I am afraid it would complicate matters for quite a tire. S fallows. S.1 E/PC/T/C .II/PRO/PV/3. MR McKINNON (Canada): The Delegate of France has expressed our position so Well; I would just like to state that. May I put it in my own words? We will come to Geneva having received from 17 other countries 17 lists of request for concessions. We will bring with us 17 lists of offers in return, Surely we will not show those 17 lists to 17 countries? We will show the United States list to the United States Delegation; we will show the French list to the French Delegation. It is quite possible that some of the countries who have smallar trading history and therefore have less to negotiate with in respect of items, may waït around for a week or two, but they wilI be gradlully brought in as the larger trading countries get well into their negotiations. In that way, as Mr Lecuyer correctly says, it will be a series of bilateral negotiations, but the exchange of lists surely will be between the country on the one hand and the particular ones from which it has received. lists on the other hand, and not at ail product by product. If we get into it product by product,. most of us could not field teams big enough to deal with all the problems that will cone up early in the negotiations. THE CHAIRMAN: I dO still feel one difficulty. We are going to adopt the principal supplier rule -- the multilateral rule; not the unilateral? We do not choose it ourselves. tls far as I always anderstood, every country would try te make certain requests to certain countries, following this rule, But still what would be the ham done if you showed the lists of concessions aiked for different countries to the whole meeting? I -think I ca.not follow you there at the moment, because if we adopt tha principal supplier rule we wiJl bring the negotiations intn certain firat, betterance. YQU will have to decide which countries will have to negotiate/ and hcw the others will be brought into these negotiations gradually. I thirik you wiLl find that we are brought into these negotiations when special. a oocdities are discussed with/certain country. Therefore, I still do feel that if you would have a steering con.iittee with aLl the information available tc it, you would have quicker results and more orderly procedure than if it were let ttct every county itself to do this and that. That, I hnilc, is the main point I raise here, '. C A I E/PC/T/C .II/PRO/PV/13. MR McKINNON (Canada) We are agreed as regards a steering committee when you get to Geneva, but its duty will be largely with regard to timetables. THE CHAIRMAN: I think that before we have the full Delegations and necessary equipment available, in Geneva, you need that steering committee to deal with it perhaps two weeks from a certain deadline, with all the information available. But as it will be a very heavy burden on the Secretariat to prepare for this Tariff Conference, I think it would be useful to hear Mr Lacarte 's argument. MR LACARTE: Mlight. I revert to a suggestion you made that a list of the concessions which each country in ready to make be circulated before the beginning of the meeting. I see one advantage in that, although I think I also see a disadvantage. The advantage, as I see it, is this, that if you do otherwise you will not prepare Delegations; they cannot very well foresee what concessions are going ta be offered them; so that when your meeting starts, if it is only then that each Delegatlion is presented with a list of concessionss, it is gaing to have to study them, and it may have ta refer biak home, and I do not see hmw we could avoid that certain aosa of time at the beginning cf the meeting if that procedure were adopted.' It bas ju't occurred to me that some arrangement might be devised. whereby - countries would only ciroulate its list of proposed concessions to whatever other countries it wanted to negotiate with in the firstiuitanoe., lm cK20! (Canada): That is our point, Ur Lacarte, A.tat we would rake our reply to the particular counlr iînteresteda; imybe halt a: dozen in hfe eirst week. In due course the list would be consolidatel. There: is ne question Of tbîat.`i UR LRCAR3: The point Inalce is: would you, for exaiple, be. apeeable tu Canada:' s n of prtposea concessions on the part of Canada being oirculatea previôuw to the neetirig ta whatever caiuntries Canada chrWe to negotL;te t 4th. It seers to me that that would give each country an opportunityr say.one two or three weelcs before the meeting, to consider the concessions that weré offered, to get instruotlons froc home or to consider it at home, and then to reach Geneva with some sort of idea of its attitude towards the concessions 55. S.2. S.3 E/PC/T/C.II/PRO/PV/13. that were offered. it. If you do not do that, you will have to do that in Geneva, and then the real work will not start until April 25th or later. MR McKINNON (Canada) May I ask one question? Presumably we might get lists of requests from the 17; therefore we should preparelists of replies for the 17. It would not be very proper to say we want those replies to go only to four of the 17, would it? From your point of view; that would be a peculiar' distinction to make. MR. LACARTE: From the Secretariat' s point of view, I think the situation is this: all we are worrying about is getting the thing under may as quickly as possiblele and with as litt lossorfoaimeriif 'ieretydycy here and mmittee II arere happy with that procedure of only giving your lists to come ople.L R. ADARKAR (India:3 To express our opinion on these various points would mean some icoonveniencetof theCommitteee, because several point Sarve been raise during the ooursde of discussion ana it will be necessary to touchon all of thèm. InI the first instance, two alternative retIods of negetia ionwere disoussea; one is product by prodwut ana the other is etween pairs of ' countries, It eem s- to me that negotiations product. by prd.uot woulad not merely require a large'number f? neotiations. tamss,That it would also be contararyay `to the rnue that these negotiations are tj proceed on a-riutiuily advantageouw basis, If the product by product method ïs acDptod., there will have to be Bimultanoaus ngÉoiations.. There will have to be sinultanemus negotiations in respect of eaoh individual product, and a country whioh is asked to lower it ariffs on that a prduct will have opportunity to know at that time what wat concession it es going ta get in ±z return ±'rm the various oher.z ountries which are asking fer that concession. There will therefore develop a tendemàcy o assess the value of each by some arbitary critarion instead eof by the riteriaon of mutually advantageous basis.s If the mutually advantageous rule is o be strictly adhered to, I think it is encvitable that negotiations should bedbe onducted in pairs of countries or in smaller groups of two or three countriesis n the first instance.'ôti.' .fs. 56. ___. s_^2, T. 1 E/PC/T/C.II/PRO/PV/13 Secondly, the steering committee -or any body, whether it is the Secretariat or the steering committee which performs similar functions - wïll have to draw up a time-table. Also, it will not merely draw up a time-table and say that on the 8th April there will be a meeting between the Delegates of the United States, Canada and the United Kingdom If that meeting in to convey anything to other countries, then other countries must also know wh at are the products in respect of which the negotiations are going to take place. The. steering committee will not merely have te set forward the time-table of the meetings, but will also have to give some indication, in respect of each meeting, of the products which are going te be the subject of negotiations at the meetings. That is to say, the steering committee will have to decide what are the products in respect of which the negotiating countries are the principal supplier. From that point of view it will be of advantage if each country submits te each of the other countries a separate list - the list being composed of the products of vehich the country vas the principal supplier ta that particular country. That would facilitate the viork. Se far as the lists are concerned, it will be of adyantage if it when each country forwards its cfpn lists te other countries/simultaneous1y forwards a copy te the Socrotariat. That is te say, if country A has prepared a list for each cf the other 17 countries - B, 0, D, E, P and se on - then when f orwarding the list to B it should simultane usly fcrward a ccpy to the Seoretariat, and vwhcn sending a list te COit sends a copy te the Secretariat. The Secretariat would t hn collect tHa listed, ead in good time before tïÈs Geneva meeting it would prepare a consolidr-od *compilaticn for each country, showing the concessions which are demanded of that country by other countries, and would circulate that compilation te the cther ccuntries. Thus, each country would know net merely what requests were being made of it by ether countries but what requests were being made of each of' the other countries by various countries. There may be some objection in disclosing te other countries the concessions which each country in going to offer. I believe there should be less objection 57. . T. 2 E/PC/T/C.II/PRO/PV/13 to disclosing the list of demand than to disclosing the list of, offers, so there is some point in what Mr. McKinnon says, that it may be embarras- sing to disclose one's list of offers to countries and they may be disclosed only to countries with which negotiations are to take place. But there should be no objection to disclosing demand which are being made on that country - in this case Canada - by other countries. Thirdly, with regard to the date, I think 15th December is going to be rather early as the last date for sending lists. THE CHAIRMAN: We have to do two things, one in regard to the demand and the other in regard to the concessions offered. I think we should now discuss the listed of demands. MR.ADARKAR (India): 15th December is going to be the last date for sending in demands? MR. McKINNON (Canada): No. Mr. Hawkins expressed the opinion that it should be the target, and that it should bc adhered to as reasonably close as possible. (Deputy Executive Secretary): MR LACARTE. May I take up a point mentioned by the Indian Delegate? He was not sure whether the schcduling of those bilateral meetings between countries would be left to the Secretariat or to a tariff steering committee - as it occurs to me it might be called. It seems to me that it would definitely have to be a tariff steering committee, on which every country would be represented, because I am not quite convinced that this would be merely a question of scheduling meetings. I think we want to get thc negotiations arranged in such a way that the main countries and the main products arc dealt with in the initial stage. Once you get that agreed the rost is merely filling in gaps - we hopc. That seems ta me to be work of substance. You have ta get thu agreement of countries ta negotiate. .crtain products with certain countries before you actually arrange for them tc do So. That occurs ta me tc be a very delicate task which should be left to Delegations themselves. That is just a thought which I 'mention for consideration. 58. 3 E/PC/T/C.11/PRO/PV/13 THE CHAIRMAN: Perhaps I might make a further remark before we ask Mr. Hawkins for his comments or discuss it any further. I do not share the fear that if you circulato the concussions you offer to different countries that would endanger your negotiating position. Mr. McKINNON (Canada): Do you fear premature publicity of it? THE CHAIRMAN: It would not be published. It would simply be put on the table in Geneva when we come together. Any country in a difficult negotiating position will, of course, seek its partners in the negotiations, and will inform them what had been requested of them and what had been offered in return. You will never be able to koop the thing secret. It will be a multilateral negotiation. I think it is much better to put our cards on the tabla, and for everybody to know, when we have multilateral negotiations. Lvcn if you divide it into negotiations between different countries others would hear anyvway from, as it were, the side entrance. It is much better te lcnew everything beforehand. MR. MOKINNON (Canada): Suppose we file them beforchand, and suppose wo file our replies to the 17 countries thrce weeks beforehand, and suppose there should happen tc b. a leak. Suppose the Canadian reply te any of these countries - particularly, say, the United States - wera te appear in the papers before the negotiations started. I do not think there would be any negotiations. TIti CHAIRMAN: I would just nmlcc a comment on what Mr. Lacarta sai..i Ne said all thc countries may bc represented in the steering committee. I do net knowv whether that i9 necessary. For my part, I certainly wvould net insist on that. I would rather have four or five representatives of Zèlegations whom we know - perhaps fronm this Conference. - in whom I have confidence te whom we could say: "Now you bcys come together and settle things and advise thc Socretariat howe te deal with this." I would be prepared te accept that point-blank; and thoy would thon be responsible te see that no leakages occurred. Mili McKINNON (Canada): But surely, Mir. Chairman, you are misunderstanding me. 59. 4 E/PC/T/C.II/PRO/PV/13 The publicity of which I am speaking, and the possible leak, would occur three weeks befoeo the storing committee comes into being. THE CHAIRMAN I would like the steering committing to be in being before we most officially with all the others. That was the idea I had in mind - to prevent Delegations having to be there, because they may have difficulty in sparing people to go. MR. McKINNON (Canada) We cannot spare one for the storing committee if you want him there ahead of the 8th April. THE CHAIRMAN: We would be prepared to have one there if need be, speaking on my own responsibility, to be in Geneva for a few weeks, which might help us ta world much better. MR. LACARTE (Deputy Executive Secretary): Might I put a query to Mr. McKinnon? I am not trying to take up a stand on any point, but merely trying to get things clear from the Secrotariat's sclfish point of view. As I understand it, your vievw at the mcment would be that in the process of regctiations once the meetings had started between, say, Canada and Cuba what went on between Canada and Cuba would bc kept to those two countries. That is your present view? E/PC/T/C.II/PRO/PV/13 page 61 & 62 missing U. 3 E/PC/T/C. II/PRO/PV/13 MR. HAWKINS (Uniteod States): In Geneva. MR. MCKINNON (Canada): That is all right. MR. HAWKINS (United States): That is the way the procedure will work out. One says "You have given one concession - maybe a dozen - we do not think that is quite onough, we will get in touch with you and talk with you", and the other replies, "That is fine, we have something to talk to you about too." And you arrange it. That process goes on all round the circle - it would last a. long time, it is truck. The essential point, and this is indispensible, is that there should be a list of offers from each country not later than the opening date of the meeting. MR. MCKINNON (Canada): That is all right; we have never departed from that, The suggestion is that it be no less than three weeks before the opening meeting. THE CHAIRMAN: I may perhaps change that proposal. I think my idea was this: what are we expected to do in Geneva? We start with tariff negotiations, then after a few weeks we see whether those things are going on all right or not. The we mot' the othor representatives to again to discuss the Charter, bccause certain parts of tho Charter will have to come into, affect and will have to be adopted by the Governments at the Geneva Conference, which again need a number of people to take part in those discussions and perhaps even negotiations. What I am very concerned about is this. We have been here six weeks and at this moment we have to force out pro- ceedings because ve are expected home. Thus at very difficult stages of our negotiations we have to rush them. 'We shall have the swae problem with the Meeting in Geneva. What I would like viould, be that we should clearly have in mind. that when we come together in Ganeva, whether on the formal opening date of the Confercnce or three weeka bof ore, on 20th March,. or something like that - it is to be settled by the people who organise the conference - but when we first start, with a few people available. There is no noed for thase big delegations. \tie get the. Steering Comuittee there anid that S+eoring C=ronittec secs the .whole 63. U.4 E/PC/T/C.II/PRO/PV/13 picture, studios it and makes the programme for the negotiations.These negotiations start, choosing certain countries to open the ball, and after the first dances we see whether we have a community party or not. Then we know whether, at this time, to have the second part of our discussions; we can then ask the other people to come to Geneva who can stay at home for the time being if they are'not in at these special tariff negotiations. We discuss the main parts of the Charter that will. have to be formally, adopted. In the meantime we broaden the field of those tariff negotiations and in that way we can make a success of the conference in Genava. What I at terribliy cadraid of is, all these bag delegations arriving in Geneva without proper guidance about what they are expected to do. They would start to discuss everything and there would be a growing confusion. It would wreck the whole thing from the beginning. 64. 1 M E/PC/T/C . Il/PRO/PV/13 MR. McKINNON. (Canada): If your conception of the Sterring Committee is a Procedure. committee, then we do not care how long before Geneva it meets, as long as we do not give the Steering Committee our replies to the list of demands. THE CHAIRMAN: But again I say, if you have a Procedure committee, how can the Procedure Committee deal with this thing if it has not get the particulars before it? For my country, I say I rould not mind if we had a few people there acting in conformity with.the reasons for which they were there, to deal with this problem. What difference does it make? I cannot see that we can endangerrour negotiating position with them. MR. HAWKINS (US): I should like to suggest, in response to one of your comment, that what the various delegations would do would not be very much in doubt. If all those schedules were put on the table at once they would take. them back to their offices and start looking them over. and trying to reach an opinion as to another they were satisfactory or not and what countries they had to confer with. That would operate automatically, so they would be busy right from the start, even if there was no organizational stop taken whatever. That is not an argument against'a Steering Committee, There are probably innumerable procedural questions that ought to be dealt with. MR. McKINNON (Canada): We have no objection if it is just on procedure. MR. LACARTE: The point I was making was whether we could, by previous circulation, in some vray avoid the:stago to vhioh Ur. Harkins has just made reference. MR McKINNON (Canada): No, I think you cannot - MR HAWKINS (US): The only viay you can do it is to start your Conference carlior. MR. SHAOICLE (UKI): Thoro is. onc thing.I vould like to say, MMr. Chairman. I am a little P.it worriod about whether it vll be possible, by the sort of starting date rhich is .envisagod, to .1 1~i . .. V2 E/PC/T/C.II/PRO/PV/13 have those lists of offers ready. I can hardly imagine anybody has even started on them yet . It may be that a lot of the schedules of requests have not yet boon received, and particularly the itemised requested, and until all those itemised requests have been received countries cannot even start to draw up their listed of offers. It does seem to me it is distinctly doubtful whether a good many countries will be in a position to have their consolidated offers ready for the 8th April. MR. HAWKINS (US): I do not think the working offices will necessar- ily have to wait for all the requests. You can do a lot of anticipatory rork before you actually get the requests, and then you can check rhat you havQ1includd. against the requested, to mako sure you have not left anything out. UR, MoKINNON. (Canada): Eveng se, I think the last sentence but one of paragraph 1 mïght be deleted. It doeés not apply to tho Canadian delegation and I doubt whether it'applies to"many round this table, The point le, to get thom in preparation. UR. HAWKINS (US): As far as Americàn preparation ie concerned, as You probably know ve are actually starting very shortly ûor on a list Thich is approximately threo-quarters of our entire items. That je in preparation for this list to be put in in A pril. UR. ADARKAR (India): 1r. Chairman, re have disposed of the question of .,hotherlists of offore are to be.disclosod and rhon thoy are to be disclosed, but I do not think the same objection applies to listed of demanded. UR. flzI1IO,.. (Oanada): No. UR. ADARKAR (India): So'each country could eond a oopy of ite li8t of demanded to tho Sooretariat and it could mako them available to all epuntries. UR, oIcINNON (Canada): YOB, there is no objection to that, 66. E/PC/T/C.II/PRO/PV/13 THE CHAIRMAN: -Let:me got this clear about the first stago of the proceedings. we have a list of demands. That list of demanded should be sent in as soon as possible. we have mentioned a date - the 15th December, we -think - for a provisional list which could be adopted, but you could have an additîonal-list later on. Even after this Conferanco,. 'hich..hos given our people somo ideas, 'fe oould go into that` furù'thor. bd r'c should have in. the interval before the Genova Conferonce the possibility of sending in additional lists. After that time the Socrotariat should be the centre rich recois all the copies of these listed, studies them, tries to combine them and to give proper advice to any Etooring Oommittec or rhatevcr it is ice have in Genova. Now there is only one point: rill evory country then s ¢nd through diplomatic channolsea copy of its list to ail tha other particip- ating countries, or vinll r.-a-leavo that to the Secretariat? I think that is a point to decide hero. MR. AlARLAR (India): I think it la much better that eâch country should send a copy oftits list to all the countries concerned. India should se\d a oopy to the-United States, for instance, and a copy to the Secretariat, and the Socretariat combine that list received from India in respect of the United States with lists recoived from othor countries. THE CHAMAN: In that case r.e should draft this Momorandum accordingly,. if thora is. gcncral agreomont on that MR. MOKINNON: Yos. THE RAPPORTEUR.: I should liko te makc a suggestion on that, .Mr. Chairman. I veondor.vory much rhather itviill bo feasiblo. teo combine the liste, If you'try to combinc thom you will have to a7ait transmittal until they arc all in. I suggest tlijt %7hon any couniGtry sonda a liet of requested tenether country it soude it'to tho Socrtà riat' for process and distribution to all. THE CHAMIRAN: Yes UR, MoKINNON (Canada): Sure, 67. . . .l E/PC/T C.II/PRO/PV/13 THE CHAIRMAN: If there is general. agreement on that we will chango tho draft Memorandum accordingly. M. MCKINNON (Canada): And it should be understood we are now talking of the demanded. Va moan ovon tho second domÉnd. list vrith th¢ actual roquostod rato s4o;vn in it. THE CaAIRMAN: Ya8. Thon ';e come to the second part of it.. That is, our offers. ML. ALAMILLA (Cuba): I -ould like to put two questions here. Firet of all, I think thoro iB eno thing evorvy country should have if it can get it, but it is not going to bc casy: that iB, I believe oaeh country should send a copy of thoir orn tariff te everyone else, It vril then bo. something that. all the others nill bo able to see, My second point ie, v;hen.I make.a demand should I make a specific demand and say "You muet reduce your tariff froi4 this to this",or just say that I nant a substantiîâ reduction of thie specifiC item?. .You *ill have to say the rate? MR. HAiiKINS (US): Yes, name the rate. MR. ALAMILLA (Cuba): In order to do that I muet knovr first of all exactly what the rates of everybody else are. THE OHAIRMAN. Here you have one special difficulty, for instance. The Netherlands-Belgium Custome Union vill perhaps be able to submitite nez! tariff at the end of this year,.but not before that, because it has to pase through the States-Geneoal. MR. MoK1NNON (Canada): :i, shall hava to guess at it. THE CHAIRMAN: ile can perhaps try to got some approvalof it and re can send a provisional list boforehand, 6ubtect to approval by the States-General, but thora ie a certain difficulty there for us. I think Franco ie in an ovon rorse difficulty, because they are etill busy in changing thoir tariffe front spocifi¢ duties te ad valorem duties Perhaps M. Leouyer can tell us vwhen ho eould be able to send an indication of hie ner. tariffe to the members concerned. I do not knov whether other countries are in thz same difficulty, but you rili find it E/PC/T/C. II/PRO/PV/13 mostly in the European countries that have to cope with the aftermath of the war. MR. GUERRA (Cuba): There is another difficulty, that even countries like ours usually had the tariffs of many other countries, but there have been many changes in rates during the war, usually by way of increasing the rates, and due to the difficulties of war-time rc have not bcen aUio to get thnt information. In that regard tha achodulO Inay become out of date, and thon ;oe :ill be roquosting something that is no longer the scune, bboauso the tariff Mhs bean changed. THE OHAIMNAA: Here -- shall have to say, as. I said before, that they are provisional listed. ;.e îill close thom boforo the Conforénce, and ovonrat tho ConforencQ .in exceptional circumstanoest e can coma rith other requests on account of information recoived, but v:;e hava to try to facilitate the proceedings as much ns possible by sending themnour listed as soon as possible and then adding to thom if nocessary, even item'by item. It vil.l put a burden on the Secrotariat, but Vre Ehould not mind that; --e should just go on sénding information, and asking for things if ¢o. have other things to 'ask for. MR, VIDELA (àhle): And you' rill eend yours te everybody, toc? THE CHAIRMAN:'Yes, re shall have to do that.. ' '' 69.~~~~~~~~~~~~~. . .1 . 1- .1 à E/PC/T/C.II/PRO/PV/13 I know that it would be very hard work when we go home - I am faced with the same problem- and that if I do not send them in then I have no requests to ask. That is tho only viay, Tlon I think that vro should also put in the mmorandm .thr.t tho listed vuo ond to ovory country should shovt tho oxistirg rato as fPar as mvo visuo;Lizo it' at tho rmront, boc.use wC ,Iav. not cxaot infurmrtion, ani thon tho amount oP roquoats xvith any. incroasons to Cro a skingt for; so that %wo Icnovw that if wc hn.vo a request basod on a wrong supposition, it con bo corroctcd by the other pa.rty. THE RAPoPOETEUR: And also it wruld provont a lot of othor countries having to - 4lock Up the existing rato, bocouso countries àill automaticolly f ind out what the existing rate i8, and thoy might as woll show that inf armttion whieh will saoya a lot of work later on. 'MR SHiOICD (UI): Arc you roforring t lists of offors or requests?' THE RAMRTEUR: Na, requests. As for offers, I should thinlc'the list of offors in our case' vriulc iiant hat wme vould ,tutozrwticolly sho- THE'OELUWMU: WC vwant now to'settle the question of requests. MR OUERRM (Cuba): Thero is an important point horc, and I thinlc that it is closely connected with this, because before %o discuss the question of making separate schedules for lroforoncos, should thoso soparatc schedules for proforences bc handcd. to othor people, too? For instance, vie may be of±`'ring a reduction in tariff s to France in regard to certain groups of comnodities, and at tho sam3ie timc,: for instorm, our negotiations v.th the United States miight nIt contemplate the comllote elimination of preferential treatment which thcy enjoyed in our rnarkots - this is just supposition, of course, - they might still retain som. Margin: of preference, and should that schedule of preforencos rlso be handed to France in order thrt they can weight the advantage thcy arc getting in oomparison with the proferenti.l country? THE tYAIhMAN: Now you arc talking r:bout requests or concessions? UR GUERRA (Cuba); I am talking -bout concessions. THE CI1éàMRN: That is -mother point. We arc discussing ncaw only requests. 70 W.2 E/T/C.II/PRO./PV/13 Are we all agreed on the procedure to be allowed with regard to requests? MR GUERRA (Cuba); There is only one point, and that is that December 15th, is too early a. date. THE CHAIRMAN: I have covered that before. Isaid that that will be a provisional date, and you will be ontitiled to send in addition. lists. MR GUERRA (Cuba): But even so, December 15th in loss than a month ahead. Boforo Na ouar.o horo vo appointed a spo¢icl conmi.sion to work on ail thoa statistical data ïnolud&ng tho torifs that othor countries have to study and imrk on in dotoil, W< do not think thct that work will be finished before the eni of the ycar. Thc carliest date for us would be tho ond of Jnnu.ay, which vould be *wa month before tho Gnova meeting. But Dec'eiber 15th ia too carLy. MR HA.WKINS (USA): Decomber 15th is a target date, and I think it uuld bc as vell td hold the targot to thrn.t date, reaiuiing that thoro mWy bo cases where it cannot bo mot, but thora nay be raony viho can do it, oed therefore countries that do recoivo lista con got to vwprk upon then thon.. THE CHAIUMT. I had still thought that wo night meet in March, or saom- thing likc that, but now we havoagreed to the 8th 4ril, vihich has per- hapa some advantage, boouse thorc is no advantage in having c target data which ono knorrs before hand one cannot Icoep. Could we make the date for receiving tho list tho 31st Dcember, so that we might perhaps Bet more, This Conforenoe ij lasting longer than wo thought at tinrt, sQ that I think vwe should talco that into account and make it 31st. Decomber for th¢ firat target data. Ia that agrocablo? MIR LO1RI!E; Mr Chairmans is it intended that countries should spocity whether wrr or ail of thoir demand they think have special importance? . la it intended that they should in a woy ostablish proforenco batwoen their. vurous demand on othor countries? THE GHAMMAN: NO, YOu c cannot do that before -you know the whole position. Rl QGIRA (Cuba); That would bc to diacloas thefr position. 71. W.3 E/PC/T/C.II/PRO/PV/13 THE RAPPORTER: Everyboby knows how they are anyhow THE CHAIRMAN:If that. is then agreed, the draft will be adopted accordingly. Then we come to the question of the concessions. MR McKINNON (Canada): Mr. Chairman, did we deal with the Rapportour's question, namely that, in respectof list of requests, each country putting in such a list to any other country will file it vvith these countries and with the Secretariat? THE CHAIRMAN: Yes. MR McKINNON (Canada): Secondly, that it will have two columns showing the present rate in the other counter and the requested rate. THE CHAIRMAN :Yes. MR McKINNN (Canada): B that is agreed. THE CHAIRMAN: If there is any mistake then the other country would know and would say, "Look here you have a wrong position set out here" MR ALAMILLA (Cuba): I recommended not only that you should send also your actual rate, but that you should send in to the Secretariat the whole list of your actual rates, because some other countries might be inter- eted. :: THE CHAIRMAN That la the third point - that you send as soon as possible your complete information regarding your present tariffs. MR ALAMILLA. (Cuba): Yes. THE CHAIRMAN: Or you anticipate a tariff which will be in the course of being changed. MR LACARTE: There will have to be more then ono copr of tho tariff. MR McKINNON (Canada): You will ha.ve to sondo out svOentoozi copion. MR GUERRA(Cuba): Ancl one for the S'cretar ? - making eighteen. MR LACARTE: I think that are need at least 25 copies.' THE CHAIRMÂN: Shall w put 'it at thWty? l{R JlUORE All right. MlR GIERRA (Cuba): It will be very difficult with all the variioti axnds. IMR LECMY (France) (InterpretatiOrL): I *iruld bo vory &ratefoul if the 'Coumittee vrould fix a date oni vdiich they would like to have' çpy of the 72. 4 E/PC/T/C.II/PRO/PV/13 existing tariff. THE CHAIRMAN I will cover that point in this way, that we should also apply the same data to the inotarintion in regard to tariffs, or if' you have to make reaservations because your Parliament has not agreed, which might entail further changes you could send in the provisional lists not later -than the 31st December. MR LECUYER. (France) (Interpretation): I agree, but I would like to insist on the necessity and on the value of the ditffrent countries getting such tariffs, because moving to the war, most countries have become out of touch with others and they have not aot infurrmation racrdcling the tariff position, andi, as the Ouban delegrato has said bcforc, therc have been sao my changes. Ther,4foru, in orCler tha.t thoso countries mnIy be able ta study tha tariffs it vwoull bc a mood thing to f ix a date, not aonly from the point cr' viev7 z>f E'rncc but from the point af view.ot other countries. .MR SHACKL: (UK):f Before wv lecav tha questi.rn of the request list, I should like ta ask exactly vhat is the object (,C leaving down a request or.. a programme that you put in your requent3 ir. regard, to a particular item, together with the rata that you want, at the sane time stating waiat you undersVand ta be the existing r.-to. It seans ta me that that may .hold, up the proceedir s considerably, especially if you are in doubtt. . about tho existing rate, and I sm not quite sura vihat is the abject af' it. If it turned out that the rate is not 'zat you thought it ta be, is it the idea that you;should thon modify your demand? It seems to me that in mary caser you may have a t.irly dae±inite iîna of what you vwsh *the ratc ta be, but it ls not abasoluttly essanticl ta include what you conceive the existing rate should bc, and is it dosirabla ta run tha risk of delay while you try ta find out what it is? THE CHAIRMAN: I do not think tha:t there is any rii:c of dolay. I think you mou have certain things that you a:sk for, z tecl entitled ta aak for. Le t us suppose that ybu ask for a decrease in thc rat from 4.0 to 20, would you be prepared to grant a similar concession? It would be much better if your concession were to be in accordence with that. I think you need that information before you put your cards on the table.. X fils. 73. .. ' . .. .... .... . . . _ . X.1 E/PC/T/C/II/PRO/PV/13 MR. SHECKLE (U.K.): I can see that is desirable, but I do not see that it is absolutely essential Supposing there was great difficulty in complying with it, would there be a serious difficulty in the way? THE CHAIRMAN : Biut is it so difficult to send in a list your tariffs? SENOR GUERRA (Cuba): But you can make any necessary correction. We Ve taking the United Kiongom list on the assumption that thehntthe t tariff is so much; if that is not the present tariff,nt tarff, there is no r eaeon whetdo Ugdome Kin,&ci shoald the mike oGh necessary correction. LE SI1CT:L: (U.K.): eI cen sec tho point hers there ih a case for sayingexisting tariffnu ouldrieshàoul bo reduced by such a pro- portion - MAN: CS.I}.iJ But youido not r.sk for a proportion " You ask w tr à nerateriff adtc and .ajust the concession accordingly. You will not get out of that. LE. SrL.CKL (U.K.): eI canusefulness of iut where it can beit, cn' b i imagine it is not an absolute sine qua non that youon that yu t in the existing one.xisting on. EUR: PORliul:mplyu say that the existing tariff, ing tariff,where known, should bc shown. N: T CI.theN: bhe ocheoulduntre weeL, givomations and yout ion and yu would assemation accordingly.accordingly. (ChilleDEI live in I live i London, I didomot come fro. Chile, and I have no inAtructions. ;lsomI had no ire to show this drefegao rmy dolot.tion, se I cannot commit myself on any of these obligations with regard Therefore I can here as an here as an d i would like to make a general reservation on this.tion on thi. THE CO.LJIUI: is teis win the c up i. the eain Committie, of which you are a meeber, Mw Vidcla, I vould stto state youre s';_te yeu poeition at thc neWe session. Yic shall not finesh this papor today. , . . . . . _ 74 _, X.2. E/PC/T/C. II/PRO/PV/13 SENOR VIDEL. (Chile):. I do not know how we are placed in Chile in regard,to those particular things. I have hard here that most of the countries are going to change. THE CHAIRMAN: Not most; only one or two. SENOR VIDELA (Chile): In ordor to present. such a list, we need to know our positions regarding preferences and quantitative restrictions and escape clauses. THE CHAIRMAN: That will be dealt with in the coming week. This paper will not be definitely decided today. SENOR VIDELA (Chile): But, we are several thousand miles away! THE CHAIRMAN: 'That raises another point; which will perhaps core up later, what we shall do if we find shall what we have.provisionally decided hero does not meet with the approval of our governments. I.think we should leave that tne the end of our discussions because it would, take up too much valuable time to discuss it now. When we can see whether there should be an emergency provision to da.l v;ith the question, even before the Confurence in Gonova. SENOR VIDELA (Chile): I was talking about th list.. Perhaps we shall be cble to sond 1ass, but I do not know. I clo not know'whothcr such a list is alrcady .prcp-.rceC. in Chilc. THE CHAIRMAN: It is not c rigid rule. Evcry country should try to do their ut'i.iost before the 31st Dcccnber. If thm.t i8 nOt possible, there. it i9 not, and you ..-ry Bond in additi!onlr. list if necessary, e have tried to make the procedure as flexible as possible. in the same difficulty as you, Mr. Videla, and the Cuban dologate, rind immny others arc in the same difficultY. Wie naust try to do as ia.uch preparatory work as possible. SENOR VIDELA. (Chile):. What about the 31st January? THE CHAIRMAN I would prefer; to have an additional list and adhere -to Docember 31st. It does not scy "you muat'"' or "you shalI" but "you should". AiIey I turn to the list of concessions -. 75. - X. 3. E/PC/T/C.II/PRO/PV/13 because I think we are all agreed that we should have at the beginning of the Conference complete information with regard to all the concessions offered... If I any repeat what I said before, there should be no "horse -trade". We should simply have as carefully prepared a list as possible -of what we are prepared to offer if there is adequate mutual.l advantage in return. So every country will have to come to Geneva on the 8th .April with that lis; in its possession. We must state that specifically in this paper so that we all know what is expected of us. S&M SLZ (U.R.): I ami sorry, but I stili roimin secptica.l aftçr overythinL that has been said. I fine'. it extrataely hara to bc.lietc that evcry councry concerned will bu cablc tao cou to Goneva with a co.ptçete list of what it is prcpa.rud to offer. Even if it w-ere, it secms to mne t;lat countries oz-n hardly be expected to base thm-iselves coi.lpl*tely on thc nssumnption thè.t they will Cet everything thuy ask for, and if you Co not'rasuinc that, what havu you? I wi sorry bio raintain ran attitude of seepticismn but I think it is wrong to base our assuniption on thn.t. l'd. McKINNON (Canada): I quit angrcc t;ith llr. Shackle on that. In tact I would paraphrase thc Cha.inir.n's re.nark by sriying that is where the horse-trading would start. EHE Urei.LN: Perha.ps in tlu:t c.se. you have to stue-y thc possibility of only mentioning the itckis on which you are prepared ta offer concessions. MR. McKlMNON (Canadca): `te go further, but we share i.ir. Shnckle'ls doubt about the realistic nature of the list, plus the vOZy definite difficulty thoro wil be in having, the lists ready the very day we reach Geneva. THIE MHIIW'LN: I vould like ID propose that we should put in "r.s rmuoh as possible". mR, MerimNON (Canada) Sure. TIB CHE . LJYN: In order to Cive somc ,uidance. - 76 - X. 4. E/PC/T/C.II/RO/PV/13P MR. HAWKINS (U.S.A.): If it turns out not to be possible, you will have absolute chaos at Geneva. If people go there with them, attempting to formula it; something when they get there, and. possibly wanting; to have look at what others have done before this do so, it will be. complete chaos. To go there with ,he best lit possible is indispensable. THE CHAIRMAN: I think ".as much as possible" should be' included. SENOR ALAMILLA (Cuba): Then you will know what everybody is asking af you and as you have to be prepered to meet commitments already :made, you can say that you are not prepared to go to such an amount, but are willing to go to so much. 'We must have something which, we an idea of what is expected fran everyone, and what everybody will be able to give. 'JdB C^.IlL..N: So we should havc not too rigid a Mule, but onë which is as riEid as possible. MR. Sit.CKLI5 I feel that any remcthod of noeotiation iihich ansumes * - that those lists arQ realistic, is itsWl1f. not a very rcalkstic .- procedure. MR. HAWKINS( U.S.) That. is another question. I have different viewis on that point, but tolera ousht to be. a list at the opening - aof. the meeting fro.a everyone. I hopa. it .will bc as far as everybody is ready to go, but perhaps. that is asking. too much of human nature. . . . Y.1. E/PC/T/C.II/PRO/PV/13. THE CHAIRMAN Then we can put a phrase like that in the memorandum So we have this, that everybody must have a list in his possession at the 8th April, We will submit that to the Secretariat, Then comes the other point mentioned earlier in our proceedings, and that may not, perhaps, be settled by us, but still,. I think we can thick it over. I do not know whether we should then propose in our paper that immediately after the start of the Conference there should be a steering committee for these tariff negotiations. MR GUERRA (Cuba): There is a previous point I made as to whether the preferences thatare contemplated. should. also be given to other countries. THE CHIRMAN:.. We talk about concessions; that means tariff concessions, prefererre concessions, and everything. aR GUERRJL (Cuba): We will ccnsider lowering preferences as concessions to other countries. iR sHhCOLE (United Kingdao): The procedure enrisaged is that, as zoon as Geneva starts, you table your Iist of of fers s8 that eaeh of the regotiating countries have then, Is that the suggestion? Or is the suge6tion that yeu give it only to the particular country concerned, in the ffrBst instance? TM CHMIMUEN: I think ve should give then tc the Secretariat and they should see that every country has it in its possession. AB bo the multiLateraL li8t, they will just cobine the vhole thing ana give them an idea of all the concessions asked for andc all the concessions offered. Then we must have thick point settlJ.ed: whether further procedures of these tariff negotiations wiU be guided by a steering committee w«ho will decide: "This country should ut1rt v4th that country, and that oounntry with that country", -thing or nct, I think we need that, and we should put some/to that effect in this pa~~rx MR GUJERk (Cuba): There iB nc doubt about that. 1R H&VMBS (U.S:.) I anm very likely wrong, but I was rather expecting it would work itself out rather naturally by itself. The Mirst country that bas finished exanining these acheaules and found out what it dDes not like about them wiJJ get into touch vrith' the countries concerned and arrange 78, Y.2. E/PC/T/C.II/PRO/PV/13 meetings I may be wrong about that. Why do not you have your steering committee merely set up te deal with such procedural questions as may arise, without triying to define what it does? THE CHAIRMAN:I do not like to elaborate here on the functions of the steering committee, When we start, I think the first thing is to have that steering committee. MR McKINNON (Canada): There is no harm in having it, even if we did not need it or use it. THE CHAIRMAN The only point there is: should all couriers be on the steering comittee? MR LACARTE:I have a small point to raise: It might' be that the tariff reduction negotiations right not be the only activity of the Geneva meeting; and on that. reasoning I think we had better not oail it a steering committee, because we shal: be getting it cornfused with the Steering Coinuitteo of the whole Conference. I wouiLd suggest calling it a "Tariîff Steering Comaittee", or nome suoh naine; at7arny rate, brin&Lng the word "tariff" in. kd GUERR. (Cuba); If all the countries are represented, we nMy not need to set up a special committee, but have'a sort of meeting of heade of Delegations to tiï-etable the negotiations. MR 2IcNON (Canada): That would be quite satisfactory. ME 'MMiUILN: If that is right, then we cone to the second stage. R SMHKLE (United Kingdon): Io it agreed that this steérLng cornni ttee will consist of the representatives of every Delegation? 'l thirk in that way it would follow the modeI of -viat'is here the steering con=Îttee.' It seers hard to'visualise a steering coidttee froLi which certain Delegations areYjmitted. THE HIMiMLN: We can have the'headas of. Delegations decide this at the beginning 'of the GeneWa- Conference. kR !.CORT$: Is it suggestei that they should schedule tariff neeptiatLons at Geneva? TE ClImAN. Yes.; iR IL3C.: I wonlr w-hether it night-not be left to a working aomittee, calleci the 1ariff Steering Ceittee, or vihat have you, of the Coûntereme4 .79 Y,2, Y.3 E/PC/C.II/PRO/PV/13. THE CHAIRMAN: To be appointed by the other -Delegatee? MR LACARTE: A committee of the whole, MR SHACKLE (United Kingdom) : It does not matter whether it is the head of Delegations or not - just somebody delegated by each Delegation. THE CHAIRMAN: Yes. We come now to the second stage. Are there any remarks on that.? MR SHACKLE (United Kingdon): I have a question. Mr Hawkins, I think was explaining that, on his view of how the negotiations would proceed, the first stage would be that each country would look at the 17 list of offers it had. got from the other countries, When it is decided where these lists seem to be unsatisfactory in certain particulars, they then go and talk to the other countries concerned wvith a view to getting adjustments madé and considering the co-responding points which other'countries hada to aOce to it. I wonder how long a_ how far that process would be pursucd. On the face of it, it looks like a uuJltilateral negotiation. Io it envisaged that that process would continue until all points that were unsatisfactory were settled, or that soon aPfter the beginning you would break up into bilateral negotiations? iiR ; LKNS (U.Si,.): I should think it would be this weya *Looking'at it front the point of view of the United States, we would look over as soon as.we could, - the. schedules of concessions, conoparing thoi vLth what we offered, and see' v here we were dissatip-'ied. and talk to other countries tc get an i.i;proveLentp say half a dozen of themi. In addition to that, there Nwerc people who were dissaltLsfied themselves, and m would have to straighten there out, MR &LLÇKLA (United ri(iogdol): So that there wouiLd be nQ bilateral negotiations? ËR HMINS (U.S.A.) Yes, I SHhCKl:E (United Kingdom): I see - on particular points.- * .R HUWKMS tU.S.à.): It mght be deairable to have a general stock-taking at some stage to see where the sticking -points are and what the dicffioultLes are. I think you would go on with this bilateral process ±0or some, little tli before you did that. .It could da of course, be trilateral, where there are two or three countries involved in the sane item, 80, . .. . . ~~~~~ E/PC/T/C.Il/PRO/PV/13 MR. SHACKLE (United Kingdom): In principle the whole thing would be, as it were, multilateral, with bilateral adjusting negotiations going on. MR. HAWKINS (United States): I would say it starts multilaterally, then for a considerable time in a bilateral stage, and ends up multilaterally. THE CHAIRMAN: I think it is what we call here the second stage. If need be we can make some changes in the draft to most the point. MR. GUERRA (Cuba): I think it is explained quite well in this draft memorandum. It well require specification regarding certain of the general things, but in general the same idea is in here. THE CHAIRMAN: I agree, but we wïll ask our Rapporteur to look at the draft once again in order to meet the point raised by Mr. Shackle. Are there any questions on the third stagc. MR. GUERRA (Cuba): That has bo.n contcrnplate.d already. MR. EIACKLE (United Kingdom): Tho point about which one has to be careful all the way thrcugh the negotiations is that of socrw.cy. If thore arc substantial leakages I think tho position of Delogatos may become almost impossible. Ilodorn nc-vzpaper r.len arc such ingenious sleuths. Mlu. -RL4KNS (United States): .c miight evcn consider - although net now, but when the nmecting starts - a security conuïiittee to try to limit leakages ; as much as possible. Soma set of rulos, or procedure might be formulated, because it is cxtreînely important net to have leakages any more than necessary. THO CHAIRMAN: Should we put something in now? MR. HAWKINS (United States): I do not. think se. It is the sort of thing we should organism at the tiuie. THE CHAIRiAN: I think therc arc no questions with regard to the third stage. we naw come to the result of the negotiations and thu lists of countries. There is no noed te discuss the *ray in. which wc mention the countries concerned. I think that is scLf-c.planatory. Thon wec come te a point that was, in the old days, a port of call to a certain extent. Wc put forward a general agroormacnt on tariffs and tradc, with a draft as an adcdendun to this paper. As this i3 such an important paper I would prefer I. g .1 Z.2 E/PC/T/C .III/PRO/PV/13 not to discuss it now but to leave it till tomorrow. At this moment we may be too tired, and the discussion on points which we dosire to clear up may be too length. I have a remark to make with regard to the end of this, in the second paragraph on page 19: "This will provide an opportunity for a review of the Agreement and any adjustment of thc tariff schedules which may be considered desirable." Here we come to the main point raised, in the first instance, by the Indian Delegate. I would. like something to the effect that these are all things that we have done in the first instance, because the whole thing will corn.e up for rcviow when vwe have the world conference. New members will certainly ask muany questions. I do not think noir members should have no right to ask for other concessions. I apjreciate that it raises a difficulty, but I would like te soc soitiathing inserted with regard te the position cf the nov mcitibers when wo come to tho vrorld confenoro, MR. KAWKINS (United States): If there was a decision teo bring this into force earlier this would not want a review. MVybo you would want to have it known. THB COAMiMAN: tie have discussed this in Cr'znittee II, nnd om.ie across the difficulty of the inost-favoured-nation clause, and vwe said we could not settle that before our meeting in Geneva - evun then thera might be certain difficulties, The Indian-Delegato ha3 already put in a paper on tho subject. It was felt there might bh very considerable clifficultv with only 18 countries setting aside tho most-,favoured-nation clause. Thon we have the point whether, if vie nlake concessions, WC shàucl. extent thoac conces- sions to aLl othor countries and not mreJly the menibers of the conference provided that within a year or six months they .ntcr into negotiations, when, if they did not do sC, we would be in a position to withdraw the concessiohs from those countries. The othor possibility is to have this agreement but not to permit :. it te enter into force until we have had the world conference. Those are the two possibilities, which are not made perfectly clear in the memorandum. Wo left open the question of the most-favoured-natiàn clause, although vwe have soi.ac provisional ideas about Z.3. . it. My opinion is that you have to have them extended to other countries provided they corne into the "club" within a certain period. MR. ALAMILLA (Cuba): I suggest that before we finish we should disuse Article 31 - at last in regard to your question, Mr. Chairman. MR. HAWKINS(United States): It comes up also with regard to Article 18. It permits ot member countries who wore not in the original group being covered. Then non-members arr covered by Article 31. THE CHAIRMAN: That is thc first point. I do not think we can clear this off this afternoon. The second point is: What arc the rights of onter non-members when they into this agreement? They will have to have certain concessions. The whole thing right be open for review at the world conference. This does create certain difficulties' but we must sec the position clearly. MR. HAWKINS (United States): I would suggest tentatively the probable solution we-will get is that the bonodits cf the concessions mada in the ,negotiations ncxt spring will be generaliscd, subject to conclusions reached at the full conéeronce. I do not sece what else you can do. You have nc provision for the abrogation of bilateral agreements, and you have no agreement that. that should be donc. You can generalise until that decïsion is reached. THE CHAIRMWN: So the concessions do not come into force before we have the world conference? MR. HAWKINS (United States): There are two questions here. You have the question whether you want thero to corne into force before. If you do, I would suggest that probably they should bc generalised to all countries, subJect tr the decision of the conference. If th¢y are not brought into etfect until the conference convenues the question does not' arise. AA fols 83 AA.1 E/PC/T/C.II/PRO/PV/13 There is a procedural point, though, on bringing that into effect sooner; it is procedure and technical. Once you havo the schedules negotiated, you simply cannot keep them secret, you cannot keop then confidential, they will get out, perhaps in a distorted form, so when there is an agree- ment there is a quite strong reason for putting it into offset on a pro- visional basis. MR. GUERRA (Cuba): It will have to be very clear that it is on a provisional basis and not on the basis of the three years of the Charter, because many countries may go to Genava, make agreements and reduce tariff s, considering what we have agreed on at this present meeting, and then later on there may be other conferences and sos:e points uoay be changed. The reasons the country may have had for giving concessions nt Geneva may have altered and the country may find it. ::. longer in its interest to continue the concessions. THE CHAIRMAN: It is a vory important point so I would like to give some thought to it, and perhaps have a draft brought before us keeping in minr4 these.possibillties. I have no doubt that wo cannot decide that here. We can decide the procedure of tariff neGotiations, but the important point is whether or not they will, come into force at Geneva, That we can only decide at Goneva, but we have to study the problem here in the ieraorandum. MR. AIALA1E4 (Cuba): Uc :uust takc care of the position under Article 31, so 'e cannot come to a decision. TEE CHiIlAN: Yes, we left that to Geneva. UR. AIMULIA (Cuba): I do not want to decide here. But I have thought, a lot about this point and nf:ter thinking about it I believe you cannot even ce to a conclusion, not even a tentative one, unless you know what your idea is as to what you are going to do. TlH CHAIRMON: I would therefore like to reserve this article for discussion if possible for tormorrcw. -Ml. PilRàMAGUE (Brazil): I put forward a proposal analysing -the case of tha most f avouréd nation tc this CoLraittee, whieh decided to take simply the .. AA.2 E/PC/T/C.II/PRO/PV/13 general problem. THE CHAIRMAN: We will not discuss it at the moment but will ask the Rapporteur to look into it again. We can see when we discuss the whole problem again whether there are any more things to take into account. I do not think we should do it this afternoon, we are too tired for that. MR LECUYER (France)(Interpretation): I want to ask, a dufinite, question, and I would be grateful if the Chairman could give an answer. I would like to know whether it is a question of the pricinple of the most favoured nation clause, as it is according to Article 8 of the Charter, which ïs reserved or whether it as the application date of that clause that is reserved, THE CHAIRMAN: The point is sxi4ply this, whether, to prevent difficulties vith the most f'avoured nation clause, we shall, water the end of the tariffPnegotiations - supposing that they cere to a.satisfactory con- clusioh - put the results ' that into the new tariff schedule and into efPfect at once, and grant Lt to every country provided they enter into the "club" within a dePinite period, or not. ËR. IECUYER (oanoe) (Interpretation): It is the question of non-members which we are really dealing with - the non-emnbers at the tiiue it La put into force. THE CHAIRMAN: Then we corao to the further parts of this droft ond I might perhaps say here that I have already disoussed that. vith the Rapporteur. I feel that we' iay possibly discuss it at more- length tomorrow, but I feel thore Ls one thing forgotten in this draft. A5 we see t, 51' we have this tariPf schedule and decide. to bring it into force at once after the Geneva ConfPrence, before the World Conference which may drag on a long time then we aiso put into force certain clauses, proviaionaliy, of the Charter which L8 to be adopted at the Wlorld Conference.; But we have there Articles 8, 18, 29, 30 and others mentioned in this paper. You; cannot put those .articles into force unless you have a supervising body. The Interim Tariff Cou.adttoe as visualised will only oome into being 85 M.ZL / AA. 3 E/PC/T/C. II/PRO/PV/13 after the World Conference, so we have a gap to bridge there and, in my opinion, we are forced in that case to set up a provisional committee or something, like that assuming, for these parts of the Charter that come into force, the responsibilities of the ITO Conference as it is visualised at a later stage after the World Conference. That is what I find missing in this paper. MR. GUERRA (Cuba): Will there not be this preparatory Committee? THE CHAIRMAN: That is a point, but it is missing in this paper, and that is the only point I want to made. TEE RAPPORTEUR: You need a Croup to exercise the functions of the Organisation regarding the escape clauses, for instance, when they come into operation, IM. HNMKINS (United States): That could be a Cor.uaitte r.ade up of countries which tako part in the noàotiations. THE CMIM-Vil: It could be, but still we have to cover it in the r.ier.iorandum, Only ofter'that can we discuss what the position of the Tariff Comrittee which will be after the 1T.orld Conference. You f ind the same thing I think, if I r.iaY nakc a !ew rem.xarks to facilitate the proceedings, when we corne to this part about thO Interi3 Tariff Committee. You find the sane thing, we need sor.ie clarification because, if you road this at it is now, you are in doubt whether it should coene into force after tiie World Conferonce or not. So we have to add, I think, in the f irst part about the Tariff Cor.miittee, "ILfter the a¢cpetance of the Charter by the World' Conference", to make it very clear. Perhaps w could rmeet tonorrow and discuss the remaining part of tho Charter and sce what we have to deal viith further. We have aise tho papor of the Indian Delogation that we left over, and another point that raises difficulties. I understand that tor.morrow we shall have a aieeting at 10-30 of the Sub-Cornrittec on Quantitative R0strictions -, do you have to take part in that, Mr. Hawkins? MR. IlWIKNS (United States): I do not have to, though there are certain parts of it that I would have to. However, tomorrow I think it w'ill be strictly the balance of payments section. 86 3141T,10 - -Il/PRO/PV/ 1 3 AA 4. E/PC/T/C. II/PRO/PV/13 THE CHAIRMAN: In that case we could perhaps most tomorrow at 10-30, because in the afternoon there is a meeting of the head. of delegations at 4.30 and if we met at 2.30 that would not give us much time. We might in any case meet for. short tir.e in the atterrioon. MR. MCKINNON(Canada): I do not think we oan finish the ppaper toiuorr'ow unless we rmeet tonight. THE CHAIRMAN: I sadd it to excuse r.myself - I mar sitting here with a iZrer at the moment and I wovld greatly like to stop today, if .I jmay be excused. BB1 OM E/PC/T/C. II/PRO/PV/13 MR. McKINNON (Canada): Mr. Chairman, just so that the rest of us can envisage the week, what is your programne for the week for our Committee particularly, as you see it now? THE CHAIRMAN: I would like to go on v:ith this paper tomorroT7, hoping that r!e can in the main agrec to it and give the Rapporteur a chance to rodraft it. I think vie ought not to ask him to do night oxork again tonight. then v*c have still to discuss tomerrdi7; if possible, this paper on Industrial, Development. MR. ScINION (Canadrn): You maan v oe v'euld disuse that as tha Procedure committee? ,ihy should vie discuss it, THE CHAIBMAN: In its relation to this point. We may leave it tz the main Committee, but they vrould rant the advice of this Committee on this. MR. ALAMILLA (Cuba): I havc read this paper just now, and I think i:f re are to be asked about that, that paper also should be g4ven to us in ordor that ra may knor .:hat tre are supposed to do. MR. MoKINiNON (Canada): lie cannot soe -hat re ar;) supposed to do rith this. It do¢s not affect our memorandum on Procedure. THE CHAILMAN: No, but it is a ner escape clause, vitli a suggestion that vie should include that in Article 29 or Article 30. MR. HAWKINS (US): I think this is a ner Chapter. MR. MoKINNON (Canada): Yes. THE CHAIRMAN: I. am quite prepared to skip the discussion of this. MR. HAWKINS (Us): It doas not seem to ma to be necessary. ME. ADARKAR (India): The only point that ill not be disposed cf that imy is the further suggestion made on behalf of the Indian delegation that they would prefer all these negotiations to be put in the form of bilateral agreements, rhich vould be multi- -lateral in effect but not in legal application. That may be recorded as the opinion of the Indinn delcatibn, leaving them frec to take up the point later. 88. BB2 E/PC/T/C.II/PRO/PV.13 MR. McKINNON (Canada).: That was the point we reached this morning. If we spent an hour or two on this paper.I do not see what we should do with it THE CHAIRMAN: .We will ask the guidance of Mr. Coombs, and if he wants us to do something te shall have to do it, but I do not like, to skip it. That is taking mora on our shoulders than ro ought. I think our Rapporteur savy it has a definite hearing. MR. McKNINON .(Canada): No. It i8 just on the question. raised by the delcgate of India. One argument put up against.tho bi- latoral agreement ,.as that it ';as-adequately ccvored .by tho: escape clause in this memorandum. THE 0IAIRMAN: Yes, and I asked tho Indian.dologate to study.this paper and refer to it later, *.MR. ADARAMR (India): Yos, and thora is another point raised by us and which has not bean dispcsod of, and that 7as about the'basic oommitment rewarding tariff reductions. We suggested .they. should only offer such selective reductions in tariffs consistent rith qaoh Momber' s economic c.develcpmant and the general. p.trpCseb of the Orgènizationi' Either thora should be soma docisïon on that point r a reservaticn. should be noted. MR. McKINNON. (Canada): We. thought made the reservation this morning on that pint. . THE CHAIRN.Ai: Woll, those are the main difficulties! MR. McKINNON (Canada): We cannot solve them.: We might as v:eil iace Ép:to that:no'. -* Wie aio'<.ett;In§,;;'into thlas days of the .gotWLht4o4:8 ,.Ats '.!'.'lht *this Sol'flin there i8, ..iYo;oe. oi 7 reCd'o'iltti.à-trioo i tne y thé' "ian deeiigate tThntho position' takeri :blry the others, and I cuito uzidàstdd he'îad very definitely.roserved hie position on that. MR. ADARIMAR (India): Yos, and th}at it should be rooorded. MR. IloKINNON (Canada).: And that is rccordod and that is ail there is to it. 89. BB3 E/PC/T/C.II/PRO/PV/13. MR. ALLAMILLA (Cuba): We. have four specific amendments that are waiting to be started in theo light of what comes out of the Joint Commmittee, If we had/this paper here'one-afternoon I think e 'could just look nt that and discuss only that part which deals ith rhat rm' are supposed to do in accordance r.ith trhat thoy have dbne. That is vhat I'be¢livo' i7 should diseusB, and 'noet thià thing, rhhieh has nothing to de -ith us. MR. HAWKINS(US): The point was referred to this Committee by Committee II. THE CHAIRMAN: Yes. That is this one. MR. ALAMILLA (Cuba) : ihy should rac'not study this paper tonight, and tomorrow study the request that has been made to us? MR. HAWKINS (US): I do not think you need study tho one paper in connection v:ith the other. MR. MOKIIN.ON. (Canada): Can you tell us in a ..nrd or tro r.hat it is? THE CHAIRMAN1: I can read it to you. It is a draft mossago to aommittes II:- "In the light of rocommendations regarding industrial and goneral economic development -hich the Joint .Comnmittoc prr;peses to maka to the Prcparatory Committeo, the Joint COmnnittae requests Commîitteo Il to make a provision in Article 18 of the chapter dealing .rith Oommerciàl PolJiy, so that in relation to tho undertaking to reduce tariff and to eliminate import tariff preferences, the Organisatinn and other Membors should, rhen considering theo contribution vhich a Member can m6ke te a reduction in tariffe, take into account tho height of the tariff of that Momber, and the need, if any, of that Member to use protective measures 'in order to promote industrial and general economie dovelo-pment - That is a roqueet in tho form cf v. dref t from the -JIont oimanittoo cf Committos II, and.&B We arB deuling witK Artiàle 18.J think our adtioe Vill1 a aaskod on thie and tho:.roaaons for this request you find in thia paper that has been distributed this afternoon. MR. MoKINNON. (Canada):. You do not envisage this Cominittee f inishing its "ork by.tomorrow night, then? THE CHAIRMAi.: I do not think so. I think l.e shall have to meet on Tuesday as vrell. MR. McKINNON:(Canada): Is there not a Plenary on Tuoeday? E/PC/T/C.II/PRO/ PV/13 MR. LAOARTE: The Secretariat, under the urging of a number of delegations, is putting all the pressure on the traffic that the traffio will bear. However, if the Sub-Committees of Committee II do not finish their work in time I do not quite see how we can start the Plenaries on Tuesday. afternoon, but we are laying our plans in the most optimistic .-.ay possible and making every endeavour to get the greatest possible number of meetings at very possible opportunity, We are doing the most we can. However, if committee Il does not finish by Tuesday afternoon it seems a little difficult to start the Plonarios thon. THE CHAIRMAN: There is this special difficulty, that Mr. Loddy ought to have at last a day to prepare the Report of this Committee. MR. McKINNON (Canada): There is another difficulty - that Thursday - is the last day that soma of the delegations will be here. THE OHMIRMAN: I cannot see how we can get out of that. After all, t. - *. our Rapportaur will need a for hours, sleep. MR, McKINNON (Canada): After the Rapportour goes over his paper and revises it, is it suggested thon that this Committee considers it again? .-: : . ; .. . .THE 0HAIRMAN: Yes, We havea to see that the paper is all right, e.nd also the Roport, because the Report is the main thing that to have to adopt here and put forward to Committee II, and really I cannot see that the thing could come into Committee II before Thursday, as far as I visualise it at the moment. MR. VIDELA (Ohile:) There is the question of the quotas' which I raied the other day, MR..LAGARTE There is a possibility. that we might be able to start the Plonarics and still have one or two Committees finishing while -the Plenary is approving the Reports of some of the other 91. E/PC/T/C II/PRO/PV/13 MR. McKINNON (Canada): Why cannot this paper as revised by the Rapportour go to Committee II? THE CHAIRMAN Well, if we have full confidence in the Rapportour I am quite prepared to let it go, but it is a very important paper, which will be published. MR. MoKINiZON (Cannda): No, it ill not be published. THE OHAIRMAN: Yes, *his report of the Rappertour with regard to - the latost decision will be included in the General Report of the Conference of the Proparatory Committee. MR. McKINNON (Canada): It/should not be published as part of what the Seceetariat publishes. THE CHAIRMAN: It will be, because we shall not have a further chance of making any addendum. MR. McKINNON (Canada): This is a working paper of this Comimittee which I am talking about. THE CHAIRMAN: well, that is a point. I do not care about it, but the American delegation was insisting on as much publicity as possible, but for the other delegations, I shall have to ask them whether they would have this memorandum published.. MR. HAWKINS (US): It needs to be a document of this meeting,. because other members of the Preparatory Committee need to know of it and approve it and be guided by it It is not a *question of. the whether it shauld be made public. MR.McKINNON (Cannda): As part of the Report. MR. HAWKINS (US): No, that is another question. I do not really have any very strong feeling on the point. I had not thought of it. I suggest we might hold that question in abeyance and look at it again and see what the consequences of publishing it might be After it is edited there might be nothing in it to cause any difficulty., THE CHAIRMAN: As I see it, it is a very important paper, and I think we should not leave it without this Committee having had again the chance to see it in a definite form. 92. CC1. E/PC/T/C.II/PRO./PV/13 MR GUERRA (Cuba): I think that we have reached general agreement on these different points in the procedural part of this paper, and I think that in the plenary rooting, too, everyone will have a chance of picking out anything he has, in addition to wlhat has already been discuseed, making any reservations on certain in points he may wish or on points which he may think the rapporteur has not coverd, but I do not think really that we need to speal time on going over this second vorsion again; i mean the procedural part could go right away to committee ii THE CHOIRMLN; Yes. That is one of the difficulties here we have skipped certain things for the time being MR MCKINNON (Canada): If this papercomes back here again revised by the Rapporteur, we are going to have to spend hours discussin againthe word " automatically'' to no purpose whatever. let committee ii decide it. We obviously cannot break the deadlocki on it; we cannot come to any decision upon it; that is agreed. MR GUERRA (Cuba): might i make a suggestion the rapporteur might if this sub-comittee agrees, make a new draft of this paper relating only to procedure and that I think should go direct to the plonary session of. Committee ii and then the references to the word '"autormationlly annd' all these other matters would be again discussed, and the real question of the Charter being included in the final form agreed upon by the sub- committee in the general report of the sub-committee to committee ii THE CHAIRMAN Yes, but i want to say that we have made several amendments in this draft and we are askign the rapporteur to make a final job of it and we have evory confidence in him, but thon we will have to discuss in Committee II this paper cand that will take some tiem if we have to prepare the report and rddraft it in the light of the decisions of the main Committee ii i do feel that tomorrow we may be able to finish perhaps this whole paper at least, let us hope we, can do that - but then we must give the Repporteur a chance to draft t the report of this sub-commiittee., It .will then have to be typed, so that I think it will be Wednesday at the earliest before we come to that part and we shall not be able to adopt the report of the sub-committee before thursday CC.2 E/PC/T/C.II /PRO /PV/13 MR McKINNON(Canada) Of this sub-Committee? THE CHAIRMAN: Yes. We will not be able to do that before Thursday at the carliest. .` ' MR McKINNON (Canada): I think you will have a pretty slim committee by Thursday ' THE chairman i connot help it i cannot see hwo we can do otherwise MR GUerra (Cuba): my idea would be to make a separate paper of the draft that we have discussed to day on the procedure part not going over that again but referring it direct to committee ii MR LECUMY: ( France) (Intorepretation) Mr chairman i do not want the interrupt the discussions on this sub-committee in view of the stage they have reached, but I think we are leaving in suspense quite a number of questions, and i do not think that should be so before the position of the different delegations who are represented on this sub-committee .has been made absolutely clear. i particularly have in mind certain questions that are dealt with on pages 9, 11, 12, 13, and so on of the report which would, have to be redrafted, and some of these are very delicate matters they will have to be left with the rapporteur and I am very confident in leaving them to him but i do think that we should go through this paperonce more and i evern believe that it would be the wish of the rapportueruthat we should do so i think we ought to have opportunity of doing that, and i think that ourour duties would not be completed towards the Committee that set us up if we did not spend some more time on it or if we wont through it too quickly, Personally i do not rind if it moans that we have to discuss it for a day or a night longer, because really i do think that it should be done there is also another point i am afraid that if we put it on to Committee II that will mean that we are merely transferring our difficulties on to the shoulders of Committee Il and the discussion wili bo more difficult still if tho different points are not set out clearly and properly dealt with in the report of this sub-committee the chairman i can only say that i entirely agree with the french delegate 94 CC.3 E/PC/T/C. II/PRO./PV/13 MR McKINNON .(Canada). Surely in redrafting the Report, the Rapportour, this time, would leave out the entire Introduction, because it is, after all, a paragraph of articles that have aIready been adoptod. MR GUERRA (Cuba): But it will have to go in the general report of the sub- committeee. ; Mr McKINNON (Canada): Yes therefore all that the rapportour need produce out of this 20-page momorandum is a small document on the prodcedural station only, and the other questions that are ,still standing will have to go back to Committee Il for inclusion in the general report the section on the agreement can be dropped because it cannot be discussed or any decision reached until it is reached at goneva it hte intro- duction is included again we simply will have the whole debate over again in Committee ii, and we may even have it in plnary session. .MR HAWKINS (USA): Is not it a question that was debated so long yesterday and of its going to Committee ii? Mr mcKINNON (Canada): "autonatiealy"? MR HAWKINS (USA). Yes.. MR M¢KINNON (canada): But not part of the procedural document. MR GUERRL (Cuba):* That would be par tof the general report that is a different thing the chairman the only thing is that the time that the Rapporteur would have to spend on thas paper he will have to spend on his report, MR GUErra (Cuba).: That is what we say making a small memorandum on procedure. We are quite agreable to that the rapporteir we would begin with that would we or where would you begin? MR McKINNON (Canada): I wvas wondering if ît should be: page 9 or page 6. MR GUERRA (Cuba):' No, page 5; we have already approvdd that. MR McKINNON (Canada): ;Ether page 5 or 6. MR GUERRA (Cuba): No, 5. MR MOKINNON (Canada): We approved 5 to-day.. MR GUERRA (Cuba): Start from page 5 and then jump to page 9. mr McKINNON (Canada); Then the large section comes out of page 6 7 and 8. MR Alamilla (Cuba): Yes - and practically all of page 9 DD fols. h 95 k DD.1. E/PC/T/C.II/PRO/PV/13 MR. KINNON (Canada.): It will come to about 5 pages instead. of 20. SENOR ALAMILLA (Cuba): about; 9 or 10. SENOR GUERRA (Cuba): And all the other part will :o in the general report. the chairman i quite agee but whatever we do do not let us fool ourselves. If' tomorrow we are able to finish the other part of this paper, there are the other points raised by the drafting committee and we shall have to take care of them we shall meet tomorrow morning .and perhaps .tomorrow afternoon, after alll the Rapporteur will have to make his report even if he works night and ay, it will not be in the committee bofore -thursday afternoon. then we have to discuss it in Committee 2 and we cannot expect things which we have discussed so elabourattcly here, in spite of the confidence they have in us, will go unquestioned in Committee 2. It is very important that this part of the document shoud really be as clear as possible,. We have not even go the report of the Committee on Quantitative restrictions , I have net seen the paper on :subsidies. the others are still more or less un- decided. we shall got the report of the technical Sub-Committee tomorrow. How can we expect Committee 2 to deal with all these papers in one afternoon? It is simply impossible, so we shall need the whole of next weak to cover the work of Committee so I am afraid the Conference will not end before the beginning of the week after next. If we do not do that, we shall have all the troubles over again in Geneva. I know your difficulties, Mr. McKinnon, but every delegation will have to find a solution for itself. SEnOR GUERra (Cuba): Was not a meeting contemplated in New York in January? THE CHAIRMAN that waa drafting committee only SENOR ALAMILLA (Cuba): I think it would be a good thing to have, if not. in name, a preparatory committee in January, because then we should 96 - DD. 2. E/PC/T/C II/PRO/PV/13, have time to think things over and to agree on a lot of things about which we arc now confused. SENOR GUERRA. (Cuba): Every delogation has gone as far as they can on their present instructions on many points on which they have not ,made reservations. . I do not think- a weak or two now will accemplish anything.Unless delegates can go back to their own countries and see whether they cannot compremise, they will not be able to do anything. THE CHAIRMAN whether we have a preparatory committee in january or not, we cannot, unless we have thc whole committee available again in New York, skip the proccodings in Committee 2. I have given my reasons why I think it is physically impossible - and I repeat the word "impossible" - to have Committee 2 cover the work of the sub-committees, especially of this Sub-commiittee and that on Quantitative restrictions; before Thursday. Then, after discussion, the report will have to be prepared, and that will have to be approved by this Conference. SENOR GUERRA.(Cuba): I do not Know what the situation is here, but my experience on other committees has been that when a report has come up from the sub-committee, there has not been much discussion because everybody has reached the limit of their negotiations. THE CHAIRAMN wer are six or seven countries here, and we have dis- cussed very important pOints of principle with regard to all these negotiations, in fact, the whole thing on which the Carter is based. we ought to have proper time i will do my best to finish the work as quickly as possible, but..i..' senor afLLLMILt (Cuba): I *think the practical way out is to prepare the report, submit it to Committee 2, everybody makes reservations, we go home, and the heads of delegations have one meeting in which to adjourn this procedure and go on in January. that would be much better than staying here two more weeks, 97 DD. 3. E/PC/T/.CII/PRO/PV/13 SENOR GUERRA. (Cuba): It is no use continuing to discuss things on which everyone has reached their extreme limit on present instructions. THE CHAIRMAN: I leave every delegate to discuss that with the head of his delegation. MR HAWKINS (U.S.A.): Unless we can sottle this part roasonably well, I shall recommend to my delegation reservation on all the all the rest of it. THE CHAIRMAN Then we start again in Geneva. There is no sonse at all in publishing a report that has been decided upon by the heads of delegation meeting unless we know exactly what we are going to publish. SE1NOC GUEiMRL. (Cuba): I untirely agree with that, and with Mr.Hawkins.. But my view is that I an afraid that in all these discussions, when delegates finally. make a reservation on a point, they have reached the point from which they cannot move at this meeting, oven if thcy stay two or three weeks. THE CHAIRMAN That is not visualised In one or two or three more days we can have proper drafts available ane proper reports which can be published. Do not; forget that they will be made available to the Press. Just think whet confusion will be created if these things are not properly settled.threre are not many points left opon. SENOR GUERRi. (Cuba): I would suggest that we try to make a reduced memorandum on procedure that will not have to be discussed here again, and then the rapporteurr will have at least Monday and Tursday to prepare the general report. 'We .can have it discussed on Wednesday and then have it finished finally on '.Thus Lay or Friday in Committee 2. 1THE CHAIRMAN we can discuss the other part, but I am afraid we shall not get a proper solution tonight. EE follows 98 E/PC/T/C. II/PRO/PV/13. MR LECUYER (France)(interpretation): Mr Chairman, I do believe that in fact we are very, far from reach", our target, and we have some drafting points of a. delicate nature to solve. I think that with 24 hours more we would do it. .Perhaps only two Meetings will be. sufficient, and then afterwards the Rapporteur will be able to draft it. I can quite understand that certain Delegates are in rather a hurry to leave London, I think it is important to have an agreed text, and 'that no Delegates would mind staying 24. hours more on this work, as the continuation of the work of the Conference in general. That means ther is a question of whether the plenary meeting will be on Thursday,..Friday or Saturday. wè do not have any r.e:nda-te to deal with it. I happen to know that quite a number of other committee are in.the same position as we are in. I do think we should see 'how we can finish our Report by giving it all the time that is needed. THE CHAIRMAN I suggest that we meet tororroiw morning 10.30 and that we go on with.our meeting, then adjourn at 1 o'clock, return at 2.30 and go - on till., 4,30, when the Heads of Delegations are. meeting. Tororrow we can decide whether there should be an evening, meeting, If we need our Reppoarter we must have sufficient tme to do something. MR SHACKLE (United Kindom): I should like to be assured that the Quantitative Restrictions Sub-Committee will in fact confiné itself to Balance of Payments because if it does not it will be rather difficult for some of us I wondered whether you, Mr Chairman could get into contact with teh Chairman of the Quantitative Restrictions Sub Committee and see whether in fact they will confine themselves to Balance of Payments? THE CHAIRMAN: Yes. MR MACKINNONR (Canada): Before we break up, I appreciate your own situation, mr Chaiman, that it is obvious from your face that ypu have a cold and a temperature, But for that, I would press again that we go on tonight. Could it be indicated what portions of that memorandum are standing for, consideration tomorrow? THE CHAIRMAN: The last part of this memorandum that we have not discussed at this moment. I 99 . . , : E/PC/T/C. II/PRO/PV.13. MR MCKINNON (Canada): On the Agreement? THE CHAIRMAN: Yes, on the Agreement. After that we still have the remaining part of the Interim Tariff Committee and the Entry into force of Charter and a few smaller points. Then it is usefuI that we study the draft of this Draft General. Agreement , and then we still have to deal with one request of Committees 1 and 2, on which Mr coombs may be able to give ius some guidance tomorrow. Totorrew we can reach a decision on how this whole paper should be redrafted, just to give the Rapporteur clear instructions on that. THE RAPPORTEUR Just a word about the Introduction. I gathered from, the observations that the main question about the material in the Introduation dealt.with the autoizatic description of how those rules ;would operate. I suggest that they might be very much sinplified and that the remaining part of the Introduction should be looked at very carefully to be sure that there are no unqualified, unsafeguarded statements there that overstate what seem; to have been the understanding with regard to the Charter. I do think that some sort of introductory material is necessary, in order that the Delegates of other countries not members of the Committee will have a context for understanding what we have rather set forth with regard to the procedures in the form of schedules, and how it would fit into the International Trade Organisation. I reilly think that if the introduotory part is gone over carefully, the particular point bothering I believe, the Canadian Delegate and the Indian and Cuban Delegates primarily, can be straightened out very easily MR McKINNON (Canada): The particular point bothering the Canadian Delegation is that if we have an Introduction it may be the subject of debate again .in Committee 2. THE RAPPORTEUR my fear is that unless we have an introductory part, it will not be understood. THE CHAIrman We have been discussing it for many days, but the other MEMBRER of Committee 2 have not been present; and that is one of the greatest difficulties i see mr deutsch (canada) What is the relationship between the introductory part EE, 3. E/PC/T/C .II/PRO/PV/13. of this memorandum and the general report on Article 18 that has been discussed here? MR McKINNON (Canada): It is the same thing., MR DEUTSCH (Canada): You are re-hashing the same arguments here as you would be under the other part. Do we have to keep going over the same thing again and again in different papers? THE CHAIRMAN: I am quite agreeable to having it in the Report of the Committee Let us not fool ourselves about this: ïf we refuse to discuss the introductory part of this memorandum we cannot skip discussing it as we are responsible for the Report of this Sub-Committee that will be published. in a report of the Committee. The question was whether there were still some Letters to be taken up by the Sub-committee.We agree that there is something MR ADARKAR (India): In any case, paragraph 1 of Article 18 has got to be reconsidered. in terus of the Rapporteur's note. THE CHARIMAN -I suggest that we adjourn until tomorrow at 10.30 and be prepared to have a meeting also at 2,30 in the afternoon MR SHACKLE (United Kingdom): .And you will endeavour to settle things with the Chairman of the Quantitative Restrictions Sub-Committee? THE CHAIRMAN yes MR SHACKLE (United Kingdom): Because there will be difficult if they go on to other parts than the Balance of Payments section.' (The meeting rose at 5.30 P.m.) 101

GATT Library

ws449sm4566

Preparatory Committee of the United Nations Conference on Trade and Employment

United Nations Economic and Social Council, October 11, 1946

United Nations. Economic and Social Council

11/10/1946

official documents

E/PC/T/INF/1 and E/PC/T/INF/1-22/REV. 1

https://exhibits.stanford.edu/gatt/catalog/ws449sm4566

ws449sm4566_90200417.xml

GATT_157

United Natios Nations Unies ECONOMIC CONSEIL LONDON AND ECONOMIQUE E/PC/T/INF/1 SOC IAL COUNCIL ET SOCIAL 11 October 1946 î é . , 1 '_'.' l % ;!|'!vl ORIGINAL: ENGLISH t MPt:`>'ii. r zi `:;< . d'. . .1.`I < r :; .. .. ' .. _d ; . !. 1! '.' .` . . ,s 1- i `, ` - ;. . :1 r2or. tV*s.' -. s 2`.i t.l i i`. n`: oii h l:,X i` ; .': ., rte :\ <; îc" ,_1 l- i: Jc' . _t n -v : 7; ; ; ! t ii t. S:W. 't c. , ,N ,V < I. ! Z ç i _ - 0* ..,rf!ticu!_.-.r of rl . E/PC/T/INF/1 Page 2 T- - -- ;_Ci! tC: : 0- ;?.22i .1 . .:i^ l .0...... ... .kLr '-12*<. ('i:.2.. . . - .0 2 t... ..., n. i;oL:ct:-. -., 1.> i. c,:i.r>.i<xtl U'i,1><w.!- 1 ':x.` 'W.' I,..t, , i.__1Xn. 22 t [121`2.. lc- ill .0.` :-` .>. E J.,. .CI, TIL t,:--hon.-'n.- c boDx. .' ::: 'nu. L L ;Zcu1tut o <, ,r r L ' g!iXLL'.; i" i .t.. . ,s , ><_1 l X l IL i`..-...x:or'.t * i'!. 'l`ix: ]` C o-.L.s .:1:. ` * '1`. . .! ' 21-1. t:< il!e U` .'bc> . fci . i.a ui ioi .:: GUs<_L}L1 22 1' - - .` `0 ti.`_1- tlot: c- .rs ...-'.-: t > 1._k . : .- a.'.-. " . .s t l.- _`: IL:-; hl;'rS t.`5 .:. - ,,i.....-.r.. ,.' Y, .* . '`a.o'. >wt: .002......... .1 .. *.t*. dL .l aLit .r2 C zh l`Y -il :11 ..... ,'tu '.' s-; i r.x.x. ::.:..... ,- "t -' - - * 2 2` 1-.- . IQ lb. i i.:l1 tomt.l.1: Q'; 'C'- 1`: n: 1. St i.-. Lc *``C -,. 7.. i... ^.tt : . 'lX-' 1`S'l' _2 2-V. 1X.>02C'tX : the . - .110..'lV:;. a -.-: - .5:0:212 .:.i .' 2.: ':. - r".!Î:-i C o.1 0-l..1. :,Ofi:Lathr th'lcl -' 2.2. ., .:uti;.. -!' `.lla :'1':i. tvi.: .iz . ;: - t c l :;-:.U ir .i <^. i:l .>ut. .2. *1 .n'`. c .-__ ;.:CVl.e-v`.. 2022 `tUt... olc wç.y7tes 22:.-K.2<.it2 t22.122 0.2? OXI.-' -. ': a-31' <11:... -i It.l c;>s$..-:::u2 LU> s'tri tlh: Entr.-;no--r t 0:72201 fOUS DiUu r.U'i` 'S;:.: 1_, OCtet..,- - t'~:ludslA5jr 16 Octobc.i.r, 0.lli..24! *112. :2122: 7I' 10.C -.( -:. . 3\ n.:. t u- J-.- -tai.. - t.ts ;itha 1- tio;I .t:...r±ts '1.Vltii; .: nl.. 1 w ` `21 I' f. `'t.. *i v: ;i ` -*'; i l .t.s_1-..:'pttoi sC.lSSrr zaïtlns coto1-rtainn:ent 'souJ.Q t.'irdol... :..1$. ÛdiIVT.2n.7. 10-:obr - .g -t.lrlS > , . 'n '-r't.lh Koz.. 51. JLxot--r.sto: YC.t. C-- t;'.. il` lcltic-:. in orler t-o :-.v..-1J.. 2:n, conflict 0 Cl lt<:x.

GATT Library

yt614zz9577

Preparitory Committee of the International Conference on Trade and Employment Committee V : Seventh Meeting Held on Tuesday 5 November 1946 at 10.30 a.m

United Nations Economic and Social Council, November 6, 1946

United Nations. Economic and Social Council

06/11/1946

official documents

E/PC/T/C.V/18 and E/PC/T/C.V/1-18/CORR.1

https://exhibits.stanford.edu/gatt/catalog/yt614zz9577

yt614zz9577_90220113.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON ECONOMIC CONSEIL AND ECONOMIQUE ORIGINAL :ENGLISH PREPARITORY COUMITTEE OF THE INTERANTIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMITTEE V. Seventh Meeting held on Tuesday 5 November 1946 at 10.30 a.m. Chairman: Mr. L. R. EDMINSTER (United States) The CHAIRMAN opened the meeting by recalling that at the close of the last session, he had suggested that the Delegate for the United States might bc invited to make some clarifying statement with reference to the assumptions which lay behind the proposals embodied in Article 62 on the composition and procedure of Commissions. He therefore called upon Mr. KELLOGG (United States) who made the following statement which the Committee subsequently requested should be incorporated in full in the summary record. LONDON E/PC//T/C. V/18 Page 2 COMMITTEE V (ADMINISTRATION AND ORGANIZATION) STATEMENT OF UNITED STTES POSITION WITH REGARD TO COMMISSION 1, General Status of Commissions The Commissions should be autonomous bodies on a high level, subject only to the supervision and co-ordinating authority of the Executive Board. They draw their authority from the Charter itself and from their appointment by the Board. It is hoped that the Members will be men of the highest calibre and prestige - for example men of the outstanding ability of our Chairman, M. Suetens, - and it is hoped that the great responsibility and important position of the Commissions will appeal to these men. The job of the Commissions would be to draw the conclusions and to make the recommendations on which the Executive Board would act. 2. Relation of Commissions to Executive Board The Commissions would be subordinate to the Board. Their recommendations as experts will be subject to the political judgment of the government representatives on the Board, The Board will also have responsibility to co-ordinate the Commissions as among themselves with a view to keeping theme from workingg at cross purposes. The Executive Board would, under the United States draft, be able to refer to the Commissions any matters it considers suitable, 3. Relation of Commissions to Director-General and Secretariat The functions of the Director-General and Secretariat would be differen in nature from those of the Commissions. The Secretariat would assemble r the facts and evidence on the basis of which the Commissions would reach conclusions and make recommendations. The Secretariat would be ready to 'assist the Comnissions, to gather and marshal informatio .and to make the studies which the Commssions require The Directo ,-Generl. should consult -with th 'various Cmomissions in setting up the cornesponding, divisions of the Secretariat conerned with their wor . LONDON E/PC /T/C.V/18. Page 3. The Director-General and Secretariat will be able to maintain imtimate contact with, and full cognizance of, the work of the commission at all times. The original United States draft made the Deputy Directors- General ex officio members of each of the commissions, and the present draft still provides for participation in their work by the Director- General or his deputy. If the Director-General should foresee the likelihood of conflict among the commissions, his right to participate in the meetings of the Board would give him a chance to express his fears in an effective way. He might also initiate proposals in any organ of ITO, including the commissions. In short, the Director-General and the Secretariat are to render to the commissions, on their request, the indispensable assistance in personnel preparation and administration, without which the commissions cannot operate. ANSWERS TO QUESTIONS RAISED (1) Should the Director-General direct the Commissions? Answer. This Provision would tend to prevent thei commissions from having the high level status they require and which is needed in order to appeal to top-level experts. The conclusions of the best experts in the field should be channelled directly to the Executive Board rather than to the decisions of any one man. To put this duty on the Director-General would burden him with responsibilities (many of the semi-judicial) which no one man should assume. As a result, all or some particular segments of the work of the ITO might suffer. If the capacities and interests of the Director-General should be weighte in a particular direction, it would have serious consequences upon the work of the organization. (2) Who would raise problems for the consideration of the Commissions? Answer. The Executive Board, under Article 60 would refer matters to the commissions and supervise their work. The Director-General has the right, also, under Article 68 (2) to initiate proposals in any commission. The commissions can also study matters and make recommendations on their own initiative. LONDON E/PC/T/C .V/ 18 Page 4 (5) Are there procedents for this arrangement? Answer. Yes. The Air Navigation Commission of ICAO is composed of experts appointed by the Executive Body of ICAO and it makes recommendations to that body. The parallel is close but is not exact. (4) What is relation between Director-General and Chairman of a Commission? Answer. The Chairman of a Commission would be the head of a semi-judicial body, whereas the Director-General or his deputy .on the Commission would be concerned with the administrative and investigate work of the Body. In the opinion of the US semi-judicial matters should not be assigned to an administrative officer. (5) what is the status of the commission Members? Answer. They must be men of the highest qualifications. The status of the Commissions has been so conceived as to attract these men. It is impossible at this time to forsee whether these jobs will be full-time or part time. It may well be that some of the work .may be such as to require almost full time appeintments, but it would be unwise now to lay down any set rule. The US draft leaves this to the Conference to determine in the light. of operating experience. It is to be hoped that tho Organization will get top men to start with. These men should be persueged to serve on whatever basis can be worked out. If experience then shows that these men should serve full-time it is hoped that the prestige then built up will be such as to attract the right kind of people to do the work on that basis. Mr. ERASMUS (South Africa) foresaw a difficulty in attracting highly qualified men on a permanent basis. If an international civil service was built up in the Commissions, the members would in the course of years tend to lose their practical points of wiew. On the other hand, the necessary continuity could be ensured by appointing a permanent whole-time Chairman who would co-operate with a division of the Secretariat permanently attached to the Commission. LONDON E/PC/T/C.V/18 Page 5 H.E. Mr. COLBAN (Norway) expressed general agrement with the remarks of both previous speakers and suggested two drafting amendments: That in paragraph 1, line 1 "appointed" be replaced by "invited" and that in paragraph 2, line 2, "office" be replaced by service. These changes would, he thoughts ensure a sufficient measure of elasticity and at the same time would enable the Conference to arrange for the appointment of a full-time Chairman to each Commission, if it is so desired. Mr BURY (Australia) considered that the functions of members of Commissions should be similar in nature to those of company directors. Their service should be on a distinctly part-time basis to permit them keeping in close touch with their owm countries and, with outside affairs. Commissions composed of whole-time members might become too detached from the main stream of activities which they were administering. An over-elaborate structure permanently employing first-class men would also add enormously to post. Any tendency to Five the Commissions "semi-judicial" function, in any wider sense than that of strict impartiality in relation to matters with which the Board is competent to deal, should, he believed, be strongly resisted. He wished to support the amendments proposed by the Delegate of Norway and agreed that at this stage the position should be left as flexible as possible. Mr. HOLMES (United Kingdom) found himself very generally in agreement with the United States Delegate and as well as with others who had spoken. He questioned however, "semi-judicial" which suggested that the Commissions would be endowed with rather more of a judicial character than was really intended, In the view of his Delegation, they would be advisory bodies. On the whole, the Charter made it clear that their character was essentially an advisory one although this tended to be sane what slurred over in Article 65 and to a limited degree in Artidle 66. He agreed with the Australian Delegate that members and Chairman of Commissions would benfit greatly from close contact with outside affairs. Nevertheless, in the LONDON E/PC/T/C.V/18 Page 6 case of particularly Commissions for example concerned with Commodity Arrangements and Commercial Policies, it had to be recognized that the work would be fairly arduous and of a continuous nature. Circumstances would vary from one Commission to another and the question of full-time or part-time service would have to be determined in the light of actual experience. H.E. Mr. COLBAN (Norway) stated that the amendments he had proposed were expressly intended to meet the points raised by the Australian and United Kingdom Delegates - namely, to avoid the creation of expert bodies in competition with the Director-General and the Secretariat. He had thought of suggesting, by way of emphasizing the independent and advisory status which these world experts should have, the addition after the words "conditions of service" of the following: "including stipulations concerning fees and indemnities". Mr. QURESHI (India) considered that the Commissions should form a permanent or quasi-permanent organization. Their duties would be more onerous than those of any commercial board, and they would have to cover a much wider field and should be full-time experts of the highest calibre. Economy should not outweigh efficiency. There was a real need for continuity and this could not be achieved by occasional ad hoc meetings of experts, who, if they were real experts, would not have much time to spare. A possible compromise might be to appoint members for three years, sitting in rotations and maintain the Commissions in permanent establishment, Adequate representation should be given to the less industrialized countrie Mr. DAO (China) suggested that in the selection of members the precede of the Economic and Social Council be followed: Governments should be consulted and their consent obtained. No country should have more than one representative on any Commission. LONDON E//PC/T/C.V/18 Page 7 Mr. HOUTMAN (Belgium) supported the South African Delegate. It would be necessary to rely on temporary though highly qualified advisers serviced by a permanent secretariat. He proposed that paragraph 3 be amended on the following lines:. "That each commission should elect a Chairman and a Secretary and should adopt its own rules of procedure. The functions of the Secretary should be of a permanent character." Mr. PALTHEY (France) expressed general agreement with the Delegate of Norway. The CHAIRMAN suggested that the points raised should be referred to a Sub-Committee. He invited discussion on each of the paragraphs of Article 62. Baron Van TUYLL (Netherlands) agreed with those who had argued that members of Commissions should serve only temporarily. He, therefore, pro- posed, in paragraph 1, to delete "appointed" and substitute, "invited", and to insert words such as "from time to time", or "as may be required". Mr. LA.URENCE (Now Zealand) questioned the use, in paragraph 5, of the words "public international", which he thought might be deleted. Mr. KELLOGG (United States) considered that the word "inter-governmental." should be used to correspond with particle 71 (2). The CHAIRMAN suggested that a distinotion on might be drawn between wording which would involve on the one hand "consultation" and on the other hand, active participation in the work of a commission. Mr. BURY (Australia) expressed the personal opinion that the position of non-governmental organizations was sufficiently covered in Article 71 which applied to the whole organization. If, however, it was desired to provide a link between the commissions and other inter-governmental bodies, the warding should be precise. The work of some of the commissions would clearly be most intimately related with the activities of such inter-governmental organizations as the Food and Agricultural Organization or the International Monetary Fund; but to subject the commissions to pressure by organizations of every kind might react unfavourably on the International Trade Organization. L0NDON E/PC/T/C..V/ I 8 Pages Mr. COLBAN (Norway) thought that the amendment to praragraph 1 suggested by the Netherlands Delegate would make the Article too loosely worded. It was sufficiently elastic as it stood. Article 2. Membership (except last part of pagraph 1) Mr. HOUTMAN (Belgium) observed that the French translation of the first paragraph did not correspond correctly with the English text. For example, the first words should be "Les membres originaires"s instead lf "Lesmaembresocriginel"', whilst tei date, which was eftt blank in theE.nglihi text was specified in the 'French text as1I Deceb.er 1946. Mr. HOMIES (United Kiig~dom) desired thata nd doubt socud remain a.s to whethermembeership of teh organization aws orwa s not suject tosomre procedure in the Executive Board. Aarticles 60 35) as amended al-owed, instead of oblgzing, te_ x:ecutive Board torecommend to the Coferenmce the admission of nn we emmbers to the organization. ,r. TRN.ER, Secretary, stated that tec Sub-Cmmistee- oculd be recmmmendngm that thew old "may" should replace "shall'" n Articali 60 3() and had foreseen the necd o,r a consequential alteration inAr ticle 2-2. 2r. BURY ALustralia) proposed ta;t thewo-rds "on eoommendnatoin of the Executive Board" be deleted. On th prfpossal of the Chairman, it wasagrered thatArticl s 62 should be added to the terms of reference of the FWirst (ener.al) Sub-Committee, appointed at the last eefting. Mr.. TUNERR, Secretary, said that the Sub-Cmmmittee had met at p.m. on the previous day, and had unanimously agreed on a redraft of the Article submmitted to it (Articles 52, 54, 55, 59 and 60). He suggested that the Sub-Committee should hold, a further meeting to discuss Articlee 62, and should report on all the Articles together. The Committee adjourned at 12.41 p.m. until 3 p.m. on Wednesday, 6 November 1946.

GATT Library

fn992dp5385

Proces Vireal des Seances : Troisieme Seance Tonue le 7 november 1946 a 15 heures

United Nations Economic and Social Council, November 10, 1946

United Nations. Economic and Social Council, Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, and Preparatory Commission of the International Conference on Trade and Employment

10/11/1946

official documents

E/PC/T/C.I/15 and E/PC/T/C.I/1-15

https://exhibits.stanford.edu/gatt/catalog/fn992dp5385

fn992dp5385_92290360.xml

GATT_157

United Nations Nations Unies RESTRICTED ECONOMIC CONSEIL LONDON AND ECONOMIQUE 10 November 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH COMMISSION PREPARATOIRE DE X CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI ,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ PROCES VIREAL DES 3i'.LCES Tonue le 7 november 1946 d 15 heuros Président: K. Wunsz King (Chine) Déclaration du Président Le Président exprime le regret de n'avoir pu convoquer plus tôt une séance plénière de la Commission. Le Comité institué par la Commission, lors de sa duxid séance tenue le 21 octobre, s'est efforcé de trouver un terrain ci d'entente de plus on plus vaste. Comme les members le constateront on lisdnt le rapport, - document E/PC/T/C.I/11, - auque ont été des projets d'articles et un projet de resolution, des efforts n'ont pae été sans obtenir un cortain succès. La tâche du Comité a été facilitée par les excellents services du secrétariat et de document constitue un éloquent ténoignage de très bon travail acico.: 'i par M. MEADE (Royaume-Uni) qui a rempli les fonctions de Rapporteur. E/PC/T/C.I/15 Franch page 3 Le Président décrit alers la tenour du document en entrants dans certains details, et en donnart les motifs qui ent servi de base à certain articles. El ajoute un mot sur le deuxième point de l'Ordre du Jour de la Commis- sion, à savoir l"Accord International sur le Développement Industriel. La Commission se rendra compte que cette partie de l'Ordre du Jour a liquidée, car c'est la Commission nixte du Développement Industriel qui, à toutes fins utiles, a étudie cette quéstion et toutes celles qui s'y rattachent. Çette Commission, il est heureux de le dire, a enregistré des progrès intéressants. Le PRESIDENT propose de discuter séparément chaque paragraphe du rapport du Comité, ainsi que l'appendice audit rapport. Il signale à l'attention des says-Bas deux autres documents connexes, l'un présenté par la Délégation des pays-Bas et l'autre par l'observateur polonais (E/PC/T/C.I/w.4 et E/PC/T/C.I/I2). Etude du rapport du Comité (E/PC/T/C.I/11). M.GOTEN (Pays-Bas) désire réliciter le leur excellent travail les membres du Comité et plus particulièrement son Rapporteur. Les prepositions néerlandaises, dont a parle Prpolienq, estiernational d'emploi prable,-étant d mmonné d'aquevite é la iDmeiicue iétE2-nitionale cn matière ;e el'CiI. pote sur des !;.iotss de ctidd itroiteD'établir es à celui à. l't.I.C. ;bien qliédisetincie ;anismerniécutid'séoblé. une convention ar cetonnaissance cu1iôaeport dn Comité, il seutécfaSdparêc Après avoir p.ip opo.nisonar.ce du rppoct au Ccrcit-, il ce dolere prCt à retirer sa orcoositic. E/PC/T/C. I /15 French Page 3 Il tient cependant à ajouter quc si le Comité adopte la clause 6 à la page 2 du Rapport, il semble nécessaire de signaler aux autres Commis- sions le sujet traité, de manière à leur permettre d'inscrire dans leurs propres rapports des dispositions semblables. M. DESCLEE DE MAREDSOUS (Belgique-Luxembourg) dit que sa délégation apporte son accord général sur le texte proposé, et il félicite le Comité d'avoir défini les objectifs de la politique du plein emploi de manière à permettre à chaque Etat d'y souscrire. Il estime, comme le Comité, qu'une action internationale entreprise sous les auspices du Conseil Economique et Social est nécessaire pour que le plein emploi des ressources humaines et matérielles d'une nation soit réalise par la voie d'un accroissement régu- lier de la demande effective mondiale. Le plein emploi ne peut être atteint que par deux méthodes ! en contrôlant entièrement la consommation et l'acti- vité productrice de chacun, ce qui implique une limitation de la liberté individuelle, méthode qui ne saurait être appliquée que dans les pays à économie assez étroitement dirigée, ou bien en laissant une plus grande liberté d'action aux conommatoure et aux producteurs? Cette deuxième méthode, qui est celle à laquelle se rallie sa délégation ne peut donner de résultats satisfaisants que si de nombreuses conditions se trouvent réanies. Il faut tenir compte non seulement des questions qui se posent au sujet de la balance des paiements, mais aussi de la nécessité d'assu- rer un développement harmonieux du potentiel de production ainsi qu'une cellaboration étroite dans le domaine du développement international. Son pays attache la plus grande importance aux measures entreprises sous l 'égide du Conseil économique et social. En outre, le deuxième paragra- phe du premie: projet de clause de la page 3 est d'une importance essen- tielle. Le seul doute qui subsist en son esprit est le suivant il se demande si le texte proposé précise suffisamment la nécessité E/PC/T/ C I/15 French du la combinaison extrémement délicate des pelitiques éconemiques. son avis, il faudrait; dans le project d'organisation interanationale du Commerce, accorder cette question une attention toute pariculière. La PRESIDENT demande alors au Secrétaire de lire les projets de clauses relatifs à l'emploi à la page 4 du document, clause par clause Clause 1: M. GOTZEN (Pays-Bas) propose d'ajouter le met "effective" après le mot "demande" à la premiè, ligne de la clause 1. M. SKINDO (Norvège) accepte de paragraphe tel qu'il a été modifié, mais il tient à signaler que sa Délégation a interpréte le membre de phrase "niveau élevé et taujeurs creissant de la demande" comme significant que le niveau croissant n'aura aucun caractère inflationniste, mais qu'il correspondra aux resources disporables en produits et en services. y compris la main d'ceuvre. M. LOHAHATHAN (Inde) se déclare tout-à-fait dispesé à aceepter l'addition du mot, "effective", ais il propose d'ajteuter à la deuxième ligne les mots "er. réalisant et" avant les mots "en maintenant". Il faudra de même ajouter les mots "la réalisation et" au deuxième paragraphe. Comme aucune objection n'est aculevée contre ces amendements, le project de clause 1 est adopté avec les modifications proposées. Clause 2 Le Secrétaire donne lecture du texte catte clause. Sur la proposition de M. FRESQUEE ula) en ajoute à la première phrase les nots"de nature productive" aprée "le plein emploi", de sorte que le membre de phrase lirait : "le plein emploi nature productive". Le projet de clause 2 est adpté avec cette modification. French Page 5 Clause 3 Le Serétaire donne lecture du texte du projet de clause 3, qui est adopté sans observations. Clause 4 Le Sècrétaire donne lecture du projet de clause 4. M. CHANG (Chine) se demande si l'expression conditions de travail inférieures à la normale" est suffisamment claire si l'on ne précise pas ce qu'on entend par conditions normales. Il craint qu'on ne s'éxagère l 'im- portance des conditions de travail inférieures à la normale dans le domaine du commerce international. Il est exact que les conditions de travail of- frent des différences considérables, et que l'avilissement des conditions de travail peut avoir pour résultat de diminuer le coût de production. Il ne faut pas perdre de vue, cependant, que les conditions inférieures de travail existent surtout dans les pays insuffisament développés au point de vue industrial, et que les avantages qu'on peut en retirer ont comme contrepartie l'abaissement du niveau de l'habileté professionnelle. L'avilissement des conditions de travail n'entrîne pas nécessairement une diminution des frais de production, Le problème des conditions anormales de travail est-il suffisamment important pour qu'il soit justifié de l'in- clure dans la Charte ? A son avis, cette question pourrait très bien être laissée à l'O.I,l. avec laquelle l'C.I.C. devra toujours collaborer à la solution des problèmes d'interêt commun. E/PC/T/C.I/15 French Page 6 M. IGONET (France) désire souligner une fois de plus que la tâche de l'O.I.C. consisterait à. favoriser l'essor du commerce international, comme moyen de relever le niveau de vie des peuples en général. L'un des aspects de cette tâche réside dans l'accroissement de la productivité et du rendement de la main d'oeuvre grâce à la modernisation des méthodes et des outillages; un autre aspect, consiste à accroître la part des travailleurs dans la consommation totale ainsi que leur pouvoir d'achat. Il imports done de maintenir au premier plan le concept d'un relèvement du niveau général d'existence. M. MARTINS (Brésil) est heureux de se déclarer pleinement d'accord avec le délégué de la France, dont les propos corroberent le point de vue qu'il a lui-même exposé au Comité . M. MEADE (Royaume-Uni) rappelle que, lorsque cette clause a été dis- cutée pour la première fois au Comité, la délégation du Royaume-Uni a exprimé exactement les mêmes doutes que le délégué chinois. Il a lui- même insisté sur le fait que les pays très peuplés mais peu évolués n'ont vraiment de chance de se développer que s'ils sont à même de profiter de ce que la main d'oeuvre y est moins coûteuse que dans les autres pays ; il a indiqué qu'il voulait éviter tout chevauchement avec les attributions de l'O.I.T. Mais sa délégation n'en, appuie pas moins Ia clause sous A * forme actuelle, parce qu'elle établit un rapport très net entre les conditions de travail et, la productivité nationale. La Commission notera que les initiatives prévues à la clause 5 intéresseront essentiellement le Fonds monétaire international Personne n'a insisté cependant pour que le Fonds mionétaire international y soit spécifiquement mentionné, mais l'intention cat évidemment que toute institution spécialisée ayant un interêt essential à ces questions devrait pouvoir se consulter d'une façon très étroite avec l'Organi- sation internationale du commerce. Par conséquent, en ce qui concerne E/PC/T/C.I/15 French Page 7 cette clause, il espère que, dans son rapport fina1, la Commission aura soin de préciser que toute mesure adoptée sous l'empire de ce paragraphe ne devra être prise qu'en consultation très étroite avec le Bureau international du Travail, de même que les mesures prévues au paragraphe 5 ne seraient adoptées qu'en consultation très étroite avec le Fonds monétaire International. M. DESCLEE DE MAREDSCUS (Belgique) tient à appuyer les vues exprimées aussi bien par le délégué de la France que par celui du Royaume-Uni. M. LOKANATHAN (Inde) désire, au nom de sa délégation, réserver sa decision finale au sujet, de cette clause. Il a déjà exprimé des vues semblables à celles du délégué de la Chine qui ont été partagées par le délégué du Royaume-Uni. Bien qu'il souscrive pleinement au principe que comporte le paragraphe 4, il estime qu'il est inopportun de prévoir des attributions qui sont'déjà assignées à un autre orgànssme. M. PIERSON (Etats-Unis) se déclare, au nom de sa délégation, en faveur du maintien de cette clause, sous sa forme actuelle. A son avis, cette clause n'impose nullement à l'O.I.C. l'obligation d'appliquer aucune forme de sanction, Elle vise plutôt à endiquer que chaque pays accepte l'obligation de prendre, sur les territoires soumis à sa juridiction, toutes mesures appropriées pour mettre fin aux conditions de travail inférieures à la normale. En ce qui concerne l'O.I.T., il croit que le rapport devrait souligner l'importance du travail accompli par cette Organisation, ainsi que l'intérêt qu'il y a à maintenir avec elle une collaboration. Le PRESIDENT suggère, et la Commission cohvient, de maintenir cette clause dans sa forme actuelle et de faire mention dans le rapport des réserves des délégués de la Chine et de l'Inde. E/PC/T/C.I/15 Page 8 Clause 5 La Commission passe onsuito à. l'étude do la Clause 5. La Clause 5 cet cupprouvée sans observations. Clause 6 - La Commission passe ensuite à l'examen du paragraphe 6. M. COO;BS (Australie) explique que cette clause a pour but de préciser que, de l'avis du Comité, il y a lieu d''insérer aux endroits appropriés des clauses de sauvegarde satisfaisantes, afin de pommottre aux Etats membres de protéger leur économic centre la pression déflationniste es cas de fléchissement subit et grave de la demande effective. L'intention est que l'efficacité dos clauses de sauve- garde finalement adoptées sera déterminée en tonant compte des besoins du moment. ll considère comme fondamentaIe la nécossitó de relier les obligations en matidre d'emploi de colles qui sont assumées en d'autres passages de la Charte mais la façon dont ce point a été6 réglé le satisfait entièrement. K. DEUTSCH (Canada) déclaro, un tant que réprésentant d'un pays qui s'interosse vivement aux difficultés auxquelles pourrait donner .lieu l'insertion, à cette section, d'une clause do sauvegarde, qu'il trouve satisfaisante la méthode suivie pour régler le problème.i.. La. Clause 6 est approuvée sans autres observations. Clause 7 La Commission passo alors à l'examen de la Clause 7. M. COTZEM (Pays -Bas) indique que ce n'est pas seulement le volume de la demande qui a do l'importance, mais qu'il faut aussi tenir compte das éléments de cotte demande. Il suggère done d'ajouter "et les éléments" après le not "volume", à la 4ème ligne de l'alinéa (a) de la Clause 7. E/PC/T/CI/15 French Page 9 .r. EADE. (Royaume-Uni), M. COOMRS (Australie) et M. DE MAREDSOUS (Bulgique) appuient cette proposition. M. de Maredsous suggère égaIement que les mots "... et de ses éléments constitutifs" soient fnsérrés à la suite des mots "revenu national", à la 4e ligne du même alinéa, et a'ajouter. aussi, à la fin, les mots "et éventuellement des programmes de développement économique". M. MARTINS (Brésil) appuie cette double proposition. .. PIERSON (Etats-Unis) se demande si les suggestions formulées par le déléque belge n'ont pas pour effet d'insister inutilement sur un point de détail. Les "renseignements sur" le revenu national comprendraient surement sa composition, et les renseignements sur le développement éco- nomiqu seraient déjà prévus par le texte actuel, ou par l'alinéa (b). En outre, on pourrait compter sur le concours d'organistnes tels que la Commission de statistiques pour permettre aux différents pays de recueillir et de publier de façon uniforme les données relatives à leur revenu national. M. DE MAREDSOUS (Belgique) tout en appréciant le point de vue de M. Pierson. fait valoir que les données relatives aux éléments constitutifs du revenu national sont d'une très grande importance. Beaucoup de pays ne peuvent pans fournir les statistiques dont il s'agit aussi facilement que les Etats-Unis ou que la Grande-Bretagne et il croit que'le texte servi- rait utilement à indiquer la nécessité d'élaborer ces statistiques et de les présenter sous une former claire. K.MEADE (Royaume-Uni) suggère alors un autre texte ainsi conçu .>Réunir, analyser et échanger régulièrement des renseignements relatifs aux problèmes nationaux, aux tendance générales ex à la politique de' l'emploi et au développement économique, y compris les renseignements sur le niveau et les éléments cons- titutifs du revenu national, des dépenses nationales et de la balance des paiements." French Page 10. M. PIERSON (Etats-Unis) estime que certains pays pourraient éprouver des difficultés à fournir des renseignements aussi détaillés et qu'il serait peut-être préférable en conséquence de s'en tenir à la rédaction orignale. M. HEADE (Royaume-Unti) accepte et retire son projet. Il auggère que le rapport indique les sujets sur lesquels les renseignements devront étre réunis, analysés et échangès au sens des amendements néerlandais et belge. H. COOMBS (Australia) propose de rédiger l'alinéa en question en des termes encore plus généruax, à savoir: (a)"réunir, analyser et échanger régulièrement des renseignements relatifs aux problèmes nationaux, aux tendances générales et à la politique de l'emploi, y compris les renseignements relatifs au revenu national, à la demande et à la balance des comptes". K. DESCLEE DE LAREDSOUS (Belgique) se déclare disposé à accepter cette proposition, sous réserve que le rapport spécific que les Etats devront fournir des statistiques plus détaillées concernant les dévelop- pements futurs. H. FRESQUET (Cuba) mentionne le cas de plusieurs pays, y compris le sien, qui n'ont pas les moyons financier et technique de, fournir des renseignements statistiques aussi détaillés que ceux qui sont exigés et il suggère d'insérer après "y compris" les mots "autant que possible". Le paragraphe est accepté avec cet amendement. Projet de résolution. La Commission passe alors à l'examen du projet de résolution conver- nant l'action international en matière d'emploi. Le PRESIDENT demande à M. Meade d'exposer les oonditions dans les- quelles a été élaboré ce project de résolution qui constitue un compromis réalisé après de longues discussions au sein du Comité. E/PC/T/CI/15 French Page 11 M. MEADE (Royaume-Uni) déclare que le Royaume-Uni avait d'abord proposé, outre les clauses ordinaires relatices à l'emploi, une disposition invitant le Conseil Economique et Social à entraprendre, d'accord avec les institu- tions internationales spécialisées compétentes, des études dans le sens prévu par le présent projet. Il est apparu toutofois qu'il serait peut- être inopportun de procéder à une longue énumération de pareilles études, en particulier si elles devaient faire l'objet d'un article de la Charte de l'OIC. Il a été suggére que le meilleure façon de procéder serait que la Conférence du Commerce et de l'Emploi adopte à ce sujet une résolution spéciale, plutôt que d'insérer une clause, soit dans l'acte constitutif de l'Organisation du Commerce soit dans une convention séparée, La Déléga- tion du Royaume-Uni accepterait cette suggestion. Le Dr COOMBS (Australie) ne voit pas très bien quelle sera la position de la Commission Préparatoire en ce qui concerne les résolutions destincés à d'autres organismes, mais il ne lui semble pas que le Conseil Economique et Social doive' attendre, pour examiner la présente résolution, que la Conference du Commerce et de l'Emploi organisée par les Nations Unies ait tenu son assemblés, laquelle n'aura vraisemblablement pas lieu avant la fin de Septembre 1947. Il propose done de renvoyer la résolution en question au Conseil Economique et Social aussitôt qu'elle aura été approuvée par la présente session de la Commission Préparatoire. M. MEADE (Royaume-Uni) estime qu'il convient que les chefs de délégations examinent cette suggestion. E/PC/T/CI/15 French Page 12 Le PRESIDENT est d'accord à ce sujet. Alinéa 2 M. FREQUET (Cuba) désire réserver jusqu'au lendemain matin l'attitude de sa délégation au sujet de cet alinéa. Alinéa 3 M. GOTZEN (Pays-Bas) soulove, en ce qui concerne l'alinén 3 du project de résolution, la question de l'óchelonnement dans le temps de l'erécution des travaux publics, lesquels constituent une arme importante pour la lutte contre les conséquences d'une dépression mendiale. Il propose d'in,z.cCS à la deuxème ligne, après le mot "politique", les acts "l'exécution de travaux publics sur une base nationale". M. MEADE (Royaume-Uni) se rend parfaitement compte de l'importance de point mais se demande s'il est approprié de faire mention des politiques essentiellement nationales dans la présente résolution qui se limite à des questions qui requièrent l'intervention d'organismes internationaux. La clause 7 (b) traitera prohablement de ces politiques. Le Comité est, d'une manière générale, d'accord sur ce point et demande au Rapporteur d'en faire mention dans son rapport. Alinéa 4 M. HAKIM (Liban) soulève une objection au sujet de l'alinén 4 qui prévoit "la création de... un courant de capitaux pendanut les périodes dée2r déflationniate mondiale..." Il estime gu'il y aura lieu de c 7 un pareil courant non seulement pendant les périodes de pression déflationiiizste mondiale, mais aussi pendant les E/PC/T/C.I/15 French Page 13 périodes normales. Il fait valoir que le courant des capitaux en provenance des pays industrialisés vera las pays moins développés constitue un avantage pour les pays industrialisés eux-mêmes. Il propose done d 'ajouter après le mot "création." la phrase "provenant des pays ou une abondance relative de capitaux menace de réduire le volume de l'emploi" M. COOMBS ( Australie) estime que l'idée émise per le délégué du Liban devrait trouver place dans la section de la Charte qui traite du développement industriel. En fait, cette idée est, déjà en discussion à la Commission Mixte qui est chargée de la question. A son avis, il sorait inopportun d'inclure cette idée dans une résolution destinée spécialement à souligner qu'il y a, dans les périodes de pression déflationniste des possibilitiés de mesures d'urgence qui pourraient être instituées par les différents organismes internatio- naux. M. MEADE (Royaume-Uni) appuie cette manière de voir. Il est toute- fois d'accord avec le délégué du Liban en ce qui concerne l'opportunité de souligner que le courant des capitaux dus pays développés vers les pays moins développés est avantageux pour les uns comme pour les autres et il propose de modifier la dernière ligne, comme suit : "pour leur per- mettre de maintenir leur demande de produits d'autres pays et leurs politiques nationales de plein emploi production . E/PC/T/C.I/15 French Page 14 d'accord égaiement sur le point de vue général exprimé par les délégués de l'Australie et du R. LOKMATHAN (Indo) croit qu'on pourrait pout-être supprimer le mot "leur", de umère que la phrase soit conçue comme suit "afin de permettre de maintenir la demande des...", M. FRESQUET (Cuba) est d'avis que le text original est suffisamment explicite. Il craint, si l'on y apporte des additions, que certain détails se trouvent soulignés et d'autres laissés dans l'ombre. H. MEADE (Royaume-Uni) est disposé à so rallier au point de vue tendant au maintion du texte original. Il propose de laisser ce texte inchangé, en laissant la question à l'appréciation de la Commission Mixte, de la compétence de laquelle elle relève. Cette solution est acceptée et l'ensemble du projet de résolution est adopté. Adoption du rapport. Le PRESIDENT déclare que le project de rapport du Comité, avec les amendements adopts, et sous les réserves et précisions indiquées, constitué désor.nis le Rapport de la Commission. Désignation du Rapporteur. La Commission approuve à l'unanimité la proposition du Président tendant à désigner comme rapporteur M. MEADE (Royaume-Uni). M. Meade s'engage à soumettre à la Commission lors de sa prochaine séance, qui aura lieu la samaine prochaine, le texte du rapport qu' il établira en tenant compte des différents points soulevés au cours de la discussion. E/PC/T/C.I/15 French Page 15 Vote de remerciements au Président. M. MARTINS (Brésil) tient à rendre hommage au Président pour la maîtrise et la courtoisie avec lesquelles il a dirigé les debats de la Commission. En réalité la Commission a battu un record en terminent ses travaux plus tôt qu'il n'était prévu et ce résultat satisfaisant est du, pour une large part, au tact et à la patience dont a fait preuve le Président. Le PRESIDENT exprime sa gratitude aux membres de la Commission pour les paroles très aimables prononcées en leur nom par M. Martins. La séance est levée à 18 heures.

GATT Library

hc988ch5424

Programme for the Plenary Sessions

United Nations Economic and Social Council, November 21, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

21/11/1946

official documents

E/PC/T/DEL/14 and E/PC/T/DEL/1-17

https://exhibits.stanford.edu/gatt/catalog/hc988ch5424

hc988ch5424_90210094.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL RESTRICTED AND ECONOMIQUE LONDON E/PC/T/DEL/14 SOCIAL COUNCIL ET SOCIAL 21 November 1946 ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT PROGRAMME FOR THE PLENARY SESSIONS Heads of Delegations are invited: (a) to fix a date for the final Plenary Sessions; (b) to consider a programme for the Plenary Sessions. The following notes may assist Heads of Delegations in considering these matters: - 1. It now appears probable that the work of Committee II can be completed by midday on Saturday, 23 November. This would leave Saturday afternoon and Sunday for the Secretariat to complete the final work of compiling the Reports for submission to the Plenary Session. It is therefore suggested that the Plenary Sessions should commence at 10.30 on Monday, 25 November, and should be resumed at 3 o'clock on Monday afternoon, and either completed the sane after- noon or on Tuesday morning. Insofar as certain delegations may already have left London, it is suggested that alternates be appointed from the diplomatic missions of their governments in London. 2. The programme should follow the draft agenda outlined in E/PC/T/DEL/7 amended in the light of subsequent discussions in the meetings of Heads of Delegations. After the Report by the Chair- man on Credentials, the United States Delegate should submit the resolution on the Tariff Negotiations. The Chairman will then submit successively the resolutions regarding the Report, the Drafting Committee, and the Second Session of the Preparatory Committee, referring particularly to the proposal to postpone final consideration of items 11, 12, 13, and 15 of the agenda LONDON E/PC/T/DEL/14 Page 2 until the Second Session. The Committee Reports will then be presented seriatim by the Committee Chairmen. It is suggested that this presentation should be formal, and that the Committee Chairmen should not endeavour to summarize the work of their Committees. In the absence of Mr. Malik, it is suggested that the Report of the Joint Committee on Industrial Development should be presented by Dr. Coombs. Immediately after the presentation of the Reports, there should be submitted any specific resolutions resulting from the work of the Committees e.g., the resolution submitted by the Joint Committee and the resolution submitted by Committee IV. The Chairman of the Preparatory Committee will give a short review of the work of the Preparatory Committee as embodied in the Committee Reports, and then invite a general discussion. This will afford delegations an opportunity to make general statements covering the work of the First Session. It is suggested that delegates who wish to take advantage of this opportun- ity should inform the Executive Secretary in advance and furnish copies of the texts of their statements, in order to enable the simultaneous interpretation system to function effectively. At the conclusion of the statements by principal delegates, the Chairman will wind up and will include in his concluding speech an instruction to the Executive Secretary to make an interim report to the Economic and Social Council at its Fourth Session.

GATT Library

rs713rv4075

Projet de Chapitre sur le Developpement Economique

United Nations Economic and Social Council, November 15, 1946

United Nations. Economic and Social Council, Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, and Preparatory Commission of the International Conference on Trade and Employment

15/11/1946

official documents

E/PC/T/C.I II/17 and E/PC/T/C.I/13-20

https://exhibits.stanford.edu/gatt/catalog/rs713rv4075

rs713rv4075_92290385.xml

GATT_157

United Nations Nations Unies LONDON RESTRICTED ECONOMIC CONSEIL E/PC/T/C.I & II/17 15 Novèmber 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI PROJET DE CHAPITRE SUR LE DEVELOPPEMENT ECONOMIQUE Article I - Importance du development economique. Les.Etaifs membres reconna±ssent que le 1développement industriel et le développement écondmique gté;ndral de tous les pays et en particulier dd ceux dLont le3 ressources sont encore orlativement peu développeesj, améliorera les'messibilités d'emploi, *augme.ntera. la. productivité de la i=ani. d-oeuvre, a.ccro±tra. la demande de prcduit t d evcs otiur à. la.* stabilité éconcàiiq.ue, accroîttz les échanges internationaux et rehaussera le niveau du revenu réel, consolidant ainii les liens interna- tionaux d. -ntente et. accord. Article 2 - Plans du Dévelopvpement Boconatai-u. I. Les Etats membres s'?engagent à. Favoriser de façon continue le d4velop-' pemint 'Industriel et le dé~veloppemn Économi.que gin6r-al de leur pays.et deo leurs torritvires respect fa en. vue de contribuer à. la réalisation des buts de Il'Ozanisation.. 2. Le-- Etats u1embres décident -de coopérer, par l'intermédiaireC du Conseil Econc ".oaue et Social des Nations Unies et des institutions své cialistéees interriationnles.appropriées, à. l'élaboration des pl-*ns et des prog-os destiné~s à ?t-.voriser le dàéveloppement industriel et le développement économaique général, E/PC/T/C.I & II/17 French Page 2 [3. ` A la demande de tout Etat membre, l'organisation le conseillera au sujet de sesplans de développement économique, et, dans la mesure de ses possibilités, elle lui fournira une aide technique pour l'aider a réaliser ses plans et réaliser ses programmes 7 Article 3 - ioyens de réaliser le développement économique. 1. Les Etats membres reconnaissent que le progrès du développement économique est f onction d'une disponibilité satisfaisante (a) en capitawux. (b) en biens de production, en moyens techniques modernes, en personnel spécialisé et en...cadras compétents. 2. Les Etats membres décident de ne pas imposer d'obstacles exagérés qui empêcheraient les Etats membres d'cbtenir l'accès aux moyens dont ils ont besoin pour développer leur économie. 3. Les Etats membres décident de coopérer, par l'intermédiaire des institutions internationales appropriées, en vue de fournir ces moyens. . Les Etats membres décident de traiter les autres Etats membres, les entités comerciales ou les personnes qui leur fourniront des moyens servant à leur développement économique, conformément aux dispositions das engagwuwts internationaux qui sont actuellement én vigueur ou qui; seront contracts en application du paragraphe'.5 de l'article 50 ou de toute autre fapon, et, en général,, de ne * prendre aucune mesure exagérée qui s'avérerait préjudiciable aux * intérêts de ces Etats emubres, entités commerciales ou personnes. E/PC/T/c. I & I/17 French Page 3 5. L'Organisation recevra par l'intermédiaire de tout Etat-membre lésé ou avec la permission de celui-ci, les plaintes des entités commerciales ou personnes -qui relèvent de sa juridiction, relatives àæ des mesures prises par un autre Etat-. .ambre qui sont incompatibles avec les obligations qu'il a contra.tges en vertu des paragraphes 2, 3 et 4 du present article. Si une plainte de cette nature est formulc, l'Orga:nisation-peut, à son gré, inviter les pays-membres intéressés à négocier en vue de parvenir "à un accord satisfaisant pour les deux partilbs. et employer ses bons offices à- cette fin. ?ticle 4. - ai.e .ouvernementale -au D veloppcment économique 1. Les Etats-membres reconnaissent que, dans le cas de certaines in- dustries, il peut ttre nécessaire de fire appel à une aide gauvernemen- tale spéciale lestinée à en faciliter l"'établissement ou le relèvement, et que cette aide pourra prendre la form de mesures de protection. 2. Les Etats-membres reconnaissent qu'lun recours déraisonnable à ces measures de protection grèverait indlment leur propre économie, impose- rait au comerce international des restrictions injustifi6es et pourrait être de nature à susciter d' inutiles difficiltés d' adaptation aux écono- mies d'autres pays. 3. (a) Si un Etat-membre, dans l'intér8t de son programme de dévelop- pement, se propose de recourir à des mesures de protection qui risquent d'entrer en conflit avec l'une quelconque des obligations qu'il a sous- crites aux ternes de la Charte ou en conséquence de celle-ci, il en informer l'Organisation et lui présentira tout argument à l'appui de la measure qu'il se propose de prendre. L'Organisation en informer prompte- ment ceux des Etats-membres dont le commerce serait sensiblcment affect par cette measure, et leur offrira l'occasion '"exprimer leur opinion. L'Orgamisation exarlnera ensuite, avec diligence, la measure proposée, compte tenu 'es dispositions di present chapitre, des arguments invoqués E/PC/T/C.I & II/17 French Page 4. par l'Etat- membre rcc.rnt des opinions exprimées par les Et-tL-; ;bres léses, et en s'-insmirrat de tous critères, relatifs %u rendement de la ',rsuctio et, de tours autres f-cteuirs, dont ulle poura détczriner l'existence, compete tezlu du degFr de ppvcoScment et de reconstruction éco:,ormique atteint par cet Etat-membre. (b) Si, à la suite des enouetes men6es conforzément au paragraphe 1er, l'Organisation entérine une measure qui serait incompatible avec aucune obligation aue l'Etat-enembre requérant a assiume à la suite .de nesociations avec d autres Etats-membres,' tn consequence du chapitre IV de la présente Charte, oul qui ré6ufirit les avantages que d'autres Etats-membres retircnt d'une telle obligation, des négociations seront .entamdes, sous les auspices et avee l'aide de l'Organisation entre l'Etat-membrç; recuér=nt et d'autres Etats-membres lésés, afin d'arriver u un accor' sur le fond, anx terms duquel 1.' Orp.anisation pourra reliever l'Etat-membrc reoqurant de l'oblibFation en question ou de toute autre obligation pertinente dérivapt'de la Charte, sous réserve des limites cue l'Orcanisation sera autorisée à fixer. (c) Si, en ^cnséquence des enouttes menées conformément au para- graphe 1er, l'Orgaisativn entérine ume mesure,'autre que celles visées au paragraphe 2, qui serait incompatible avec une obligation derivant de la présente Charte, l'Organisation pourra, à sa discrétion, relever l'Etat-membre reqcurant de l'obligation en question, sous reserve des limits que l'Organisation sera 2utorisée `i fixer.

GATT Library

gm506yw6462

Projet de Raport de la Ière Commission I

United Nations Economic and Social Council, November 10, 1946

United Nations. Economic and Social Council, Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, and Preparatory Commission of the International Conference on Trade and Employment

10/11/1946

official documents

E/PC/T/C.1/14 and E/PC/T/C.I/1-15

https://exhibits.stanford.edu/gatt/catalog/gm506yw6462

gm506yw6462_92290358.xml

GATT_157

United Nations Nations Unies LONDON ECONOMIC CONSEIL E/PC/T/C.1/14 10 November 1346 AND ECONOMIQUE, French ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL COMMISSION PREPARATOIRY DE LA CONFERENCE INTERNATIONALE DU COMMERCE DE L'EMPOLOI PROJET DE RAPORT DE LA Ière COMMISSION I Travaux de la Ière Commission 1. La Commission plénière a tenu quatre Séances. A nos première et deuxième séances, après avoir désigné comme President, k. Wunsz King chef de la délégation de la Chine, nous avons abérdé la discussion générale des questions posées et décidé de diviser notre travail en deux parties, ainsi qu'il suit: (1) accord international en vue d' établir et de maintenir des niveaux élevés et en progression constant de la demande effective, de l' emploi et de l'activité économique. a. Obligations générales des membres. b. Possibilitiés de recours au cas où un membre se trouve lésé par le manquement d' un autre membre à remplir ses obligations. c. Consultations et échange de documentation. d. Àttribution des fonctions. (2) accord international en vue du dévéloppement industriel. 2. Aux termes d'une uécision autérieure de la Commission préparatoire E/PC/T/C.I/14 French - Page 2 la question du développement industriel devait être examine en commun par les Ière et IIème Commissions. La Commission Mixte, qui a été con- stitutée en conséquence, a eu à s'occuper de la 2è:,e partie du programme ci-dessus. Nous avens institué un Comité comprenant, sous la présidence de eï. Wunsz King, des délégués de l'Australie, du Brésil, de Cuba, de l'Inde, du Royaume-Uni et des Etats-Unis et nous l'avons charge d'etab - lir un Ordre du jour détaillé comprenmamt toutes les propositions pré- sentées jusqu'ici au sujet des questions figurant dans la première partie du programme ci-dessus, et de rédiger un aperça d'enseràble de ces propositions . 3. Les travaux du Commité ont au pour base eu .aassages relatifs à l'emploi des "propositions soumises l'examen d'une conference international du Commerce et de l'Emploi" et du "projet ae Charte d'une organisation internationale du Commerce à instituer par les Nations Unies"qui ont été préscentés par les Etats-Unis, ainsi que des mémoires soumis par les délégations le l'Australie, de la Belgique, du Brésil, de Cuba, de l'Inde, des Pays-Bas, du Royaume-Uni et par l'ob- servateur palonais. Le comité a bénéficié des vues de la délégation belge, et des Observaiteurs du Bureau International du Trayail, du Fonds monétaire international et de la Baneque international pour la Recon- struction et le Developpement. 4. Le Comité a tenu, quatre séances. Il a commencé par préparer un aperçu d'ensemble des diverses propositions, mais il a estimé qu'il lui était possible de rassembler tous les textes en en projet unique, sur lequel les membres du Comité étaient prêts à se mettre provisoirement d'accord et qu'ils ont soumia à la Commission plénière comme base de discussion. E/PC/T/C.I/14 French Page 3 5. Au oours de sa troisième séance, la Commission plénière a étudié le rapoport de son Comité et elle apporté quelques amendements aux projets de clauses et au projet de Resolution relatifs à l'emploi, que le Comité avait élaborés à l' intention de la Commission. A sa quatrième et dernière Séance, la Commission a adopté le rapport final que nous sounettors maintenant à l'appréciation de la Comission Préparatoire, 6. Avant de terminer ce bref compté rendu de nos séances, nous tenons à. dire à notre Président, combien nous avons apprécié l'habileté, le tact et l'autorité amicale et ferme à la fois avec lesquels il a dirigé nos débats, et auxquels nous sommrres redevables, dans une large measure, de l'accord auquel nous sommes parvenus. Natre travail a été grandement facility aussi par le concours efficace que nous a apporté le Secrétariat. Il. INSTRUCTIONS GENERALS A L's<DE'`SE.: nOi.ITE DE REDACTION. (i) Signification et importance du terme "plein emploi'. 7. Nous avens attach une grande importance au problème que nous avons et dié. Pour maintenir le commerce interniational à un niveau élevé et stable, il est nécessaire de maintenir également un volume ample et stable, dans le monde entier, de la demande en preduits et services et d'abaisser les barrières qui s'opposent au commerce. Par ailleurs, le plein emploi productif et le maintien d'un volume ample et stable de la demande effective, ne peuvent contribuer au maximum à assurer l'amélioration des conditions de vie, si l'on ne réduit les barrières qui font obstace- au comrmerce, E/PC/T/C.I/14 French Page 4 8. C'est l'un des principaux objectifs de l'Organisation des Nations Unies, énoncé à l'article 55 de sa Charte que de favoriser "le relève- ment des niveaux de vie, le plein emploi et des conditions de progrès et de dévélopement dans l'ordre économique et social". Nous avons eu à discuter le sens de l'expression "plain caploi". Dans les pays peu industrialisés dont l'économic s'appuie plus particulierement sur la production des matières premières, une insuffisance de la demande se tractait moins par le chêmagu généralis.; comme c'est la régil dans les pays industrialisés, que par la réduction àu volume àe l'emploi ou par l'emploi à des conditions désadvantagauses our les producteurs de matières premnières. C'es: >-curquci, nous avons défini les objectifs. essentials d'une politique de l'amploi comme devant comprendre la nécessaté d''éviter la réduction du volume de l'emploi aussi bien que l'emploi à des conditions désavantageuses tour la production. 9. Il neus a également été sanatu que si l'expression "plein emploi" devait être interprétée littéralement, s'il fallait que toute personne capable de travailler et désireuse de le faire ne se trouve jamais sans travail, Dour une péríode aussi courte que ce soit, des pays pourraiçnt être tenus de s'engnger à prendee des measures , qu'en fait, ils nu seraient pas disposés à appliquer. Chaque pays doit évidement être libre d'adopter une intererétaticn du termec aussi stricte qu'ill désire; ic.mais il semble que pour les fins que nous avons actuellement en vue, il cenvient a''interv.-Jer le "plein e.emploi" comme une situation dans laquelle des possibilités d'emploi utiles s'offrent à tous ceux qui peuvent et qui veulent traviller C'est le maintien de telles conditions et le maintien simultané d'un volume ample et stable de la demande qui ont une réelle importance, du toint de vue interna- tional. French Page 5 10. lI est, en général,.adais que tous les pays du monde ent, non seulement envers leurs propres citeyens, rais également envers les autres mays des responsibilites qui les obligent à faire tout ce qui est en leur pouvoir pour :oUintcnir le plcin emploi productif et un volume ample et stable de la , 5,and, sur leur prepre territoire. Un fléchissement de la demandem dans un mays important, en réduisant les importations en aprovance lautres pays. or faisant peser leurdement sur le marché ::di- l l'exeddens des prohibits que es pays produisant auparavant pour as rc consummation est suscep- tible d'ns.cner le crc-. ge total ou ;rti:l ou à s'etendre aux autres pays. Les Etats devranient dont entrepredre de concert une action destinée à realiser at à maintanir le plein camploi productif de leur main-d'oeuvre insi qu'un volume ample et stable de la demande effective sur leur territeire. C'est au gouvernement de chaque pays qu'il devrait appartenir de décider en ce qui le concerns, du genre de asures à adopter pour at eindre ce but, et il devrait être libx de les Boisir telles qu' elles scient en harmonie avec ses propres institutions. Ce choix devrait so faire librelent à condition, bien entendu, que les mesures adeatées soient compatibles avec les autres objectifs de l 'Organisation Internationale du Commerce, et avec Les dispo- sitions de se Charte. E/PC/T/C.I/14 ( ii) Développement des ressourcees et de la productivité nationales. 11 . Le plein emploi de La palin d'oeuvre dans un pays donne ne constitue was l'unique condition qui détermaine le volume de la demand effective, de oe pays ce qui. cercerne les produits de aprovence der rre. Un pays qui ne développee pas effectivement ses ressources, cu qui ne recherche as toutes les occasions 2' r.ccrettre la productivité de sa main-a'deuvre, ne r-ussira pas, conséqiemce a dévlopper au maximum, sa demande effictive en marchandises es eb ce services. Tous les pays devraient dene reconnafere qu'ils ent un ir.tcrt. commun à ce que les ressources du monde scient utilisets de mani..re productive et ils devraient enterpreter. A.rc un. '.action `;nCr en vue de developper progressive- ment leurs ressources économiques et d'élever leur niveau de pro- Quetivité.. Là Cr:.crt, c'est au Governe ent de chaque pays qu'ill devrait appartarir de a{. cl.oLsir ics .esures a Jtopter en ce qui le corcerne à, conàitian que ces . esures soient cocrvv.cibleS avec lés autres objectofs de l'Organisation Internationale Commerce et avec les dispositions de sa Charter. (iv) Conditions de travao; equitables. 12. Si l'cn veut quec le plein emploi apporte sa légitime contribution au "relévement was niveaux de vi ' et aux "conditions de progrès dans l'ardre economique et social" auxqucla fait allusion l'Article 55 de la. Charte de l'Organisation des : L.ns Unies, il est nécessaire que le traveilleur recuaille und part équitable du produit de son travail. Tous des pays ont an int*r.t comun au maintien de ces conditions de travril équitables, -- rtioulièrment dans le F/PC,/T/C.I/14 French Page 7 domaine de la production destinée à l'exportation tn.nt donné que sans cels, le produits d'un pays -cuvent être supelanés per ceux d' un autre, dans lequel la main d'scuvrc est injustemtent exploitée. .c. ntcnÀdu, les conditions de trivail i neuvent être uniformes dans tous les pays, mais olles deivent être fonction du rendement pro- ductif de l'économie nationale. Mais, e'est une opinion assez généralement soutenue que tous les pays devraient convenir de toutes les measures nécéssaires et possibles en vue de faire dispa- raître les conditions de travail inférieures à la normale dans le Xr .inc de. lour production destinés à l'exportation et, en général, de l'' n:semble de leur économie. 3. Queliques délégatiens ont expire cert ins doutes quant à l'coQcrtunité d'introduire parai ces dispositions relatives à l'ecv!lici un accord portant sur ce sujet. Ces doutes se fondaient sur deux raisons: a. Ce serait erreur que d'essayer d'assigner à certains pays des objectifs tro- .'levés, car ce serait entraver sérieusement le developpement de la production dans ces pays qui, possédant d'abondantes ressources en main-d'ceuve, mais relativement peu biens de capital et une technique industrielle peu dévelopic doivent, provisoirement, asseoir leur développement sur une rémunératior. inférieure à celle qui prévaut dans des payaplus évolués . b. L'Organisation Internationale du Trava i.l étant l'institution spécialisée plus particulièrement chargée de ce probleme, ce serait faire double, -;li avec ses activités que d'introduire un accord en cette matière dans l'Acte constitutif de l'Orga- nisation Internationale du Commerce envisagée. E/PC/T/C.I/14 French Page 8 14. Sur le point (a), on cenvient généralement que, si un accord quel- conque relatif aux conditions de travail est compris parmi les disposi- tions sur l'emploi, il faut préciser qu'il ne peut être questien d'un étalen de mesure, valable pour tous les pays des conditions de trail équitables.mais que cet étalon dans chaque cas particular doit être fonctiom du rendement productif du pays considéré. 15. Sur le point (b), on convient généralment que pour leur parties essentiellem, ces travaux devraient continuer à être du ressort de l'Or- ganisation international: du Travail, et que, si on introduisait dans l'Acte constitutif de l'Organisation international du Commerce un accord portant sur ce sujet les pays qui sent également membres de l'Organisation internationale du Travail devraient coopérer étroitement avec cette Organisation dans l'application de cet accord. Si l'on propose méanmoins d'y inclare sous une forme sa une autre un accord,. por- tant sur ce sujet, e'est que les conditions de travail en quelque pays que ce soit, et particulièrement en ce qui concerned ses produits d'ex- portation, constituent un fateur qui a sur l'emploi de la main-d'oeuvre et le coorant du commerce international une influence capital (v) La rectification du déséquilibre dans la balance des paiements. 16. .';, ;iem si un pays maintient le plein emploi à l'interieur, dévéloppe ses ressources économiques, élève le niveau de son renderment productif et assure des conditions de travail équitables, il se peut néanmoins qu'il exerce une pression déflationniste sur d'autres pays. Il en sera sinsi si, d'ane manière constant, ses achats et ses investissements I'étranger représentent une partie insuffisante de ses exportations. De fait, o'est peut-être au moyen de son excédent d'exportation qu'il maintient le plein emploi à l'intérieur. E/PC/T/C.I/14 French Page 9 17. Ce n'est pas à dire que des pays qui épreuvent des difficultés, du fait d'une balance des paiements défavorable, ne puissemt être eIle- mêmes responsables de ce déséceilibre. Far example, des pays à balance des paiements défavorable, dont les difficultés sont aggravées par la fuite: des capitaux, pourraient très justement être invités à mettre fin à ces exportations de capitaux Mais pour autant que la pression excrcée sur leur balance des paiements provient de ce que des pays balance des paiements trop favorables s'Abstiennent de dépenser, sous former d'importations, leur pouvoir d'achat sur les marchés extérurs ou à l'utriliser à des investissemments productifs à l'étranger, il ne faudrait pas demander aux pays soumis à cente prossion de fournir le gros de l'effort qui nécessite ce réajustement. 18. La thèse est assez généralement soutenue que si la balance des paiements d'an pays se troave en déséquilibre fondamental, ayant pour effet d'entraîner des difficultés persistates dans les balances de paiemients d'autres pays et de les entraver dans leurs effort., de main- tenir le volume de l'emploi, ' pays doit contribuer dans la plus grande measure possible à toute action qui vise à corrige ce déséquilibre. Il revient, bien entendu, au pays intress: de décider quelles mesures particulieres il convient d'auopter (par example stimuler les importa- tions ou supprimer des stimulants spécifiques à l'exportation, relever le taux de change de sa monnaie, modifier dans le sens de la hausse la structure de ses prix interfieurs et le ses prix de revient, augmenter ses pIacements à l'érranger etc ..). Ici le problème st situe dans un domaine auquel le Fonds montaire international s'intéresse spéciale- ment, et il est particulièrment souhaituble qu'en cette matière les gouvernments nationaux intéressés et l'Organisation internationale du Commerce collaborent pleinement avec le Fonds mométaire international E/PC/T/C.I/14 (vi) Protection des pays sujets à une pression déflantionniste s'exercant de l'extérieur. 19. Naus avons examiné plus en avant la situation des pays dent les systèmes économiques seraient exports à :. pression déflationniste, rés:_ltant d'une baisse sérUrI* isc et brausuque de la demande effective exercée par d'autres pays. On est généralement d' accord qu'il faut des garanties saffisantes pour faire face cette éventualité. 20. A ce propos, nous relevons que les actes coastitutifs du Fonds monétaire international contiennent des dispositions protectrices importantes . (a) En premier lieu, rien dans les textes n'empénce le contröle des exportations de ce c.,i; v -, de secrte qu'aucun paqui octps qui câtirait l'une pression déflationaiste vonant de l'extérieur, risque de voir ses difficulties accraes par la fuite des capitaux devant sa monasie. (b) En deuxième lieu, pays qui ys CUi se ticuvec un situation de "déséquilibre fondamental" da fait de de maintenir ses prix intérieurs , coûs. de production et revenus face à une déflation P àl'étranger, paut demander au Foods Favoursir la déprécaiation dans la measure jugée aécessaire, au taux de change de sa monnaie. Les effec to de pareille; dépréciation ne peuvent être annulés par ane curse. la dépréciation la laquellie se livereanux les autres mes du u -no.mbres du Fonds, qui e se trouvent pas dans ln situation de '"ilibre foundamental''. A ce propos, nous avone vons acte noté qe dlescuireoteurs exécutiffs du Ponds monétadaire international out interprété les articles constitutions du Fonds en ce sams que "des .ensures nécessaires -pour protugeur un Etat to membre du arcnp chronique at persistant. résultant d' une pression qui s'exeroor it surve balance caiment, compatent Parmsi celles qui sont nésscaires pour rectifier un déséquilibrc foundamental"' E/PC/T/C.I/14 French (c) Eh troisième lieu, si un pays ,ou un greupe de pays enregis- trent un excédent d'exportations considérable au point de rendre "rare" leur monnaie, dans les réserves du Fonds, les autres pays sont autorisés restrcindre les achets faits à ce pays dons la mesure nècessaire, sans tourfais restreindre les achats qu'ils se fant entre eux. 21. Les Articles constitutif s de l'Organisation International du Conserce devront, eux aussi, prévoir des garanties suffisantes. Ils prévoient, de toutes façons, que les pays dont la balance des paiements se troupe en situation difficile soient autorisés à. appliquer des res- triction s quantitatives à leurs leurs importations. Et, il est généralement admis que cela constituerait une garantie importante, du genre de celles que nous envisageons. Nous n'avons pas pensé que notre tâche fût d'examiner en détail cette garantie ou d'autres que peurraient comporter, ailleurs dans le texte, les Articles conistitutifs e l'Organisation Internationale du Commerce. Neu recommendens qu'au moment ceux-ci viendront en discussion, on examine de très près cet article et d'autres portant sur ce zeae sujet, qui se trouvent dans les autres chapitres du Statut de l'Organisation International du Commerce, afin de s'assurer qu'il existe des garanties suffisants pour un pays soumis à une pression résultant de la baisse de la demande effective exercée par d'autres pays. E/PC/T/C.1/14 French Page 12 22. De l'avis general, les clauses partant directement sur le problème de l'emploi, qu'il nous incombait d'examiner, doivent computer la reconnaissance, sous une forme générale, de la nécessité de garanties suffisantes, en obligeant l'Organisation Internationale du Commerce de tenir compte, dans l'accomplissement de ses tâches, telles qu'elles sont définies dans les autres articles du statut de l'Organisation, de la nécessité qu' éprouvent les pauys de prendre des mesures dans le cadre du statut de l'Organisation Internatiinale du Commisew pour protéger leurs systèmes économiques centre une pression déflaticnniste, en cas de baisse grave et brusque de la demanded effective exercée par d'autres pays. (vii) Action internationale pour maintanir le volume de l'emploi 23. Dans la situation actuelle, l'action directed nécessaire pour maintenir le plein emploi productif et un volume ample et stable de la. demande effective Dit être dans l'ensemble, la some. des efforts individuels de chaque pays. Il exists némcansi certains moyens par lesquels les institutions internationales spécialisées, chacune dans son domaine, peuvent, dans le cadre de leurs attributions respectives et conformént aux termes du leurs textes constitutifs, apporter une contribution. directe au maintien du volume du, l'emploi et de la stabilité de la demande dans le monde. E/PC/T/C.1/14 French Page 13 24,. Le Conseil économique et social, de concert avec les institutions internationales spécialisées, pourrait utilerent examiner les possibi- lités qui existent dans ce demaine. Pareil examen pourrait s'étendre non seulemlent aux effets, sur le volums de l'emploi et sur la produc- tion. qu'exercerait l'abaissement des barrières au commerce, mais encore à la mise en harmonie des politiques de crédits , de manière à alléger les conditions de credit dans une grande partie du monde, an cmoment où s'exerxe une pressing générale de caractère déflation- niste, à des arrangements tendant à assurer la stability des reve- nus, partent,; celle du pouvoir d'achat de producteurs de matières et objects de premiere nécessité; à l'échelonnement dans le temps des de caractère international; dépense s en capital destiné,es à des projets d'investissements/et au développement d'un courant de capitaux dirigé vers les -pays don't la balance des paieiments a besoin d'un soutien temporaire, à des moments où s'exerce une pression déflationniste dans le monde, pour leur permettre de ia intenir lur politigue nationale du plein emploi productif, (viii) Las fonction.s du Conseil économique et social et des institu- tions Internationales special sées. 25. Nous avens examiné dans quel cadre international ces tâches peuvent être accomplies, Dans ce domaine, une action positive implique des actions individuelles de 'a part des divers gouvernements nationaux et dus institutions internationales spécialisées. Cepenrdant, cette action doit être coordonnée comme il convient, si les mesures de portée E/PC/T/C.I/14 French. Page 14- nationale et international, destinées à neutraliser une dépression générale, doivent intervenir au bon moment et revêtir l'ampleur voulue. 26.. Il faut donr prévoir qualque orgsnisme international sous les auspices duquel les divers gouvernements nationaux et les institutions internationales spécialisées peuvent se concerter sur une action coordo.. éc en vue, de Maintenir le volume de l'emploi. Et il apparaft que l'organisme qui convient à cette tiche, est le Conseil éconocique et social des Nations Unies, de concert avec sa Commission économique et de l'emploi et ses Sous-commissions, au-cquelles cette tâche a déjà été confiee. 27c fes fonctions que le Conseil économique et social devrait ou bien remplir lui-même, ou dont il devrait se charger par le truchement d'accords conclus avec les institutions internationales spécialisées portent sur (i) le rassemblement périodique, l'analyse et l'échange de rerseignenents sur le sujet -visé; et (ii) sur la préparation d'échanges de vues sur une action concertée, nationale et internationa- le, dans le domaine de l'emploi. En plus de ses fonctions permanentes, le Conseil économique et social devrait mettre en train les études mentionnées au Paragraphe 24 ci-dessus, au sujet d'une action directe évertuelle sur le plan international tendant au maintien du volums de l'emploi. 28 Le travail du Conseil éconmique et soc -.l et des institutions internati!o.ales spécialisées sera d'une grande importance. La documentation à recueillir de..;t porter, autant que possible, sur le volume et la E/PC/T/C.I/14 French Page 15 composition du revenu national, des dépenses de la nation et de la balance des paiements, de, même que sur les statistiques de l'emploi, du chômage et de production.. Dans la mesure où cela est possible et pratique, elle doit s'étendre aux projects unvisagésa et aux tendences prévues pour l'avenir de manière à escompter judicieusement les besoins futurs de la politique de l'emploi Des échanges de vues détaillées et périodiques, en provision d'une action concerted centre les divers gouvernements nationaux et les institutions internationales spéciali- sées, seront nécessaires pour déterminer jusqu'a quel point le memont d'application des diverses politiques nationales (par exemple en matière de dépenses sur les travaux publics) ou d'autres politiques internationales appropriées peut être ajusté de manière à fournir la contribution commune la plus efficace au maintien de la demande dans le monde. (ix) La forme à donner aux dispositions sur l'emploi 29. Il n'y a pas de conflict entre La thèse qui veut que le Conseil éccnomique et social doive continuer à remplir à l'avenir ces fonctions générales en matière d'erploi, et le rapport particulier qui doit exister entre emploi et commerce Certains pays pourraient éprouver des difficuités à assurer les obligations en matière de commerce prévues aux termes de la future Organisation international du Commerce, en l'absence de l'engagement de la part d'autres pays de faire de leur mieux pour maintenir un volume ample et stable de la demande effective; or, les politiques de l'emploi ne doivent pas s'opposer aux obligations E/PC/T/C.I/14 French Page 16. prévues dans le domaine commercial. Pour ces raisons, il est nécessaire de lier étroitement les obligations en matière de commerce et les obligations en matière d'emploi. Nous penchions à croire que pour cette raison il serait sans doute le mieux indiqué d'inclure les engagements en matière d'emploi dans les articles constitutifs de l'Organisation internationale du Commerce. 30. Il est, cependant, un problème on matière d'emploi qu'il sera sans doute préférable de résoudre d'une manière différente. Selon ce qui est proposé au paragraphe 24. ci-dessus. le Conseil économique et social et les institutions internationales spécialisées doivent être invritées à examiner le genre d'action internationale possible pour aider au maintien du plein emploi productif et d'ui volume ample et stable de la demande dans le monde. Nous penchons à croire que cette invitation prendrait le mieux la forme d'une resolution séparée. (x) Projet d'articles et projet de résolution 31. En vue de résumer les princires généraux que nous avons passés en revue, nous joignons à notre rapport un nombre de projets d'azrticles relatifs au problème de l'emploi, qui se réfèrent aux divers points don't pourrait tenir compte le chapitre sur l'Emploi des articles constitutifs de la future Organisation internationale du Commerce, de meme qu'un projet de résolution sur une action interna- tionale en matière d'emploi. E/PC/T/C.I/14 Page 17 III A N N E X E (i) Projets d'articles Relatifs à la Politics de l'Emploi. 1. Les membres reconnaissant que la nécessité d'éviter le chômage ou l'insuffisance du volume de l' emploi, en réalisant et en maintenant dans chaque pays des possibilités d'emploi avantageuses en faveur de ceux qui sent capables et désireux de traviller ainsi qu'un niveau élevé et teujours croissant de la demande effective de produits et de services, n'est ;.as une préocupation d'ordre uniquement national, mais qu' elle constitue une condition nécessaire au dévloppment du commerce international et en génral à l'accomplissement des tâches. de l'Organisation. Les membres reconnaissent également que les measures tendant à soutenir la demande et l'emploi duivent, ôtre; compatibles avec les autres objectifs et dispositions statutaires de l'Organisation et que dans le choix de ces mesures, o:r.que pays devra chercher à éviter de créer dans d'autres pays des difficultés dans le domaine de la balance des paiements. Les Membres sont d'accord pour considérer que si la réalisation et le de la demande maintien du volume/effective de l'emploi depend on premier lieu de disposi- tions d'endre intéricur, ces mesures doivent être facilitées par l'échange régulier de renseignements et de ues entre les membres et compeltées autant que possible par ure action internationale entreprise sous les auspices du Conseii économique et social des Nations Unies, action qui devra s'exercer en collaboration avec les institutions internationales spécialisées competentes en la matière, agissant chacune re CdJ1m1s son domaine respectif et toujours dans le cadre et conformément ut auâches quiqui l ur- sont asnégr.es pae lcurs textes constitutifs. 2. Dans le ressort de sa propre juridiction, chaque membre devra prendre des mesures destinées à. réaliser et à mintenir le pleir emploi productif et un aiveau élevé et stable de la demande effective, sous une forme appropriée à ses institutions politiques et économiques et compatible avec les autres buts de l'Organisation. E/PC/T/C.I/14. Page 18 3. Chaque membre, recommissant que taus les pays ent un intérêt oe:. ..ur. à l'utilisation productive des ressources mendiales s 'engage à. s'effereer de développer progressivement les ressources économiques et à élever le riveau du rendement preductif dans la ressort de sa juridiction, au mayen de mesures compatibles avec les autres buts de l'Organisation. 4. Chaque membre, reconnaissant sner qqucles s es ea-ys ont unêintéret commun au maintien de conditions de travail équitables, en rapport avec le rendement productif de chaque pays, s'engage à prenare toutes mesures utiles et réalisables een vue de faire disparaitre les conditions de travail inférieures à la normale du demaine de la production destinée à l'export-- tien et, d'ure façon générale, dans tous les secteurs soumis à sa juridic- tion. 5. Chaque membre s'engage, en cas de déséquilibre fondamental dans sa balance de S .ic yie ..-zs, susce tible l'entrainer dans la balance des paiements l'autres pays des difficultés persistance qui les empêchent de mainteninir le ve;ue de l'emploi à contribuer dans la plus grade mesure possible toute action lestinée à corriger ce déséquilibre. 6. Dans l'exercise de ses attributions telles qu'elles sont définies dans les autres articles le cette Charte, l'Organisation tiendra compte/ie la ncessité qu'éprouverent les membres de prenrenctre dans le cadre des clauses statutiaires de l'Organisation Internationale du commerce, , des mesures destinées àpretèger leurs économies centre une préssion déflati- onniste qui pourrait e se oduire e s'il a e baisseérieuse ou soudaine de l la demande offective d'autres pays. 7. Les membres s'engagent à participer aux arrangements pris par le Conseil économique et social des Nations Unies au sur son initiatively compris les arrangements avec les institutions spécialisées compétentes en vue de: (a) réunir, analyser et échanger régulièrement des renseignaments relatifs aux problèms de l'emploi se posant pour chaque pays E/PC/T/C.I/14 French Page 19 les tendances générales et la politque de l'emploi, y compris autand qup possoible les renseigrements sur le reveru national, le volume de la demande et la balance des paiements; t et (b) se consulteir en vue d'une action concerted des gouvernements et des institutions internationales spécialsées, dans le domaine de la elitique de l'emploi. (ii) Projet de résolution au sujet d'une action internationale en matière d'emploi. Attendu qu'une contribution in ortante pout être faite à la réalisation et au maintien âu plain emploi et d'un volume ample et stable de la demande effective, par le mayer d'une action internationale entreprise sous les auausmices du Conseil économious et social et réalisée on collaboration avec les institutions spécialisées compétentes againsant chacune dans son domaine respectif et en conforaité avec leur . .r.dat et les teaches prévues par leurs Statuts. La Conférence du Commerce t et d'Emploi des e NSationnU:.ieécideeaa d'inviter le Conseil économique et social à entreprendre prochainement de concert avec les institutions. spécialisées compétentes de procéder à des enquêtes on vue de déteminer la forme que cotte action internationale pourrait prondre et propose que tout on pertant sur les répercussions que peut avoir sur le volume de l'emploi et de la production la l''abaissement des barrières oppeséés au commerce, ces enquêtes comprennent aussi l'emen n de mesures telles que : 1.l'échelonnement concerté dane le temps, dans la mesure où cela serait utile et réalisable dans le cadre d'une politique de l'emploi, des mesures nationales et internationales destinées à exercer une influence sur les conditions de credit et d'emprunt; 2. les accords nationaux ou internationaux, conclus dans des cas appropriés pour aider à la stability des revenues des producteurs de denrées de première nécessité, compte tenu aussi bien Ces intérêts des pays consommateurs que ces pays producteurs; E/PC/T/C.I/14 Page 20 3. l'écholonnement dans le temps, dans la mesure où cela serait possible et réalisable dans le cadre d'une politique de l'emploi, des dépenses en capital destinées à des programmes d'investissements d'un caractère international ou financés au moyen de capitaux internationaux; 4. la création, sous les ga DDn: ;A:is nécessaires, pondant les périodes de pression déflaticoniste mondii'.l d'un courant de capitaux vers les pays dent la balance des paicments nécessite une aide temporaire pour leur permettre de maintenir une politique nationale de plein emloi de nature productive.. -----oOo--------

GATT Library

wd893wc5371

Projet de Raport de la Ière Commission I

United Nations Economic and Social Council, November 10, 1946

United Nations. Economic and Social Council and Commission Preparatoire de la Conference Internationale du Commerce de l'Emploi

10/11/1946

official documents

E/PC/T/C.1/14 and E/PC/T/C.I/1-15

https://exhibits.stanford.edu/gatt/catalog/wd893wc5371

wd893wc5371_92290358.xml

GATT_157

GATT Library

hn771bz9366

Projet de Rapport de la Commission Mixte du Developpment Industriel

United Nations Economic and Social Council, November 20, 1946

United Nations. Economic and Social Council, Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, and Preparatory Commission of the International Conference on Trade and Employment

20/11/1946

official documents

E/PC/T/C.I/19 and E/PC/T/C.I/13-20

https://exhibits.stanford.edu/gatt/catalog/hn771bz9366

hn771bz9366_92290387.xml

GATT_157

United Nations Nations Unies LONDON E/PC/T/C. I&II/19 ECONOMIC CONSEIL 20 November 1946 AND ECONOMIQUE French SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH COMMISSION PREPARATOIRE DE LA: CONFERENCE INTERNATIONALE DU COMMERCE ET DE L 'DEVELOP PROJET DE RAPPORT DE LA COMMISSION MIXTE DU DEVELOPPMENT INDUSTRIDMSTnIEL Introduction. ans~ troisikiu s~.-rnÇc, J..C.iso P -rti ri .-I- n Co..itC- c.x6cutie, a' d. (IC.~ l opcc.o;.t son Or(irc *'u jour r~vis~, I!,. r bi qu c "~ccord Inon.i~..roltvtif' -.u cvlop.Lntinclustricl". .'u cours clos s.zc'.Co s (lu cLibut, C.ivors ~u~ .~nt v:'r;. '.vi -:' Lr-.t ucs ticDn (lu IU~ Co~isions, !%vt.it on vr1- é & C; un :~r ta n cc su±'2:iotnto .pur jLL3ti-- -.cLior un ox,-u.man s~pa6 D.'uflconr.Ufu a'ccore-, 1osa.ro cl, II'~...c Coa .~.-ssions oc Sont r~.unicz on sd5c-.ncc coit:..-un c; 1 l octo*~ro, ot,. ont cc.nstitu6 unw. Coi.L±szion ;.iixto du avo1opp(..n tu inCL.us triul..1 '. o~.sin:~~t ooL rit 10 1d.<~~~ UJu Pri4siaContct il a '.! av'cic iao ..u. Hï.C. Co. (~..ustrL-1±o), 'Pr~siaont ,Io la. lèrc Couzr.îssian.$ ot ..~unis Ki (Chi- ),'rs i:o.;nt zb laIIo (,C&:Uamsion ro...mlra'icnt asa fonctions ci c Vicc-prr6siJ,.cntz. La..o..±so -.:xtzct 'asot r~- unie q.uatr fois; ol. tor1.iin , s trtvw.u k. 18 novcz.bro. E/PC/T/C.I & Il/19 French Page 2. 2. Au cours de sa troisizrac s .ce, le, Ca=àission a-iLctc t instituc un Co=itn dc RCU.^.ction co0uosS dca &Q1,ucs dc l'-..ustr^lic, du BrWsil, dc le Criaci, de la. Fr.ncc, d. l'In2c, '.u Rcy.u -Uni et --es Etats-Unis. ~.u cours dcs su;n=os qu'il a t&nuos, 3 Oo:.i.t s'est confor=6 à un Orcrc du Jour co portent les principe.uz- point suivants (a) Principes çncraux, ct buts du cdvCloppcflcnt industrial ut dcono- tiquc ; (b) Voics et moyens en vue do réaliser le développement industriel y compris la détermination de critères pour lus industries qui ucri- tcnt de'*trc prot6gcs, (i) ce;lit= et invcatisszc:unts, tii) 'rvcloppezient technique et questions connexes., (4i) hati.rcs pr«ièros, produits izanuufctur._s ct cquipcucnt, (iv) politiques commerciales. Outra les expcszs f'.^its px-.r las D;lCucs -u cours des sc.ancos de le. C=.ission xtc, p=ticulirrizacnt cciz: '-ds D4lgEuis du Roy:o-tU<-Uniy dc l%~.uStr lie et de, l'Indo, le Cî..t4 o dispos dos 'acuctnts -rCscn"tçs par l'..ustr.-lic, le Br6sil le Chili, la Chn; , l'In_ lcs Etats-Unis, le Liban, par l'Obs¢r- vateur de la Colombic et pr-r l. Sccrc-t,.rit. 3. * Lc rapport -u Coi-tc4 a cti iscut et odopt avuc lqs ;^icndc..ents d.cid;s par la C0-dission zzixtc .u cours do sa qurtriZu et dorniùre s6ance * lo 18 nove-abre. Nous .avcns l'honneur de so=cettre 1. l'exa=cn dc la Coa.ission ?r6paratoire le rapport dafinitif de la Co=irssion iite nuquol sont omicxUs ur project de Chapitre, sur le développeo.nt iconoUiquc, un projet de rasolu- tior à\ aJressoZau Conscil Econc:-.iquc et Social et une coaunicaction à la E/PC/T/C.I & II/19 Page 3 Recommandations 4. La Commission mixte soumet à la Commission Préparatoire les- recommanda- tions suivantes: (a) Afin de ménager dans l'ordre du jour de la Conférence Inter- nationale du Commerce et de l'Emploi une place pour lEntente internal eiona- le sur le dcvelopperent industriel, il f audrait insurer dans la Charte de l'Orsnisatior linteinationale du Coc=orce un Chapitre prâvoyn.rt que tous les Etats-cenbres s'enga.eront à favoriser le développement industriel et le dveloppement économique général, et entroprendront action concertâe cui pourra Ctre néces3aire pour f'avorisr cCe duvelop-perent; (b) En prison dos plans que le Conseil Econoriiue et Social prépare pour favoriser le d4veloppeaent Éconouique, et de l'int4r8t que portent a cette question d'autres Irnstitutions Ir.ternationcles Sprcis1is6es, une couricaticn devrait être adres36e sans retard au course de la présente session de la Coaissior. Prépar-toire, au Conseil Economique et Social pour l'inviter à tenir cotncte dos conclusions de la Coriiission mixte lors- qu'il examinera la îaçon dont le responsabilité de 1l'oeuare deencouragement du développement indust-i3l doit 8tre répartie entre les différents organis- mes international, y ao-ris l'Organisation Internationale du Commerce et de décider si l'article B (3), inséré provisoirenent d.-as le projet de Ch=pitre sur le dé;velopper:.ent éconori que est conforme ez vue du Conseil sur l'attribàtion qu'iL convient de fire dos f'onctions relatives au développeaeent économique E/PC/T/C.I & II/19 French Page 4 Partie Il A. DEVELOPMEN T DES RESSOURCES ECONOMIQUES: 1. La Commission Mixte estime que la Charte de l'Organisation Internatio- nale du Commerce.devrait reconnaître clairement que le développement progr sai des ressources économiquies dans toutes les parties du monde est a.ési- rable non seuleÈlent en soi, en tant que moyen de relever .e niveau de vie %dans certain pays! mais également en tant que moyen. d.accrottre le volume des échanges sondiaux, pour le p .us grand bien de toutes les nations parti cipant au commerce international. L'amélioration des norrese de prodction et celle du revenu réel d'un pays contribuent à rialiser et à Maintenir de ce pays un niveau élevé et croissant de la derande effective dlel'ensembli des rarchandises et services, ce -qui a pour effet dI accroître les possibi: offertes à ce pays de participer aux changes mondiaux. Le développement c ressources économiques aura également des repercussions favorables sur le plan social en aupentant le c'sha'mp de. possibilités d'emploi utile. Par c séquent., um développe-ent progressif est désirable particulièrement dans pays dont les irdustries ont atteint, à l'heure actuelle, un développemen qui n'est pas en rapport avec leurs possibilités. 2. De l'avis de la Commission Mixte, un des principaux avantages que l peut tirer du développement, c'est la diversification plus grande qui en sulte parmi les industries de base, de transformation et de service et à l'intérieur de. ces industries. Cette diversification peut contribuer à at croître la stabilité de l'économie d'un pays, et lui procurer de grands avantages sociaux et culturels. Le développement des industries de trans formation revttira une importance particulière car c'est au moyen de ce velcppement quail sera possible d'obtenir la plus grande diversification de la production et les meilleures possibilités d'emploi. E/PC/T/C.I & I /19 French Page 5 3. La Commission Mixte désire également attirer attention sur un sujet qui intéresse tous les pays, à savoir le prompt rétablissement éccnozigae et la rapide reconstruction industrielle des pays dont les éconcr.ies ant direc- tement souffert de la guerre.;Ces pays possèdent des ressources si réelles et si irportantes pour le rested dlu ::onde que leur disparition ou leur dé,lin teuporaire a provoqué des difficultés dans des parties au glcbe très élcignée des theatres d'opérations. Dans de nombreux cas les éccnor.ies de ces pays étaient déjà très développées et elles sont prètes à cérer un relèvement relativement re.pide qui les r.:.ttra en r..esure de procurar. adu autres nations les zatières pre.-.ires, le rtricl et 1es produits rnmui'^cturés dont elles ont besoin pour leur développeæcnt écono.ique. Il existe dans ces pays des technicians qualifies et des ouvrriers expéri:=entés déjà rcr-us aux teerinnî7ues industrielles zodernes, et pr6ts à occuper les em'plois très divers que c.a- porte la. ecorzstr.ctien. Lors;uz -e.s pays iévastés par la guerre seront rele- vés, ils seront en vesura d'a-.,rcer lur contribution au rogrès technique et au relèvenier.t de la prouotii.tç et des niveaux de vie. Er. zcnsoquence, la Cc. z. ssion $ixte estiz.e qu'il serait necessaire de prendre des -Mesures destinées à faciliter aux ;ayj dévast,és leur retour ra;id7 à un delvoe,-.eent interr=r:vu par lM. guerre et elle pense que ces .esures contribuerot utilement au déveloPper.ent rapids et saini des autres pays. ADAPTATION DES ECONOMIES 4.. Pendant que les pays les m-oins développés entreprendront progressive- mit la production, d'une l- e plus itmndue de products de base destinés à leur -.rce. intérieur, il est probable. que les nations dont les eéoror..es sont plus développées, qui alir.entent autrefois 'es narchés des pays les mcins diveloppés, auront à.résoudre les -r:blt;;es réàultant de l'a tz.tîcn de leurs écono.ies aux nc*uvelles oircoristar.oes. La gravité E/PC/T/C.I &.II/19 French Page 6% et la durée de ces problèmes se trouveront r6duites si ces pafs prennent le ecd de veiller à ce que leurs prcgrares de déve1cppemént soient conçus et exécutés sur une base saine. La Ccmission :lxte émet 1l'ciion que c'est seulement en suivmnt cette voie aue les pays en cours de déve- loppemert apparteront la contribution la plus effective à leur propre bien gtre éconcmique et aux échanges internationaux, et.que les pas les plus développés n'auront de bonnes chances de réussir l'acdaptation de leurs éeonomies cu'en opérænt de cette façon. 2. D'autre part, les pays en cours de développement auront éga- lement à taire face à des problèmes d'.adaptation. Ces. probIèmes se trou- veront principaflerent lies au transfert de la main-d'oeuvre provenant de l'rgriculture et des autres industries de base au' ur et à mesure de l'accrcissement du rendement du trareil dans ces industries, vers les ma-. nufactures et les autres branches de l'activité éconclique en voie dsec- pansion. Ce transfer pourra nécessiter une noutrelle distribution géogra-. phique de la population. avec tous les problèmes qui er; dé-alaent, et sculerer es problèmes de l'éducation et de la r4éducation profession- nelles. .C. Conditions du développement industrial . Les conditions de la mise en valeur, au moyezLaie l'industrie, des resources économiques- d'un pzys.. comprennent le capital, les biens de production et les matières premières, les dlbouchéi, une technique ap- prcpriée, des cadres expérimentés, dee techn:icïens et( des ourriers quali- fiés en nombre suffisant. Qand l'une ou l'autre de ces -conditions nest pas satisfaite, des nesures, tant internationales que nationales peuvent être prises pour modifier la situation. C'est ainsi que des measures E/PC/T/C.I & II/19 French Page 7. internationales peuvent être rises pour faciliter l'approvisionnement en capital, en biens de production et en matières premières, pour fournir des padres exprinentr.tîs, des techniciers et des ouvriers qualifiés, et pcur améliorer la technique. Chaque pays peut entreprendre l'élaboration et l'exécution de plrs de arise ern valsur îes'tins à élever le niveau de la àoO:ëtsrJe au personnel le o ditin Ile l'industrie, a organiser lop.- prentissage et le perfectionnement de ses propres ressortiss=-ts pour en faire des techniciens et des ouvriers ualiiiés, t, sUs reserve dé ses cblig.tiorzs ir.ter-._icri Zes, il peut s' effcc-re _a r-s rs-.r, au Noyer. de ensuress protctrve.i u.ne part raiscr=-ble lu r.arohé ixr. ur sux prc- du-ts ficricu's sur sor. mrc- r) sarr- tOi- . D. Ressournes er. <nzi t? . 1. Un pays ,eut :voir besoin da. cr.-pit-ux pour xoderris et or.é- liorer la t.ech.ique de scs industries, dév.loppr les industries qu'il possède ou en créer de nouvelles. Les tapitaux peurent mssi ,'tre néces- saires pour a élicrer ou acoro±tre les przstatiors de services publies, tels que l es services de transports ct ie o...ca ions, les services de distribution d'eau et deénargie électrique. Des Drojets tel3 que ^es derniers, qui sont inrdis.renabls à Jl, .-ise en viur progressive des paya peuvent ne pas 9tre ii diaterert ni retement rz-.unéeraeurs, et les .mesures internationrles peuvent se révéler d'aut=t plus nécessaires si 'or. veut que l'offr3 de capitaux soit suffsate. 2. La ûozimni3oi iCr te -stie c l'offre ind.,rn.tionl e capitaux sera. pariuière-ent né,essaire ax pays =oins *VOiluès et a oeux qui ont souffert- de la guerre. Cette offre peut se r=ifster p-ar la voie, soit de pinvisvissc.-é-r i, 3oit des orgi-.srier, ,ouve;rner.entutx, soit enfin de a Banue interrtiore pour la Reconstruction et le 3 vieloppement. E/PC/T/C. I & II/19 French Page 8 Etant donné l' iportznco du ddveloppoment industrial dans l'expansion du cotracroc mond.ial, le. Co±iasion .-mixte Csti.o' quc tous l :;.:bros de l'Organi- satian intcrnntion.lcu du Cca.-.co civont reconnaîtra la rosponsabilité qui lour incoabcs dc coop»ror dans los liiitjs d.; lûurs pgssibilit6os, -vo los or- ganiblas intcrnationaux compétents pour assurer, on particulier aux pays don't les ressources en capital sent limitées, un afflux résulior de capital. L'Or- ganisation international* du co;t.iordc pourrit. participor aux discussIons con- cornant dcs j>ropositions on'co sons, qui pourront s'mtablir ontro 50s =c-orbros ot d'autros srg.nis.os intornationwux. En outro, l^ Coa-=isaion '.iXtC C8ti- me quo bcs !tts :o.ibrcs doivont s'aoninor à no pas ps. chQr,.par dos en- tzraves loz s.tifiècs, 10a autros Etntts-zioibrrs lavoir accès aux russoUxcCs on capital. ;, Un pmys qui =zrc'. un ?rogrt.nc Eo d6votopppciont i"apliquant dos iv3portations do bions do c-pital on quantités Lpi;rtantoi puiut avoir à wnvrisagQrl. h 5ontuabit6 dc difficulties on .iatiÙro do blanco dces co-ites. La Ccrio$si-n -.imto oit d'avis qu., Si, a un ..soicnt quolconquo, un pays prévoit l' ininonco _z .z01ROa dif'ficult-ts, il doit 3tru autzrisa à utablir un contrôle ;uolitatit do sea imiortations pour, aint'nir ontro sos *importations de bions do capital et sos i..portations de bions de consowina- tion un oquilibro judicieux. 'Naturolle.lont, Ic ùaaintiun dû ce contr8lo dos ipo'tationu no so j4stiîficra qu tant quo subsistora la parspoctiv do d±fficultés cn zlatièrc de balance dos co.iptos. Uno co..iunication'a et. adrons6à eco sjejt à la IIème Commission. E/PC/T/C.I & II/19 French Page 9 E. Ressources Les plans de production et de développement feront naitre dans tours les pays une demande de biens de production et de matières premières de toutes sortes. Pour la plupart des pays, y ccmpris ceux oui s'emplcient à activer leur développement industriel et le développement de leur éconc- mie dans son ensemble, cette demande ne peut recevcir satisfaction qu'a l'aide des resources cu'ils pourront obtenir sous une fcrmo cu scus une autre d'autres pays. Aussi la ocrmissicn rixto estirme-t-elle oue les Etatz membres de l'Organisation doivent reconnaître qu'ils cntEnvers les autr'-s Etats mlembres l'obligaticrn do ne p-s les a!l-zcher, -r des entraves dar^: - sonnables, d'avoir accès aux biens de capital et aux uatières zr:i-rcs de toute sorte dont ils ont bescin. Il -, sans dire qu'un tel engagement r.e saurait atre pris que sous réser-ve de l'e--licaticn des autres dispositions de la Charte. Par exemple, les pays fournisseurs qui scuffrent de la péntrie d'un preduit déterrminé, en particulier dina la rériode de transiticr. suivant immédiatement l'après-guerre, auront la faculty d'applicuer des restrictions dans les conditions prévues à l'artizle 19 *du prcjet américain de C'rte. Dans de tells circonstances, cepondant, il est a espérer qu'ils tie-idroni copte des besoins des autres zeys et liaiteront ces restrictic's au st_3t Minninmum F. Technique et qualification L'une des méthodes les _lus j crtantos ecur favoriser à tsravers le rion:- de le divelcvppment industriel cc-esiste ; propager, particuliire-.ze.x' &?-.s les pays dont le dévelopt-exet ie ccrreapcnd pas à leur pctentiel eoncr.quc, la ccn=-issancw des tech iques de production. Cette diffusion peut tre Usée en partie à 1'aile de measures rntic*nales et intern:atic'ales oui se poroposent d'assurer le pluz large rayonnement possible E/PC/T/C. I & II/19 French Page 10 (sous reserve des Considérations de sécurité naticnale)- à la con:.aissance des perfectionnements nouveaux survenus dans tours les pays grice aux trans- formations de la technique et à la recherche scientifique; et en-partie à l'aide de nesures individuelles entreprises par les établissements privés des pays mains industrialisés qui obtiennent accès aux brevets, devis des- criptifs et inventions techniques. Ces entreprises pourraient y parvenir, par exemple, en saàssociant à des entreprises situées dans les pays parve- nus à un stade d'industrialisation plus avancé et qui cnt acquis ure expé- rnence plus grande. Encourager dans les pays plus évolués les techniciens et les artisar.s qualifiés à se rendre, déffinitivenont ou terporairerent, dans les pays noins évolués peut aussi contribuer au progrès technique en ces pays. D'autre part, les pays noins évolués doivent prendre des dispositions pcur clever le niveau des ccnnaissances techniques et tachnicclogiques de leurs ressortissants et devront pc.uvoir facilement envoyer leurs ressortis- sants fire des stages de form.ation et de perfectionnement dans les pays plus évclués. G. Responsabilités réciproques Dans l'exécution des programmes de développement industrial et de mise en valeur générale de l écoiccie, les pays moins évolués et les pays par- venus à un stade d'évolutioî plus avancé, dépendront ainsi mutuellenent les uns des autres. En ce qui concerme l'offEre international des ressources que nécessite la mise en valeur d'une éconoeie, notamDent en capitaux d$étabh - sement, en biens de productions et matières premi? :,. s, en installations, en technique perfectionnée et en personnel qualifié, la Cc=iission mixte estime que tous les pays doivent recomnaitre qu'ils =nt des responsabilités réciproques. E/PC/T/C. I & II/19 French Page Il Il a. dj. ete s±înMclc que loe po.W s qu sont on Ctc.t dc ftirc bMnWficier les cutros do ces rossourocs nc devront ic.s lcs a_:,cIhor: pI.r ces a ntraL- vos injustifi4es, d'y ncccdere Toutozioi, il n'nest p.s r=.oins ir.ocrtc'nt quo les pa.ys bCnificiairos al.,pliquont z.uzx I)y8s fturnissours$ tant a leurs entreprises qu'à leuz ressortiszants, un tSrr.itou-.-nt conioroio n 1 a tereur de leurs cnC,.,erLonts intorinticnaux on cotte ;..tiSroe et d'une lun çon enra le skabstiennon±t de toute uaesuro injustiffio qui soit do ne.turc à porter prejudice aux intr8ts -du pays fournissour. :T. fNlcbouch6s ot .n-zsures o 'rotctiorn. 1. Los ;LndusttLes r.cuvollor.;cnt cr~o3 sont z;nr'l suent, du moins dans les àprom:iers terwps, tributcirez dos ..archws nation=.ux pour 1 'oular.nnt do 1rurs produits. Lussi 1:. Ccr ission .-a.ixto tir..o-t-ello ..uo, cSuo 'ois u s'rl sr rc.cossair', les Etnts .cu.ibros cui ci orirsnt ±':oriser lcur dqvo- lopperment industrial lcvront avoir cu sa -.±ri rooonr.^.:tre, dr.ms clus limites rrisonnables, la liborto ie recourir à dos :..osurc: lo prctacticn de falon à assurer aux produits int.ros£5s une art rquitablo le lurs .arcIhs in- trieurs. Toutefois, cor:ie un pays oui, pour favoriser son dvUlcPPeçront industriel, recourt sans prison vblalo, à. dos r:-curos d ;protection, srève inddment son 5conorzio int'riouro et iicsc au ac;c.-:oco intornaticna. dos restrictions inJust±fi6os, il ost souhaîite.bl quo los pays juJi. frvorisent le d6telopqpr.ient -ne fassent pas un usa.^e abuait du talles r.esurus de Dro'toc'- ton. 2. Le recours, do la: part d'autres pays à une une politique de dumping pourr.ait tro pr.rticuliàreriunt pr juzliciablo aux ;pays qui désirent m;ettre en rcuvre un progrnx.-e dc uiso on valeur ou ce reconstruction E/PC/T/C. I & II/19 French. Page 12 Toutefois, la Coowission mixte mrésumant que la ilème Commission prend à cet égard les mesures nécessaires, n'a recommandé aucune measure spéciale en vue de cette éventualité. 3. Etant donné que les meâys membrei ne sont -as parvenus au même degré d'évolution et qu'ils ampliquent des tarifs douaniers de niveaux différents, la Commission mixte estime que ces facteurs doivent étre pris en considératic d'urne manikre générale par Ics Etætts nczibres .au cours de toutes les négocia- tions de tarifs qu'ils sont appelés à entreprcndre, et par l'Organisation lorsqu'elle sera apelée à d4cidcr si un rays à eCXcuts ses obligations en ce qui concerne ces négociations. Une note sur cette question a éte adressée à la IIème Commission. I. Nature des mesures de protection. 1.* La question de la nature des mesures de protection dort l'e=ploi peut être autorise pour favoriser lc développement a tetenu p-articuliè- rement l'attention de la C=zission mixte. Ic Coumission aixte a rcconru d'une manière gén>r le que le projet américain de Chl rte laisse une large mesure de liberty dans l'er:?loi des subventions et qu'elle. autorise auasi le recours aux tariffs crotectzurs, là o.- les tarifs ne sont pas conven- tiomiellement liés à un taux =zx2À=z par suite d'accords négoci3s volon- tairement entre Etats mcïiîbres ainsi que l'envisage la Charte. Aussi la Commission mixte a-t-elle fait porter principalement la discussion de cette question sur les moyens -n.r lesquels un membre pourrait obtenir une derogation partielle aux obligations assumes au cours de telles ncgo- ciations avec d'autres Etats membres et à la réglementation contenue dans La Charte concernant ' emploi de f ormes de protecting autres que les subventions et les tarifs qui ne sont pas lIUe conventionnellement à un taux maximum E/PC/T/C.I II/19 French Page 13 2. Lt C::". m rl.-ixte cst 1!%rvenuc 1c k. c nclusizr cruc dJe telles '. - ,^.ti:ns 'evr. ..t ,- ^.cc.r:_n '.-nsa L cir_ rst:tnces f%. . 1oomifc8* L':.ccor'. s'_c;t r.½.lis9 _.,.l~c cnt sur l^. ?rncQurc .oritc a àll'trticle D (3) -u Pr:jc.t 'c ch,. itrc cFui f i urc cn :.nticxc. L= s;cti r. (b) -V.c ce , -ri v it Lz c.s '.'un r:icr.ibrc s:l- iicit..r~ 1'. l^: ~ris«ti..n "^uz-.' t r un *1rvit n.u t?.ux duquel ce ric.bre S'Utait li : 1l siitt: 'c ci.ti-.ns avcc d'autres Etats ici..brcs; ou r.c lui il -un E:t^.t -.c.bre simnt c. --)liqurcr unc -.utre f :r-,e cde -rzstectizn *uc l-.Oh-C.rtc n'.11ut':.risr -. r -.illcurs et u.i rueduira.it 1r. v.leur, pour "s^.utlrcF: ::.C .5rcs, Csu~ ^.c^rc7 ->'-ci c-n :..ti:r c1.c t'arif. L -rrc&ure l.».r-; :gnt si.:iSliî'i.^ in::i:,uCc a. l'^.lini,. (c) cst -rr6vuc -'Dur les c'.s zù l "itct icc.-brc. ciCrchc a lIrc rMed ;: .es -bligsti-;na qu'il a assumdes r'n re.izl^`.;'; LtV. C r.r srAns quc 2.~ rsultn.t dc nn obti:n t-rifir.ircs :*t. ic^&rc f:r S it f-Pfct'. LI. C5 rAissi:,nr.-.ixtc a. !tudi; avec unre .tten- ti.n .. ~rtLulîbr'- 1,. ssjiilit~ d'utilise-r ccii:m. rm.ycn de -ir-Dtecti-'n la r:.-lc,..:r2^-.t.i n. szuentLStr^ive ;'.as i:z ort!%ti:ns. Elle estiric- que, S'ous rmServe . c l'-. lic .ti:n *J.e l. -jr:[email protected] 'rc!-..5;c-, ci n.yen ne- c'.st ttre e;:zlzy; ,jus 7 :!:-5jU'il e;t r-.1ins 'n:reux -arur le -mys qui -xaccr7 la rotection et 1 r;;u'i1 conrn-rtc -'..ur il c m:.erce i.ntern^.ti-;r.^l *'es restricti-ns 'ioins jttvcsPe3 v.*ue l. le r re.ient 'r'autrc f:r-.es ar: re rt ecti:,n. 3> Ur. .'!:z;:n ' e. crir 1 ' ini zn z uc le s restricti :ns qun.ntitatives ~.cvr-:ier,, .'t ~ recnnu s C-?:r.:e un ye7n ^- r'tecti-:n v.%u ue1 un Etr.t .e:;ore -sur.!-.it -vilr recurs `tzut :.:-..ent stileL ju*ee.tt ^.bsIlument nscuss!i2erù s.uz .1. smUlc ruservc A.u droit - e 't-ut autre membre 1' -r sser u.c Flint-' l'Or>.ais-ti. s'il estit;..ait que, :mls un c.s quelcnque, il ,tt.it ;^t auxT:rcsl.-icti:na cueantit-%tivcs un recurs injustifi'.ble. Ce >s91 -W-`cxre. s :issir.nt r;s-rvr0 s m. %ttitucc en ce qui crrecern le -i".rSra.-he 3 2e '' r-.rticlc- D lu -r jet .c ci;* 'itre. E/PC/T/C.I & II/1 9 French Page 14. 41.. Un second 23l$gu% . ex.irimi une ccrt-ie inqui3tuc'e au sujet de la lon,.ueur et Ce l. c .mlicn.tion qui c-r-.ctCrisent, d'.près lui, la.procédure -r.vuc i'article D (3) .u -?rJet de ch.pitre dans le cans :Ù un Etat ac.ubre dc.:^nd'e àW etr~ relev6 dc ses ,bligati)ns. ~sin r.vis, avac la pro- c6'.ure envisagc il Aourrit être po.l-.isc pour un mays insuPfisanmcnt <ve l^Dpp ce se 'aire relever de sCe :bli-j&tions pour -ouvoir recur netmtmnicnt ra acs rcstrictions quantitatives. Bien que se rendant coimpte des incnnvçnients desarcstrictions quantitatfves, ce dâlXgu6 a cstimô que la CMate c'.avait -révoir cirWss.oent la faculty d'y recamrfr i titre de ?rotection. Il a d.clarL tvutefzis qu'il r.6-:r.ciait le coqr nis que la COrwmission m.ixte était n%-.rvenue à rinliscr sur cette question, et que our le rmoment, il ne -r--sserait -as d'nziendement. 5. a Co.i:iissi n m ixte n entendu 6gale,.ent les ':bservations d'un _ ;sSlns7fudc Dncernm.nt le rec-urs aux acc-rds -r6fvrentiels r;3ionaux, mais ->rus:^.r± que ces accorCds font l'o-bjet te 1.. -.irt de la IIèm. Oo.:.nission -'un ex, cn wr rofondi, elle a estir. n'aviir mas à aller au-delà. 6. Br. c'16Sit de la ,ro-sition fa.ite 'iar la Com.issimn miixte, et f-o%.~ulçe l'r-rticlcf D (3), à sav:ir que l'Or,-nisati-n ait le droit, Cd-.ns certaines circ-nstances, de relever un Etnt nembre 'e toute obliga- ti:-n découlant de la Charte, un dâl6gu. a exrxr.i l'opinion qu'on devrmit crvoir ces dis-->ositions plus pr1cises ern ce qui ccncerne le recours _ux accords -1r'fh-entiels rgionaux cozno.e moqyen de .protection. Ce déléqué. toutefois, a réseré son attitude sur ce point. J. Attribution des functions 1. La Commission mixte a tudi-; avec soin la questim de sevoir cor>- mnent les foncti-ns internm.timnales relatives au dâveloe-rlent industrial s3nt susceptibles 'Utre le rmieux re;mplies; elle a âzalement étudlié le E/PC/T/C.I &: II/ 19 French Page 15. rôle que :lcvr.i.t jour, dloes lour r^.coo.plissc..nt, l'O., .nisation Intornationn.- a u.u Coziiorco. Il ¢st cl:._r uuc l'Or njsr.tion Intornrationalo (lu Cor.1emra ec un rebc _ jouer on co qui conc&-rno la dclovaboppc;Xnt iniustricl, au ;..oins Jas i'.. --osurc où las -c.ys recourent aux moyens Oie la politiquc coai.arci.bo pour favoriser cc fv1oloppar,-Gnt. Si l'on onvisaga les buts visa par lo. Chart et la f'onctionnomcnt oftoctif '.c l'Organisation Intornationclo iu C cwr-aa il y a d. s4ri.uscs raircns pour '1otor l'Or.,anisation dcopouvoirs qui lui poxycttront Jlc rc;uplir f.os ±Nnctions positivCS dans la c'o-ruainc cu dCv!ojopo;:nt inC.ustriel, not,-cr.tnt on '.ppurtant aun Etats tioriares l'aide tochnic.u¢ nccoss,?.ire pour '16- tablissocs;rnt ot l.ex4 clc5 plc.n3 rclatifs `; cc varclvqo-Ient. En cQnsi- ;:uoncc, lr'. Coamvsiaion a±to o introduit dons la project do Ohonitra onx6 au pr6scnt rr.pport ur.c ciiSOSitio'1 povisoirc qui, si cll ost a.optc, ha^bili- tora 1'Or niz!tion Intorn--.irn .u lu Co;:.-.crcc, o'lrns La li..ito cl . co:xj$tancc ot dci sos :0ssouicOas, lour porterr une tollo ,%sistzrnco. 2. Ccutto tô e, an rr. ison -le son caractùre cosentiellorb;r.t ac- nistrof, ccrviondrait L une institution sp¢cialisce, et son acco.lissc..nt pr.r l'Organisa ticn Intern dtionale lu Cao.,orce pourrtit con.stituar pour ella un i-coyen utile de coop.ror t;f'icacu;.nt -vac lez Etats z-.abras. De plus, cotte ttche donnerait aux aei.,res au personnel Ge l'Orgo.nisation une experience fond-'a sur la. conti;Lui- té 7'es livcrsas ioliticsus c e cL6veloppcmcnt national enviseavgcs tant du point de vue qooitfue -..u point: le vue des maesures ae protectionot .insi elle les alert . c'onservor lL-apartialit4 ossontielle à l'exercice rationnel des rouvoiru lis critiornnirci :±ue la Charte conf6ro ,. l'Orc-,miiation. E/PC/T/C.I & II/19 French Page 16 3. Toutcfois, la Cox.tission mixta a conscionoo que cc problem no peut être envisagé du seul point do vue de la Charte. Les divers aspects '.u dâvoelop- pement inCLustriol intércssant un coltain nombro l'institutions internationales, notm nt la Sub-commission du Développement économique, organe du Conseil Economique et Social, la Banque Internationale pour la reconstruction et la zriso en valeur, l'Or'tanisation Internationale du Travail, l'Organisation de l'Âlirentation et do l'Agriculture et l'Organisation dos Nations Unies pour l'Education, la Science ot la Culture. La Commission u.ixto suppose igaleent que le Conscil Econouique et Social exoainera prochainerent la question d'une réparti'don appropriée ontre les différentos institutions, ies responsabilités non encore attribuécs dans le doivaine du développement économique et los uyons par lesquels il scra possible de coordonner utilou.-ant lcurs activitbfs, olle csta2ic aalczront que les decisions du Conseil on ces .itiùres doivent roposer non seulement sur les con, ia6rationz ;-ui sont de la coupètenco de cetto conuis- sion, :.irs aussi sur d'aufros raisons, priut-8tro eune, porter plus large. En oonsécuunce, le project de ara.^r-aph;h . 3 l'u.rticle B,. qui dote l'Organisation du pouvoir d'mpportcr aux Etats meubres ume assistance technique, a %té placé entree crochets pour inaiquer quo son insertion doit Ctrc ro-ce come provi- soire tant que le Conseil Econo..aia.u ct Soci.l n'nura pas cxpriad ses vues sur cotte question, 4.. !.ussi est-il propose que le Conseil Econonique et Social soit invite, lorsqu'il cxeuinçra la question do l'attribution des fonctions on ce qui concern' no lc dc;vcloppmnunt industriel, à poser soignieuseent les reasons exposes ci-dessus et, on particulier, à décider si l'insertion du project do paragraphe 3 dans l'article B est conforIe h ses propres vues. Un projet de resolution à cot eCeot est souis h l'càxa;en de la Cocmission PrcSparatoiro. que 5,- - Etant donné/ de nombureux facteurs, on. lehors dc ceux qui ont trait airoctomnt àl'OrgaMjâgtion Internationale du Camorce, rwritent d'étrc pris en consideration dans cc domaino, la Coa;dssion ;zixte exprimi l'espoir qu les gou vernoeonts reprusentés à la Coi.ssion Préporatoiro, motis qui ne font pas 6ga- lricent partic du Conscil Sconouique et Social, sent invites a. soumettre lours observations lorsque le Consoil oxaeninora cos problemes. French E/PC/T/C.I & II/19 Page 17 CHAPITRE SUR LE DEVELOPPEMENT ECONOMIQUE. Article A. Importance du developpement iconor..zueo. Les Etats r:oetbres reconnaissent .ue lu dovelclpoement industriel et le développement économique général de tous les pays et en particulier de oeux dont les ressources sont encore relativement peu drveloppées, améliorer les poss bilitàs d1er.ttloi, aujaenterra la.^ productiïvté de la main d'oeuvre, accroîtra la demande de produits et de services, contribuera à la stabilité écor.oar.iue, accro±tra les ohe.^ngcs internationaux et rehnussera la ni eau du revenu réel, consolidant ainsi les liens internationaux d'entente et d 'accord. Article B Plans de développement économique . 1. Les Etats raermbres s'onorgont à ±avoriser de ftçon contir.e le développe- ment industriel et le deloppe.cntâconor.ique ;nira' de leur pays et de leurs territoires respoctifs en vuc de contribuer b. a r'a.lr.isaction des buts de l'Organisation, 2, Les Etats membres d;bident de cocpo-rer ;ar leinter aQdi.ire dt. Conseil Economique et Social des Nations Unies et par l'intermédiaire, des ingtitu- tions spéci-lises interaouvernetientcles approprieesl au ddvebopperucnt indcus- triel et au dWvelopPer.cint 6conoirque gènéral. 30 A la dauanie de tout Etat membre, l'Organisation le conseillera au su- ,;et de ses plans de devoloppement économique, et, dns le. limited de s9 corm> pitence et de ses ;possibilités, elle lui fournira une aide taechrici e pour lVaider à réaliser ses plans et ses programmes, Article C. Moyers de réaliser le dçveloneirent worEo iiue 1. Les Etats mtv.æbres rocorÀrv.issov.t que le Zrogrès du d~veloppemert éconor.i- que est fonction d'une disponibilité satisfaisante: E/PC/T/C. I & II/19 French Page 18 (n) de capitaux; et , (bm deè-atiAres premières, d'.utillaze, de nmoyens techniques modernes de -ersonnel snâcialis_ et de cadres ompc tent. 2. Les Etats z1ei:'-'res d.;cident ac ne »2as imoser d'obstacles exagérés qui errpOcheraient d'autres Zt'ats membres d'obtenir l'accès aux moyens Count ils ont besoin pour developer leur jconomraie. . .~~~~~~~1 3e Les Etats rembres décident de coondrer dans toute la resure où ils le neuvent, avec les institutions internationr.les aPnropriâes dont ils font partie, en vue de fournir des moyens. 4.l Les Etats membres. Scid.ent, dans la traitement qu'ils accorderont à d'autres Etats r.iembrs, à des entitcs oirmerciales ou à des ?ersinnes qui leur fourniront des moyens servant à leur d6velopnement industriel 'et à leur develo:?pement dcznon-ique g6Tral, non seulement de se conformer aux disositions de leurs obliy.ations interrati:nr.les 6ertinentes, actu-' ellement en vigueur cu qui seront contractées en m-olication de l'Article 50 (5) 'du _rojet aovricain de Charte, 3u ae touted autre façon, mais encore de ne nrendrez en. gâ'nér.l, .ucune moesure exagér6e qui s'avérerait pr6ju- diciable a.ux intJrE'ts de ces autres Etats membres, de ces entités cxwmer- ciales Du d.e bEs ;e.rsonnes 5. L'Organisation recevra -ai-r l'intermédiaire de `,out Etat membre lesé ou avec la demissien e cilui-ci, les plaintes fo ulées par des entit3s commercials ou des nersaones relévant de sa:juridictiDn, au suejt des r.esures -orises .ar un autre Etat membre. et incornIatibleâ avec les oblizations qu'il a contractées en vertu des aragra phes 2, 3 et 4 du -,risent article. Sipune ?lainte de cette nature est f:rulée, l'0r;a- nisation peut, a sén gr6, inviter les pays me-itres intéressés à négocier en .sue de -arvcenir à un accord satis.aisant :»our le.s deux.parties et yM;loYer ses bons offices à cette fin. E/PC/T/C.I & II/19 French Page 19 Article D. Aide gouvernmentale au Développement économique . 1. Les Etats -.lc*Lbres rcr.rnissent que, &r.ns le c-.s e certaines industries, il peut Etrc nécessirc -'. fir.ire -.*1el à une aile ouv-vr- .ncDer.t."e s çcoi~.i.l ed.cstin6e a CTn f .ciliter l''tn.blisse:.-.ent 'u le rél- ve,.ient, et que cette a.i; ---;urr,. -ren.rc ln. f-rtme de ;-.esures ae -,rotec- tin. 2. Les Etats M:emibres rec:,nnr.issent qu'un roc*curs U=r^.isonnable ces .c.-surcs ;-a rntecti r. jràcr.it i mfl.nJ leur -Dr-?re -c.Dnomie, imposerait au commerce intcrn^ti;n.\l ' restrictions injustifi;5es et pourrmit être de maturc à susciter c.inutiles difficult's I'a..aptation pour les ;czaoDiOies d'1'.utrcs naxys. 3. (a) Si un Etf%.t ziej;.k, dra/Il'intr-t r.e s .n *r',r^.In..e .e dével3- -reibcnt, se vrn ?se '.c rec^u; ir à c's :e.sures ue nrotecti n cjui risquent en conflit fcvsc l'unc- eulc:nce tes' bliati-ras cqu'il a S.-Us- crites n.ux acr.ic-s .ca la. Ch,.rtc Du en crnscqjucnce :e celle-ci, il en in- .:Pserc l'Grg-.nris^.ti:. et lui. cc;:.l.unur.u. l;s .rgue;.sr.ts qu'il invDcjue a l',..:.-?ui de ln i..csurG :rc.ete. L'Or eisa.ti.n en infir-tarer sans rctard ceux &.es Et.ats i.c-.:brcs cr.t le c: z.v:rca serait sensibleent affect --^.r cettc :..csure, ct leur ±ffwÎrr. l'-ccc.sisn l'em ;er leur -^sint c'e vue. L'Or -.nis ntir. ex:n incrfr cnsuitc, a.vec ili-ence, la i.:esure -rsC.C, en `Cenamt co:.te ".s ris çsiti ns ç:u réscnt ch.-pitre, des nr: x..ents inv ,w3s ,,^.r l'E3tet r.Ae...bra rc qu rPt, t.es oinicns ex-ri:8es -r'r les Etl.ts ..s.-bres lésçs, ct en s'ins-'ir;it .e t^ua critbreszrel tifs %u en.e;ent .e l '-:)uOcti-m ct ;'e tous autres f'ecteurs, --:nt r-l -urr. ',tcrziner l'exi stç.cn cïi.r'te tenu c.iu d' Gw.l.2vc lo-2p.e.ent et dLe reconstruction ,cCOnD ;iquG ..4ttcint «-.r cet Stnt,..bre E/PC/T/C. I & II/1 9 French Page 20 (b) Si, à la suite des enquêtes menées c nformément à l'alinéa (a) l'Organisation cntérine une :1.esure qui serait inco=n-tible aveà une obli- satizn que l'Etntt zie:.bre requir.nt a nssuziée -rcr voie de négociations avec diautres Eta.ts membres., en c-.nsuquencc d'u cha.ritre IV du project américain de Charte, ou qui réduirait les avantages que d'autres Etats membres retirent dune telle obligation, des négociations seront entamées, sous les auspices et avec l'aide de l'Organisation, entre l'Etat membre requérant et d'autres Etats mei.-bres lésée., afin d':rriver'à un accord substantici,'après quoi l'Organisation pourra relever l'Etat m ernbre requérant de l'obligation en question ou-de toute autre obligation pertinente dUrivant de la Charte, sous reserve des li;i.aitees que l'Orga- nisation pourra. fixer. (c) Si, en consequence des enquêtes .menées confozné,ment à l'alinéa (a), l'Org!.nisation entérine une aesurc, autre que celles visées à l'ali- n6a (b), qui serait incom.iatible avec une obligation dérivant de la présente Charte, l'Organisationi pourra, à sa discr&âci., relever l'Etat eii-brc requérant de l'obligation en question, sous reserve des limnites que l'Organisation pourra fixer. C/PC/T/C . & II /19 French .Page 21 ~ ~ ~ ~ ~ ~ N` '' ' X I PRCJET DE RESOLUTION RELATIF AU DEVELOPPEMENT INDUSTRIEL A adresser au Conseil Economique et Sccial CONSIDERANT que le Conseil Economique et Social étudiera probablerment Sous peu lar question du partage, entre les diverses institutions intéressées, des responsabilités non éncore attribuées dons le domaine du développement économique, ainsi que la coordination de ces activités CONSIDERANT que la Commission Préparatoire a discuté, à sa Prcemière Session, les fonctions positives aff'érents au développeement industriel dont pourrait s'acquitter l'Organisation Internationale du Cmmerce, particulièrement en ce qui concerne les conseils à fournir aux Pays-rmembres au sujet de leurs programmes et, dans les limites de sa compétence et de ses ressources, l'aide technique à leur accorder pour l'élaboration et l'exécution de ces projects. ÇONSIDERANT, en outre, qu'afin de permettre à la Commission Préparatoire de mieux s'acquitter de son mandat en ce qui concern le développément in- dustriel, il est désirable qu'elle puisse compter sur les avis du Conseil Economique et Social relativement aux vues qui ont été échangées à la Première Sessior. La Commission Préparatoire de la Conférence Internationale du Commerce et de l 'Enploi INVITE PAR LES PRESENTES le Secrétaire exéutit appeler l'attention du Conseil Economique et Social sur les parties du Rapport de la Commission Préparatoire qui ont trait à l'accomplissement ëventuel, par l'Organisation Internationale du Commerce, de fonctions portant sur le développement in- dustriel et de demander au Ccnseil Economique et Social de déclarer, avant l'ouverture de la Deuxième Session de la Commission, si l'Article B (3), provisoirement inclus dans le prejet de Chapoitre sur le développement écono- mique, est bien conformes aux vues du Conseil sur la répartition convenable des fonctions afférentes au développment économiue. E/PC/T/C.I & II/19 French Page 22 ANNEXE II PROJET DE COMMUNICATION A ADDRESSER A LA IIème COMMISSION Mixte Suivant les recommandations que la Commission/soument à la Commission Préparatoire au sujet du développement industriel et économique général, la Commission Mixte prie la Ilème Commission d'introduire dans l'Article 18, au chapitre traitant de la politique commerciale, une disposition destinée à assurer que l'Organisation et-les autres Etats membres tiennent compte, en examinant la mesure dans laquelle un Etat membre peut réduire les droits de douane, du montant des droits appliqués par cet Etat, et du besoin éventuel qu'il éprouve de recourir à des mesures de protection pour favoriser son développement industriel et son développement économique général. La Commission Mixte demande également d'insérer à. l'Article 20, une disposition visant la situation d'un Etat membre qui prévoit, comme con- séquence à ses plans de développement ou de reconstruction industriels, que l'ensemble de ses resources monétaires internationales seront insuf- fisantes pour financer les importations en biens de $apital par exemple, dont il a besoin pour l'exécution des plans en question, à moins qu'il impose des réglementations restrictives à certaines catégories de produits, notanment de produits de consommation.

GATT Library

rd457fg0975

Projet de Rapport de la Iere Commission I

United Nations Economic and Social Council, November 2, 1946

United Nations. Economic and Social Council, Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, and Preparatory Commission of the International Conference on Trade and Employment

02/11/1946

official documents

E/PC/T/C.I/14.Rev.1 and E/PC/T/C.I/1-15

https://exhibits.stanford.edu/gatt/catalog/rd457fg0975

rd457fg0975_92290359.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL LONDON AND ECONOMIQUE E/PC/T/C.I/14.Rev.l 19 ECONOMIQUE 2 November 1946 SOCIAL COUNCIL ET SOCIAL French ORIGINAL: ENGLISH COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ST DE L'EMPLOOI PROJET DE RAPPORT DE LA Here COMMISSION Compte rendu général des travaux. 1. La Commission plénière a tenu 4 séances. Aux premère et deuxième séances, la Commission a procédé à la discussion générale des questions posées et a décidé de diviser son travail en deux parties, ainsi qu'il suit: (1 ) Accord international en vue d'établir et due maintenir des niveaux élevés et en progression constante de la demande effective, de l'emploi et de l'activité économique (a) obligations génerales des members (b) possibilités de recours au cas où un membre se trouve lésé' par le manquement d'un autre membre à remplir ses obligations (c) consultations et échange de documentation (d) attribution des fonctions E/PC/T/C. I/14 Rev I French (2) Accord international en vue du develop en; industriel. 2. Aux termes d'une décision antérieuro de la Commission préparatoire la question du développement industriel devait être examincr en commun par les lère eu 2ème Commissions. la Commission fixte qui a été constituée en conséquence, à eu à s 'occuper de la 2ème partie du programme ci-dessus. Un comité a été institué, comprenant des délégués de l'Australie, du Brésil, de Cuba, de l 'Inde, du Reyaume-Uni et des Etats-Unis; il a été chargé d'é- vablir un ordre du jaur détaillé comprenant toutes pre positions présentées jusqu'ici au sujut des questions figurant dans lere partie du programme ci-dessus, et de ré diger un aperçu d'ensemble de ces propoitions. 3, Les travux du Comité ent eu pour base les passages relatifs à l'emplei des "propositions souais à l'examen d'une conference internationale du Commerce of de l'E !i", et du "project do Charte d'une Organisation inter- nationale du commerce à a't ur.ztit par les Nations Unies" qui ent été présentés par les Etats-Unis, ainsi que des ;r..cre rcsau par les délégations de l'Australies, de la r- 1 . i;ua, du drésil, de Cula, de l 'Inde, des Pays-Bas, du i:cyaia;se-Uni et par l'observateur pelenuis. 4. Le Comité a tenu 4. séanees. Il a commencé par préparer un aperçu d'en- semble des diverses propositions, mais il a estimé qu'il lui était possible de rassembler tous les textes en un projet unique, sur lequel les membres du Comité etaient prêts à se m« .0 e ;. Ur:;c-: r . i .w; d'acsord et' u 'ils. cn' 5. Au cours de la 3ème sounce, la Commission pla a`Li _ 5U&&ié le rapport de cor Comité elle a .ar;u Cu te as Or w-vue ux re jets de clauses et au projet de risolution relatif à lenglei, que le Comité avait èlaborés à l'internion de la Commission. A sa 0u.c; u.!uc:iéro séance, la Commission a ztuté le rapport final que nous sout Ut.: -ttor.e maintenant à l 'appréciation de la Commission Preparatioire. E/PC/T/C . I/14 Re v. 1 French Page 3 Instruction , à l' adresse du Comité de Rédaction (A) signification et importance du terme "plein emploid". 1. La Commission a attaché une grande importance au problème qu'elle a étudié. Pour maintenir le Commerce International à un niveau élevé et stable, il est nécessaire de maintenir également un volume ample et stable, dans la mende entier, de la demande en produits et services et d'abaisser les barriè- res qui s'opposent au commerce. Par ailleurs, le plein emploi productif et le maintien d'un volume ample et stable de la demande effective, ne peuvent ^cntribuer au maximum à assurer l'amélioration des conditions de vie, si l'en ne réduit les barrières qui font obostacle au core. 2. C'est l'un 'des principaux objectifs des Nations Unies; énoncé à l'article 55 de leur Charte, que de"faveriser le relèvenent des niveaux de vie, le plein emplo et des conditions de progrès et de développement dans l'ordre économique et social", Le sens à denner à l'expressicn "piein emploi" a fait l'objet d'assez lengues discussions. Dans les pays peu industrialisés don't l'économie s'appuie plus particulièrement sur la production des matières premières, une insuffisance de la demande se traduit meins par le ehômage généralise, comme e'est la règle dans les pays industrialisés, que par la réduction du volume de l'emploid cu par l'emploid à des conditions désavanta- geuses pour les producteurs de matières premières, C'est pourquor les ob- jectifs essentiels d'une politique de l'emploi ent été définis comme devant comprendre la nécessité d'éviter la réduction du volume de l'emploi ainsi que le ehômago. 3. Il a été également signalé à la Commission que si l'expression "plein emploi" devait être interprétée litéralement,s'il fallait que toute personne capable de travailler et désireuse de le faire ne se trou- ve jamais sans travil, pour une période aussi courte que ce soit, des pays pourraient être tenus de s'engaaer à prendre des mesures, qu'en faitils. ne seraient pas disposes à appliquer. Chaque pays doit évidemment être libre E/PC/T/C. I/14. Rev. I French d'adopter une interprétation du teu:ue, aussi stricte qu'il le désire; mais il semble que pour les fins que la Commission a actuellement en vue il convient d'interpréter le "plein emploi" comme une situation dans laquelle des possibilités d'emploi utile s'offrent à tous ceux qui peuvent et qui veulent travailler. C'est le maintien de telles conditions et le maintien simultané d'un . luL.:ample et stables de la demande qui ent une réelle importance du point de vuc internationel. (B) Maintien de l'emploi à l'intérieur des pays 4. Il est, en général, almis te tous les pays du monde ont, non seulement envers leurs propres citeyens, mais également envers les autres pays, des responsabilités qui les obligent à faire tout ce qui est en leur pouvoir peur maintenir le plein emple productif et un volume ample et stable de la domande sur leur propre territoire. Un fléchissement de la demande, dans un pays important, en réduisant les importations en provenance d'au- tres pays, en faisant peser lourdement eur le marché mondial l'excédent due produits que ce pays reuinuit ;:ravcnt pour sa propre consommation, est susceptible d'amener le cha.ner lC ert.-.. c total ou partiel ou de l'étendre aux autres pays. Les Etate-devraient de entreprendre de concert une action destinée à réaliser et A;.intenir le plein emploi productif de leur main- d'oeuvre ainsi qu'un volume ample et stable de la demand effective sur leur territoire.C'est au gouvernment de chaque pays qu'il devrait appartenir de décider en ce qui le concerne, du genre de mesures à adopter pour atteindre ce but, ut il devrait être libre de les choisir telles qu'elles soient en harmonie avec des propres institutions. Ce choix devrit se faire librement, à condition, bien entendu, que les measures adoptées soient compatibles avec les autres objectifs de l'Organi- sation Internationale du Commerce, et avec les dispositions de sa Charte. E/PC/T/C. I/14. Rev. 1 French (C) Développement des ressources et de la productiviit.,& Itionales. 5. Le plein emploi de la main-d'oeuvre dans un pays donné e constitue pas l'unique condition qui détermine le volume de la demande effective de ce pays en ce qui concerne les produits de provenance étrangère. Un pays qui ne développe pas effectivement ses resources, ou qui ne recherche pas toutes les occasions d'accroftre la productivité de sa main-d'ceuvre, ne réussira pas, en conséquence, à développer u maximum sa demande effective an marchandises et en services. Tous les pays devraient dene reconnaitre qu'ils ont un intérèt commun à ce que les ressources du monde soit utilisées de manière productive et ils devraient entreprendre une action concertée en vue de développer progressivement leurs ressources écnomiques et d'élever leur niveau de productivité. Là encore, c'est au gouvernement de chaque pays qu'il devrait appartenir de choisir les mesures à adopter en ce qui le concerne, à condition que ces mesures soient Compatibles avec les autres objectifs de l'Organi- sation Internationale du Commerce et avec les dispositions de sa Charte. (D) Conditions de travail équitables. 6. Si l'on veut que le plein emploi apporte sa légitime contribution au "relèvement des niveaux de vie" et aux "condition de progres dans l'ordre économique et social" auxquels fait allusion l'article 55 de la Charte de I'Organisation des Nations Unies, il est nécessaire que le travailleur recueille une part équitable du produit de son travail. Tous les pays ont an interêt commun au maintien de ces conditions de travail équitables, particulièrement dans le de la production destine à l'exportation, étant denné que sans cela, les produits d'un pays peuvent être, supplants par ceux d'un autre, dans lequel la main-d'ceuvre est injustement exploitée. Bien entendu les conditions de travail ne peuvent être uniformes dans tous les pays, mais elles doivent être fonction E/PC/T/C.I/14 Rev. 1 French Page 6 du rendment productif de l'économie nationale. Toutefois, c'est une opinion assez généralement soutenue que tous les pays devraient conve- nir de toutes les mesures nécessaires et possibles en vue de faire dis- paraitre les conditions de travail inférieures à la normale dans le domaine de leur production destinée à l'exportation, et en général, de l' ensemble de leur économie. 7. Quelques délégations ont exprimé certains doutes quant à l'oppor- tunité d'introduire parmi. ces dispesitions relatives à l'emploi un accord portant sur ce suject. Ces deutes sent fondés sur deux raisons: (a) ce serait une erreur que d'essayer t'assigmer à certains pays des objectifs trop élevés, car ce serait entraver sriousement de déve- Ioppement de la production dans ces pays qui, possédant d'abondantes resources en main-d'ceuvre, mais relativement peu ie bions de capi- tal1 et une technique industrielle peu développé::deivent, provisoire- ment, asscoir leur développement sur une rémunératic, inférieure à celle qui prévaut dans des pays plus évolués; (b) l'Organisation internaticnale du travail étant l'institution spécialisée plus particulièrement chargée de ce problème, ce serait faire double emploi avec ses activistés que d'introduire un accord on cette matière dans l'acte constitutif de l'Organisation international du commerce envisagée. 8. Sur le point (a) en convient généralement que, si un accord quel- conque relatif aux conditions de travail est compris parmi les dispo- sitions sur l'emploi, il faut préciser qu'il ne peut être question de soumettre à un étalon de mesure valuable pour tous les pays, les con- ditions de travail équitables, mais que cet étalon dans chaque, cas particulier, doit varier avec le rendement productif du pays considéré. E/PC/T/C. I/14 Rev. 1 French 9. Sur le point (b) en cenvient généralement que pour leur partie essentielle ces travaux devraient continuer à être du ressert de l'Organisation Internationale du Travail, et que, si l'on introduisait dans l'acte constitutif de l'Organisation. International du Commerce un accord portant sur ce sujet, les pays qui sont également membres de l'Organisation Internationale du Travail devraient coopérer étreitement avec l'O.I.C. dans l'application de cet accord. Si l'on propose néanmoins d'y inclure sous une forme ou une autre un accord portant sur ce sujet, c'est que les conditions de travail, où que ce soit, et particulièrement en ce qui concerns les produits d'exportation du pays considéré, constituent un facteur qui exerce un influence capitale sur l'emploi de la main-d'oeuvre et le courant du commerce internationale. (E) La rectification du déséquilibre dans la balance des paiements. 10. Mème si un pays main:i.in l; plei^ w!loi à l' intérieur, développe ses resources économiques, élève le niveau de son rende-- ment preductif et assure des conditions de Travail équitables, il se peut rz roojus qu'il. exerce une pression déflationniste sur d'autres pays. Il en sera ainsi si, d'une manière constante, sus achats et ses investissements à l'étranger rerésente t une partie insuffisante de ses expertations. De fait, c'est pout-être au moyen de son excédent d'exportations qu'il maintient le plein emploi E/TC/T/C.I/14. Rev. I French page 8 11. Ce n'est pas à dire que des pays qui éprouvent des difficultés, du fait d'une balance des paiements défavorable, ne puissent être eux- nèmes responsables de ce déséquilibre. Far exemple, des pays à balance des paiements défavorable, dont les difficicultés sont aggravées par la fuite des capitaux, pourraient trés justement être invités à e ttr fin à ces exportations de capitaux. pour autant que la pression exercée sur leur balance des paiements provient de ce que des pays à balance des paiements trop favorables s'abstiennent de dépenser, sous forme d'importations,leur pouvoir d'achat ur les marchés extérieurs cu à l'utiliser à des investissements productiss à l'étranger, il ne faudrait pas demander aux pays soumis à cette pression de fournir le gros de l'effort qui nécessite ce réajustement. 12. La thése est assez généralement soutenue que si la balance des paiements d'un pays se trouve en déséquilibre fundamental, ayant pour effet d 'entraîner des difficultés persistantes dans les balances de paiements d'autres pays et de les entraver dans leurs efforts de main- tenir le volume de 1 'emploi, ce pays doit contribuer dans la plus grande mesure possible à toute action qui vise a corriger ce déséquilibre. Il revient, bien entendu, au pays intéresé du décider quelles mesures particulières il convient d'adopter (par exemple stimuler les importa- tions ou supprimer des stimulants spécifigues à l'exportation, relever le taux du change de sa monnaie, mouifier dans le sons de la hausse la structure de ses prix intérieurs et de ses prix de revient, augmenter ses placements à l'étranger etc.. ). Ici le problèsubl se situe dans un domaine auquel le Fonds monétaire international s'intéres speéiale- ment, et il est particulièrement souhaitable qu'en cette matière les geuvernements nationaux intéressés et l'Organisation internationale du Commerce collaborent pleinement avec le Fonds monéraire international E/PC/T/C . I/14 Rev. 1 French F. Protection des pays sujets à une pression déflationniste s'exerçant de l'extérieur. 13. La Commission a'examiné plus en avant la situation des pays dont les systèmes économiques seraient exposés à une pression déflationniste résul- tant d'une baisse sérieuse et brusque de la demande effective exercée par d'autres pays. On est généralement d'accord qu'il faut 'des garanties suf- fisantes pour faire face à cette éventualité. 14. A ce propos,la Commission a pris note que les actes constitutifs du Fonds monétaire international contiennent des dispositions protectriees importantes. (e) En premier lieu, rien dans les textes n'empêohe le contrôle des exportations de capitaux, de sorte qu'auun pays qui pâtirait àune pression déflationniste venant de l'extérieur risque de voir ses dif- ficultés, accrues par la fuite des capitaux devant sa monnaie. (b) En deuxième lieu, un pays qui se trouve en situation de"désé- quilibre fondamental" du fait de maintenir ses prix intérieurs, coûts de prouction et revenus face à une déflation à l'étranger, peut demander au Fonds d'autoriser la dépréciation, dans la mesure jugée nécessaire, du taux de change de sa monnaie. Les effets de pareille dépréciation ne peuvent être annualés par une course à la dépréciation à laquelle se livreraient les autres members du Fonds, qui ne se trouvent pas dans la même situation de "deséquilibre fondamental". A ce propos, la Commission a pris note, que les directeurs exécu- tifs du Fonds monétaire international cnt interprétè les articles conistitutifs du Fonds en r-e sens que "des mesures nécessaires pour protéger un Etat membre du chèmage chronique et persistant, ré sultant d'une prression qui s'exereerait sur la balance de paiement, comptent parmi celles qui sont nécessaires pour rectifier un dé- séquilibre fondamental". E/PC/T/C. l/14. Rev. I French Page 10 (c) En troisième, si un pays ou un groupe de pays enregis- trent un excédent d'exportations, considérable au point de rendre "rare" leur monnaie, dans les réservas du Fonds, les autres pays sont autorisés à restreindre les achats faits à ce pays dans la mesure nécessaire, sans toutefois restreindre les achats qu'ils se font entre eux. 15. Les Articles constiutifs de l'Organisation Internationale du Commerce devront, eux aussi, prévoir des garanties suffisantes. Ils prévoient, de toutes façons, que les pays dont la balance des paie- ments se trouve en situation difficile scient autorisés à appliquer des restrictions quantitatives à leurs importations. Et, il est gé- néralement admis que cela constiturait une garantie importante,du genre de celles qu'enviasge la Commission. La Commission a jugé que ce n'est pas àa elleq.u'l' incobme d'x miner en déttail ce tte gaaontie ou'd'autres que pourraient comporter, ailleurs dans le texte, les Articles constitutifs de l'Organisation Internationale du Commerce. Elle propose qu'au momert où ces garantíeS viendrent en discussion, on examiné dé très près cet article et d'autres portant sur ce même sujet, qui se trouvent dans les autres chapitres du Statut de l'Or- ganisation Internationale du Commerce afin de s'assurer qu'il exis- te des garanties suffisantes pour un pays soumis a une pression né- sultant de la baisse de la demande effective exercée par d'autres pays. E/PC /T/C. I/14/Re v. 1. French Page 11. 15. De lavis général, les clauses portart directament sur le problème de l'emploi, qu'il incombait à la Commission d'examiner, doivent comporter la reconnaissance, sous une forme générale, de la nécessité de garanties suffisantes,en obligeant l'Organisation Internationale du Commerce de tenir compte, dans l'accomplissement de ses tâches, tells qu'elles sont définies dans les autres articles du statut de l'Organisation, de la nécessité qu'éprouvent les pays de prendre des measures dans le cadre du statut de l'organisation International du Commerce, pour protéger leurs systèmes économiques contre une prossion déflationniste, en cas de baisse grave et brusque de la demande effective exercée par d'autres pays.' (G) Action international pour maintenir le volume de 1 'emploi. 17. Dans la situation actuelle, l'action directe nécessaire pour maintenir le plein emploi productif et un volume ample et stable de la demande effective doit être dans l'ensemble, la somme des efforts individuals de chaque pays. Il existe néanmoins certains moyens par lesquels les institutions internationales spécialisées, chacune dans son domaine, peuvent, dans le cadre de leurs attributions respectives et conformément aux termes de leurs texts constitutifs, apporter une contribution directed au maintien du violune de l'emploi et de la stabilité de la demande dans le monde. E/PC/T/C .I/14 Rev. I French page 12 13. Le Conseil économique et social, de concert avec les institutions internationales spécialisèes, pourrait utilement examine les possibilités qui existent dans ce domeine. Pareil examen pourrait s'étendre non seulement aux effets, sur le volume de l'emples et sur la production, qu' exercerait l'abaissement des barrières au commerce, mais encore à la mise en harmonie des politiques de crédits, de manière àalléger les conditions de crédit dans une grande partie du monde, au .c..cnt où s'exerse une pression générale de carattère déflationniste, à des arrangements tendant à assurer la stabalité des revenus, partant, celle du pouvrrcir d'achat de productcurs de matières et objets de première nécessité; à l 'échelonnement dans , d: dépenses en capital destinéés à des projets d'investissements de caractère international; et au développement d'un courant de capitaux dirigé vers les pays dont la balance des paiements a beeinn d'un soutien te...rerai` 2e à des 2.0C4l_.tZ où s'exerce une pression Sd1:ln;icnnid dans le monde, pour leur [enettre de maintenir leur politique nationale du ploin emploi productif. (H) Les fonctions du Conseil économique et social et des institutions 19. La Commission a examiné dans que cadre international ces tâches peuvent être accomplies. Dans ce domain, une action positive implique dec actions; individuelles de la part des divers gouverne ents nationaux et des institutations internationales spécialisées. Cependant, cette action dait être coordonnée commé il convient, si les mesures de portée E/PC/T/Cf/14. Rev. 1 French Page 13 nationale et international, destinées à neutraliser une dépression générale, doivent intervenir au bon moment et revêtir l 'ampleur voulue. 20. Il faut done prévoir quelque organisme international sous les auspices duquel les divers gouvernments nationaux et les institutions internationales spécialisées peuvent se concerter sur une action coor- donnée en vue de maintenir le volume de l'emploi. Et il apparaît que l'organisme qui convient à cette tâche, est le conseil économique et social des Nations Unies, de concert avec sa Commission économique et de l'emploi et sus Sous-commissons, auxquelles cette tââhe a déjà été confiée. 21. Les functions que le Conseil économique et social devrailt ou bien remplir lui-meme, ou done il devrait se oharger par le truchement d'accords conclus aver les institutions internationales spécialisées portent suf ( ) le ressemblement périodique l'analyse et l'échange de renseignements sur le sujet visé; et (li) sur la préparation d'échanges de vues sur une - 'tion concertée, nationale et internaltionale, dans le domaine de l'emploi. En plas de ses fonctions permanentes, le Conseil économique et social devrait mestre en train les études mentionnées au paragraphe 24 ai-dessus, al sujet i'une action directe éventuelle sur le paln international tendant au mintien du volume de l'emploi. 22. Le travail du Conseil évonomique et social et des institutions internationals spécialisées :.nc grande imortaure. La documen- tation à recutillir doit porter, auttent que possible, sur le volume et la E/PC /T/C.I/14 Rev. I French Page 14 composition du revenu national, des dépenses de la nation et de la ba- lance des paieinents, de même que sur les statistiques de l'emploi, du chômage et de Production.Dans la mesure où cula est possible et pra- tique, elle doit s'étendre aux projects envisagés et aux tendances pré- vues pour l'avenir de manière à esecmptr judicieusmement les besoins future de la politique de l'emploi. Des échanges de vues détaillées et périodiques, en prévision d'une action concertée entre les divers gouvernements nationaux et les institutions internationales spécialisées, seront nécessaires pour détermaner jusqu'à quel point le monent d'ap- plication des diverses politiques nationales (par exemple en matière de dépenses sur les travaux publics) ou d'autres politiques internationales appropriées peut être ajusté de manière à feurnir la contributions com- mune la plus efficace au manintien de la demande dans le monde. (I), La forme à donner aux dispositions sur l'emploi. 23 - Il n'y a pas de conflict entre Ia thèse qui veut que le Conseil économique: et social doive continuer à remplir à l'avenir ces fonctions générales en matière d'emploi, et le rapport particulier qui doit exister entre emploi et commerce. Certains pays pourraient éprouver des difficultés à assumer les obligations en matière de commerce pré vues aux termes de la future Organisation internationale du Commerce, en l'absence de l'engagement de la part d'autres pays de fairede, leur mieux pour maintenir un volume ample et stable de la demande effective; or, les politiques de l'emploi ne doivent pas s'opposer aux obligations. E/PC/T/C. I/14 Rev. 1 French Page 15 prévues dans le domaine commercial. Peur ces raisons, il est nécessaire de lier étroitement les obligations en matière de commerce et les obligations en matière d'emploi. La Commission estime que pour cette raison il serait sans doute Ie mieux indiqué d'inclure les engagements en matière d'emploi dans les articles constitutifs de l'Organisation internatonale du Commerce. 24. Il est, cependant, un problème en matière d'emploi qu'il sera sans doute préférable de résoudre d'une manière différente. Selon ce qui est proposé au paragraphe 24 ci-dessus, le Conseil économique et social et les institutions internationales spécialisées doivent être invitées à examiner le genre d'action internationale possible pour aider au maintien du plein emploi productif et d'un volume ample et stable de la demande darns le monde. Le Commission estime que la former d'une résolution séparée est celle qui conviendrait le mieux pour cette invitation. (J) Projct d'articles et project de résolution 25. En vue de résumer les principes généracux qui ent été passés en revue, la Commission joint à son rapport un nombre de projets d'articles relatifs au problème de l'emploi, qui se réfèrent aux divers points dont pourrait tenir compte le chapitre sur l'Emploi des articles constitutifs de la future Organisition international du Commerce, de même qu'un projet de résolution sur une action internationale en matière d'emploi. French Page 16 III ANNEXE 1. Chapitro III - Disopositions relatives à l'emploi A. Rapport entre la politique de l'Emploi et les buts de l'Organisation. Les membres reconnaissant que la nécessité d'éviter le châl.lagc ou l'insuffisance du volume de l'emploi, en réalisant et en maintenant dans cheque pays des possibilitées d'emploi advantageuses en faveur de ceux qui sont capables et désireux de travailler, ainsi qu'un niveau élevé et toujours creissant de la demande effective de produits ct de services, n'est pas une préoccpation d'ordre uniquement national, mais qu'elle constitue uno condition nécessaire au développement du commerce interna- tional et en général à l'accomplissement des tâches do l'Organisation. Les membres reconnaissent également que les mesures tendant à soutenir la demande et l'emploi doivent être compatibles avec les autres objectifs et dispositions statutaires de l'Organisation et que dans le choix de ces mesures, chaque pays devra chercher à éviter de créer dans d'autres pays des difficultés dans le domaine de la balance de paiements. Les membres sont d accord pour considérer que s la réalisation et le maintien du volume de la demande effective de l'emploi dépend cn pro- mier lieu de dispositions d'ordre intérieur, ces esures doivent être faci- lités par l'change réguler de renseignements et de vues entre les membres et complétées autant que possible par une action internationale entreprise sous les auspices du Conseil économique et social des Nations Unies, action qui devra s'exercer en collaboration avc les institutions internationales spécialisées compétentes en la matière, agissant chacune dans son domaine respectif et toujeours dans le cadre et conformént aux taches qui leur sont assignées par leurs textes constitutifs. 3. Maintien de l'Emploi à l'intérieur des mays: Dans le ressort de sa propre juridiction, chaque membre devra prendre des mesures destinées à réaliser et à maintenir le plein emploi productif et un niveau élevé et stable de la domande effective, sous une forme appropriée à ses institutions politiques et économiques et compatibles avec les autres buts de l'Organisation. E/PC/T/C.1/14 Rev.1 French Page 17 C. Développement des ressources et de la productivité nationales Chaque membre,reconnaissant que tous les pays ent un intérêt commun à l'utilisation productive des ressources mondiales, s'ongage à s'efforcer de développer progressivement les resources économiques et à élever le niveau du rendement productif dans le ressort de sa juri- diction, au moyen de mesures compatibles avec les autres buts de l'Or- ganisation. D. Conditions de Travail équitables. Chaque membre, reconnaissent qu tous les pays ont un intérêt coMmur. au maintier. de coruitions ;u travail IJquitacîls, cn rapport avez le rendement productif de chaque pays, s'engage à prendre toutes mesu- res utile:s et réalisables en vue de faire disparaitre les conditions de travail irférieures à la normale, du domaine de la production dustinée à l'exportation et, d'une façon générale, dans tous les secteurs soumis à sa juridiction. E. La Rectification du déséquilibre dans la Balance des paiements. Chaque membre s'engage, en eas de déséquilibre fondamental dans sa balance de paiements, susceptible d'entrainer dans la balance des paiements d'autres pays des difficultés persistantes qui les em- pêchent de maintenir le volume de l'emploi à contribuer dans la plus grande mesure possible à toute action destinée à corriger ce, déséquilibre. F. Protection des pays sujets à une pression déflationniste s'exercant de l'extérieur. Dans l'exercice de ses attribu .As telles qu'elles sont dé- finies dane les autres articles de cette Charte, l'Organisation tiendra compte de la nécessité qu'éprouveront les membres de prendre .. 1 le cadre des clauses statutaires de l'Organisation Internationale iu Commerce, des mesures destinées à protéger leurs économics contre tc pression défla- tionniste qui pourrait se produire s'il y a baisse sérieuse ou soudaine de la demande effective d'autres pays. G. Consultations et échange de renseignements sur les questions relatives à l'emploi. Les membres 3' engagent à participer aux arrangements pris par le Conseil économique et social des Nations Unies ou sur son initiative, y com- pris les arrangements avec les institutions spécialisées compétentes en vue de: (a) réunir, analyser et échanger régulièrement des renseignements E/PC/T/C.I/14. Rev.I French Page 1 3 relatife aux problème de l'emploi se posant pour chaqie pays les tendances générales et la politique de l'emploi, y compris autant que possible les renseignements sur le revenu national, le volume de la demande et la balance des paiements ; et (b) se consulter en vue d'une action concertée dee gouvernements et des institutions internationales spécialisées, dans le demaine de la politique de l'emploi. (r ) Project de résolution au sujet d'une action internationale en matière d'emploi. LA CONFERENCE DU COMMERCE ET DE L'EMPLOI: ATTENDU qu'une contribution importante peut t fitre faite à la réalj- sation et au maintien du plein emploi at d'un volume ample et stable de la demande effective, par le moyen d'une action internationale entreprise sous les auspices du Conseil economique et social et réalisée en colla- boration avec les institutions spécialisées compétentes agissant chacure dane son domaine respectif et en conformité avec leur mandat et les tâu..uc :r<'>s par leurs Statuts, ,_'d2i <Lt 'in'vit6« le Conseil économique et social à entreprendre, due 'tv:u;ez spéciales sur la :t... s LLu . pourrait preniro cette action internationale, ET PROPOSE que tout en portant sur les répercussions que peut avoir sur le volume de l'emploi et de la production l'abaissement des barrières opposées au commerce, cette étude comporte également l'examen de mesures telles que: 1. l' étc«i or.l nunsnt concerté dans le temps, dans la mesure où cola servirait les buts, faciliterait la réalisation d'une politique de l'em- ploi, des mesures nationales et internationales destinées à exercor une influence sur les conditions de credit et d'emprunt; E/TC/T/CI/14 Rev. French Page 19 2. les accords nationaux ou internationaux, conclus dans des cas appropriès pour assurer la stabilité des revenus des producteurs de denrées de première nécessité, compte tenu aussi bien des intérâts des pays consommatours que des pays procaucteurs; 3. l'àcnclor~nc.iecn.t; &:n.,ns dans le temps/ la où cela servirait les buts, et faciliterait la réalisation d'une politique de l'emploi, des dépenses en capital destinées à des programmes d'investissements d'un caractère international ou financès au moyen de capitau internationaux. 4. la créntion, sous les garanties nécessaires, pendant les périodes de pression déflationniste rcii alc, d'un ceurant de capitaux vers les pays dont la balance des paiements nécessite une aide tempora.'aur pour lour permettre de maintenir une politique nationale de plein amploi productif.

GATT Library

tz922vf8444

Proposal submitted by the Chilean Delegation

United Nations Economic and Social Council, November 2, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

02/11/1946

official documents

E/PC/T/C.V/11 and E/PC/T/C.V/1-18/CORR.1

https://exhibits.stanford.edu/gatt/catalog/tz922vf8444

tz922vf8444_90220105.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL RESTRICTED ; AND ECONOMIQUE LONDON.MQ ETSSOCOCAOUNG(L CIAL /PC/T/C.V/11 6E 2 ORINAL: ENGLISHT SOLA2 November 194. F THE ITERNATIONAL CONFERENCE3TTMCTIOY-0l T CO1'FEE TN TADE LI LO:C T COTTZ v UBMITTED BY DEELHGAEANTIONITAIBY T: CIILZI DELEGTION In accordance with the views expressed at the plenary session by the Head ofevehQean deleevergation and by sGorother delegations, urging that the Internrgantional Trade Oaizae t ion should givunll consideratio to problems arising from economic development, industrialization and not undfrratee their emplimporanced not lexmdQrralegation proposes that in addition to the three commissions provided for by ticle 61 oefthe Sugecsed Charteornow undecrconsideration, a fourth commission be established to deal with these matters. The establishment of a "Commission on the expansion of Production, Industrialization and Employment" would make the Organization complete and would meet one of the principal wishes of countries still at an early stage of economic development. The now commission could ollowingofollowing ld have the Thllcwi general functions:- To investigate the problemee of non-industrializd countries or countries in an early stage of industrial development, regarding the saleieen adequate jantitrroand at satisfacto-yprices of commodities, manfufactured or non-manuactured, essential to the maintenance of economic stability awnd to the raising of orking and living standards in those countries. To investigate the problems which arise from the industrialization of such countries. To recommend to the Executive Board appropriate courses of action roblems arelaoting mmendto sucmmndblems aneconuren such economic, financial tndmay tsechal coopera-io s na.^ astin the industrinlizaion of such countries. LONDON E/PC/T/C.V/1 I Page 2. The Chilean delegation has already submitted to the Joint Cormittee some proposals relating to the problems of industrialization, of expansion of production and of employment, which problems fall within the scope of the proposed commission. More detailed definition of the actual functions of the commission may therefore be left until a later date.

GATT Library

rq679mv8877

Proposals submitted by the United Kingdom Delegation

United Nations Economic and Social Council, November 5, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V: Administration and Organization

05/11/1946

official documents

E/PC/T/C.V/13 and E/PC/T/C.V/1-18/CORR.1

https://exhibits.stanford.edu/gatt/catalog/rq679mv8877

rq679mv8877_90220107.xml

GATT_157

United Nations ECONOMIC AND RESTRICTED LONDON E/PC/T/C.V/13 5 November 1946 SOCIAL COUNCIL ORIGINAL: ENGLISH Nations Unies CONSEIL ECONOMIQUE ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE EMPLOYMENT COMMITTEE V ADMINISTRATION AND ORGANIZATION PROPOSALS SUBMITTED BY THE UNITED KINGDOM DELEGATION SUGGESTED RE-DRAFT OF ARTICLE 78 (4) Each Government accepting this Charter does so in respect of its metropolitan territory and the oversea territoories for which it has international responsibility, except so far as those territories possess autonomous powers in respect of matters provided for by the Charter. Each member shall notify the Secretary-General of the UNnited ations of its acceptance of the Charter on behalf of any territory possessing such autonomous powers willing to undertake the obligations of the Charter, and upon such notification the provisions of the Charter shall become applicable to that territory. SUGGESTED RE-DRAFT OF ARTICLE79 (1) Any member of the Organization may give notice of withdrawal from the Organization, either on its on behalf or on behalf of an oversea territory possessing autonomous powers as mentioned in Article 78 (4), at any time after ...............................

GATT Library

wp196mj5169

Provisional Agenda

United Nations Economic and Social Council, October 11, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

11/10/1946

official documents

E/PC/T/1, E/PC/T/1-4, and E/PC/T/W/13,14

https://exhibits.stanford.edu/gatt/catalog/wp196mj5169

wp196mj5169_92290001.xml

GATT_157

United Nations ECONOMIC AND SOCIAL COUNCIL Nations Unies CONSEIL LONDON ECONOMIQUE11 October 1946 ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT PROVISIONAL AGENDA 1. Opening of the Session by the temporary President. 2. Remarks by the representative of the host Government. 3. Adoption of the provisional rules of procedure. 4. Election of the President. 5. Election of the first Vice-President. 6. Election of the second Vice-President. 7. Adoption of the Provisional Agenda. 8. General discussion of the scope of the work of the Preparatory Committee. 9. Establishment of Committee. Page 2 10. (a) International agreement relating to the achievement and maintenance of high and stable levels of employment and economic activity. (b) International agreement relating to regulations, restrictions and discriminations affecting international trade. (c) International agreement relating to restrictive business practices. (d) International agreement relating to inter-governmental commodity arrangements. (e) Establishment of an international trade organization, as a specialized agency of the United Nations, having responsibi- lities in the fields of (b), (c)and (a) above. (Article 3 of the Council Resolution). 11. Elaboration of annotated draft agenda, including a draft, Convention, for consideration by the International Conference on Trade and Employment. (Article 2 of the Council Resolution). 12. Date and place of the International Conference on Trade and Employment. (Article 5 of the Council Resolution). 13. Determination of what States, if any, not Members of the United Nations, should be invited to the Conference on Trade and employment. (Article 5 of the Council Resolution). 14. Final consideration and adoption of reports of Committees. LONDON E/PC/T/1 Page .3 15. Adoption of the report of the Preparatory Committee for submission to the Economic and Social Council on agenda items 10, 11, 12 and 13 in accordance with the Economic and Social Council's Resolution of 18 February 1946, setting up the Preparatory Committee. 16. Other items.

GATT Library

mk659qt0188

Provisional Agenda : As revised at the Third Executive Session of the Preparatory Committee

United Nations Economic and Social Council, October 17, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

17/10/1946

official documents

E/PC/T/4, E/PC/T/1-4, and E/PC/T/W/13,14

https://exhibits.stanford.edu/gatt/catalog/mk659qt0188

mk659qt0188_92290010.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL LONDON AND ECONOMIQUE 17 October 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE lNTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT-MT PROVISIONAL AGENDA (As revised at the Third Executive Session of the Preparatory Committee.) 1.. Opening of the Session by the temporary Piresident. 2. Remarks by the representative of the host Government. 3. Adoption of the provisional rules of procedure. 4.. Election of the Chairman. 5. Election of the first Vice-Chairman 6. Election of the second Vice-Chairman. 7. Adoption of the Provisional Agenda. 8. General discussion of the scope of the work of the Preparatory Committee. 9. Establishment of Committees. 10. (a) *International'agrcement relating to the achievement and maintenance of high and steadily rising levels of effective demand employment and economic activity. (b) International agreement relating to industrial development. (c) International agreement relating to regulations,. restric- tions and discriminations affecting international trade. (c) International agreement relating to restrictive business prectices. (e) International agreement relating to inter-govermental commodity arrangements. (f ) Establishment of an international trade organization as a specialized agency of the Unitedi Nations, having appropriate responsibilities in the above fields. (Article 3 of the Council LONDON E/PC/T/4 Page 2 Resolution). 11. Elaboration of annotated draft Agenda, including a draft Convention, for consideration by the International Conference on Trade and Employment. (Article 2 of the Council Resolution). 12. Date and place of the International Conference on Trade and Employment. (Article 5 of the Council Resolution). 13. Determination of what Statas, if any, not Members of the United Nations, should be, invited to the Conference on Trade and Employment. (Article 5 of the Council Resolution). .14. Final consideration and adoption of reports of Committees. 15. Adoption of the report of the Preparatory Committee for sub- mission to the Econoiic and Social Council on agenda items 10, 11, 12 and 13 in accordance with the Economic and Social Council's Resolution of 18 February 1946, setting up the Preparatory Committee. 16. Other items.

GATT Library

hh039my0799

Quantitative Restrictions to Safeguard the Balance of Payments : Note by the Australian Delegation

United Nations Economic and Social Council, November 8, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

08/11/1946

official documents

E/PC/T/12 and E/PC/T/W.14-E/PC/T/17

https://exhibits.stanford.edu/gatt/catalog/hh039my0799

hh039my0799_92290020.xml

GATT_157

United Nations Nations Unies ECONONMC CONSEIL LONDON AND Pc/T/1 2 AND ECONOMIQUE 8 November 1946 SOCIAL COUNCI ET SOCIAL ORIGINAI: XNGIISH PREPARATORY COi.LTTRE OF T N'ITEMUTINAL COEMF .CE -ON TIRAE AND ÉLOYI3T 'UI'TITATIVE RESTRICTIONS'TO SilGUÀM THE .ALANCE OF PA>JTS NOTE BY THE AUSTRkJIAN DEIEGATION 'This sheet should be attached to document E/PC/T/W. 12, which . has already had a restricted distribution. The note by the . - Australian Delegation on Quantitative Restrictions will in future be referred to under the symbol E/1C/T/1 2. COEiISSION PRÀARATOIRE DE IA COE CEM - -- : INEI.'zIOI.CAL DU COcl.;ER TZ DE L'ELLOI RESTRICTIONS 1UCITlTATIVES VE DE SAE L BALAN:E GEN M DES C CLTS . -; ,;.7 :i«NOTES DE LÀ DELFGATICN .A&UTRLLIENNE -z-a lieu -de jo±ndre la preente page au document-;8$P/T/W 12 qu a deja 2ial ;l' objet. d Dn diffusion -retreite^.. Le notes de- la Delegation ralienne -sur, lesrestic portera one 1 î-~~~ ~ k' -t .'

GATT Library

gs431pm8217

Quatrième Commission 5éme Séance : Tenue le lundi 28 Octobre 1946 à II h. à Church House Dean's Yard Londres SW I

Nations Unies Conseil Economique et Social, October 28, 1946

Nations Unies Conseil Économique et Social, United Nations. Economic and Social Council, Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, and Preparatory Commission of the International Conference on Trade and Employment

28/10/1946

official documents

E/PC/T/C.IV/PV.5 and E/PC/T/C.IV/PV/4-7

https://exhibits.stanford.edu/gatt/catalog/gs431pm8217

gs431pm8217_90220090.xml

GATT_157

E/PC/T/C.IV/PV.5 NATIONS UNIES CONSELL ECONOMIQUE ET SOCIAL Commission PrTparatoire de la CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI QuatriFme Commission 5Tme STance tenue le lundi 28 octobre I946 a II h. a Church House Dean's Yard LONDRES SW I PrTsidence de M. J.R.C. HELMORE (Royaume Uni) -I- E/PC/T/C.IV/PV.5 (La sTance est ouverte a II h.) LE PRESIDENT (traduction): Avant, liessieurs, de commencer nos travaux de ce natin, je dois vous indiquer que la dTlTgation frantaise a attirT notre attention sur certains inconvTnients de la traduction simultanTe. Certains de ses membres estiment en particulier qu'une partie de oette inter- prTtation, portant sur des sujets particuliFrement techniques, n'est pas aussi parfaite qu'elle pourrait l'Otre dans d'autres domaines . C'est pourquoi la dTlTgation frantaise dTsirerait que l'interprTtation simultanTe fut suivie de la traduction successive. Ce que nous pourrions faire pour ce matin, ce serait de nous servir de l'interprTtation simultanTe, mais Ttant entendu gu'a 1a fin de chaque dTcla- ration toutes les dTlTgations seront autorisTes a demander l'interprTtation successive. Il est possible que pour une partie des discours la premiFre traduction soit suffisante et dans ce cas nous pourrions accTlTrer nos travaux, cer il est certain que l'interprTtation successive nous prendra un certain temps. Vous avez pu voir qu'il est proposT anux commissions de se rTunir a partir de demain a 10 h.30 et 2 h.30 aulieu de 11 h. et 3 h. J'ai pensT que pour procTder a une certaine accommodation nous pourrions dFs cet aprFs-midi nous rTunir a 2 h.45 . Si personne ne prTsente d'observation, je considTrerai que nous sommes d'accord sur ce point. Nous allons maintenant poursuivre l'Ttude de notre ordre du jour. Nous en Ttions arrivTs aux dispositions pouvant s'appliquer aux accords gouverne- mentaux relatifs aux produits de base, d'est-a-dire au paragraphe 2 i) relatif a la nTcessitT de prTvoir certaines dispositions. Peut-Otre estimerez vous bon de subdiviser l'etude de ce sujet en deux parties et d'Ttudier en premier lieu la question de la rTvision et de la reconduction, afin de nous rendre compte des divergences qui pourraient surgir sur ce point. Avant de vous donner la parole, je me permettrai de vous rappeler encore combien la tOche des interprFtes assurant la traduction simultanTe est rendue plus facile lorsque les dTlTguTs veulent bien parler lentement et faire une lTgFre pause a la fin de chaque phrase. -2- E/PC/T/C.IV/PV.5 M. H. BROADLEY (Royaume Uni) (traduction): Je propose, Monsieur le PrTsident, que pour la premiFre partie de l'examen de ce paragraphe, nous prenions comme base de discussion le paragraphe 9 de I'article 46 du project de Charte prTsentT par la dTlTgation des Etats-Unis. La dTlTgation du Royaume Uni n'a pas de commentaire important a prTsenter sur ce projet d'article . Tout au plus aurons nous, a suggTrer an ComitT de rTdaction un ou deux amendements d'importance mineure . En particulier, nous dTsirerions qu'il fvt prTvu une pTriode de six mois prTcTdant l'expiration du dTlai de cinq ans . Mais nous estimons suffisant de transmettre qette suggestion au ComitT de rTdaction. Mais il est un autre point, a la fin du paragraphe 9 de l'article 46, sur lequel je dTsirerais quelcues Tclaircis- senents. Il s'agit de la phrase disant: "s'il est Ttabli que les rTsultats obtenus ne correspondent pas suffisament a l'objet des principes ..." Je me demande si les rTdacteurs de ce texte avaient prTsent a l'esprit un point particulier. Je me demande aussi s'ils ont envisagT qu'il convien- drait d'attendre l'expiration du dTlai de cinq ans avant d'arriver a une telle conclusion, ou si au contraire ils ont pensT qu'une decision a cet Tgard pourrait Otre prise pTriodiquement si certains membres de l'Organisation fomlulaient des plaintes en raison de ce que l'accord ne jouerait pas aussi bien qu'on aurait pv l'espTrer. Voila les points sur lesquels je serais heureux d'obtenir des prTcisions. LE PRESIDENT (traduction): Si d'autres dTlTgations ont a prTsenter des observations similaires, nous serons heureux de les entendre; aprFs quoi je donnerai la parole a la dT1Tgation des Etats-Unis en lui demandant d'expri- mer son point de vue. M. E Mc CARTHY (Australie) (traduction): Il y a deux ou trois points que nous dTsirerions faire prTciser. Le premier est relatif a la durTe des accords. Nous croyons qu'un dTlai de cinq ans est peut-Otre trop bref pour certains produits et qu'il faudrait prTvoir une pTriode plus Ttendue avant une rTvision ,alors que tel pourrait ne pas Otre le cas pour d'autres produits. -3- E/PC/T/C.IV/PV.5 Je me demande aussi s'il no serait pas nTcessaire de prTvoir une certain pTriode prTliminaire au cours de laquelle nous pourrions nous livrer a des Ttudes approfondies avant de dTcider si un accord doit Otre ou non prolongT ou modifiT. J'irai mOme plus loin que M. Broadley sur ce point et je dirai. que dans tous les cas la revision devrait pouvoir intervenir avant que l'accord n'arrivGt a sa date d'expiration ou de renouvelloment. Il y a deux raisons pour cela, La premiFre, c'est que I'examen de l'opportunitT de renouvellement de I'accord peut demander un certain temps; la seconde, c'est que trFs probablement il serait extrTmement gOnant pour les industries intTressTes de ne pas saroir avant le dernier moment si un accord ayrant jouT pendant une durTe de cinq ans ou plus doit ou non se terminer brusquement. Si nous pouvions arriver sur ce sujet a un accord . cet-accor constituera vraisemblablement un ensemble le rFgles assez complexes et j'ai l'impression qu'un certain temps pourra Otre nTcessaire pour rTsoudre les difficultTs qui risquent de peser sur les diverses industries de nos diffT- rents pays . C'est pourquoi j'estime qu'il devrait Otre prTvu un dTlai de prTavis assez long, permettant de prTparer los modifications que pourraient avoir a subir les accords relatifs a certains projects. D'autre part il est trFs probable que dans la pratique un accord total et dTfinitif ne sera pas toujours rTalisT des l'abord . Nous pouvons trFs bien concevoir qu'aprFs avoir dTcidT que certains objectifs prTcis doivent Otre atteints ,on estime que la dTtermination pr ?ise. de certaines mesures peut Otre remise a une date ultTrieure. On imagine parfaitement que pour arriver a un accord complet deux ou trois Ttapes et un dTlai total de dix ans peuvent Otre nTcessaires. Mais avant d'en arriver la,il faudrait passer par des accords provisoires constituant des Ttapes vers l'accord dTfinitif. J'estime pour cette raison que la clause relative aux conditions dans lesquelles il pourra Otre dTcidT si uni accord a ou n'a pas atteint ses objectifs peut Otre extrOmement dangereuse, car elle pourrait Otre une arme entre les mains des adversaires de l'accord. Cependant si des difficultTs surgissent, elles ne sont pas forcTment la preuve d'un echec complet; au contaire, on peut s'appuyer sur elles pour en tirer la dTmonstration que -4- E/PC/T/C.IV/PV.5 l'accord, aprFs certains amendments, peut constituer un succes. Si un accord a TchouT en ce qui concerne certains ad ses objectifs, le remFde ne consiste pas a y renoncor, mais a l'amTliorer. A mon avis, il faudra tenir compte des observations que je viens de prTsenter lorsqu'on envisagera des procTdures de revision. Je dirai done PremiTrement , que la rTvision ultTrieure d'un accord doit Otre envisagTe comme pouvant survenir avant son expiration. Si un accord est d'me durTe de cinq ans, il doit pouvoir Otre rTvisT, par example, au bout de trois ans . Si un pays, tenant compte d'un accord de cinq ans, a pris pour le fonctionnement de son industrie des dispositions basTes sur un plan de cinq ans, un dTlai de deux ans n'est pas trop considTrable pour prendre des dispositions diffTrentes suivant qu'un accord arrivera a son expiration ou sera reconduit. Cela signifie que les industries doivent pouvoir baser leurs provisions sur des accords qui, en tous temps, soient valables pour un minimum de deux ans et un maximum de cinq. Deuximement, que si un dTlai de oinq ans peut Otre considered comme satisfasant pour certains produits dont la rTcolte est annuelle,il peut Otre insuffisant pour certains autres accords, par exemple ceux portant sur des produits animaux. TroisiFmemnent, qu'il doit Otre Ttabli par une rTdaction suffisament laire qu'un accord dTfinitif pouvant n'Otre atteint qu'en plusieurs Ttapes un accord initial, que l'on pourra considTrer comme encore incomplet ,devra contenir des clauses prTvoyant son dTveloppement et sa mise au point dans des phases ultTrieures. M.JosT Antonio GUERRA (Cuba) (traduction) : La dTlTgation de Cuba a prTsented un certain nombre d'amendments particuliers visant ce paragraphe du projet de statut. Nous estimons que tous ces amendments sont liTs-.Ils tendent tous a obtenir une plus grande souplesse dans les temes de l'accord. -5- E/PC/T/C.IV/PV.5 Comme le texte de ces amendements n'a TtT distribue que ce matin,au lieu 'd'entrer immTdiatement dans leur discussion, je prTfTrerais laisser a la Commission un certain temps pour Ttudier a loisir l'ensemble de nos proposi- tions .Nous pourrions par exemple y revenir au cours de notre prochaine rTunion. Je ferai cependant remarquer qu'a notre point de vue chacun des points soulevTs par la dTlTgation australienne confirme la justesse de notre attitude. En effet, la dTlTgation australienne a fait allusion a la nTcessitT d'introduire dans les accords une lause permettant leur revision avant la date de leur expiration. Elle a fait observer Tgalement que si le dTlai de cing ans pout Otre satisfaisant pour certtains prodicts, il peutne pas l'Otre pour d'autres. Elle a fait allusion TgaIement aux dispositions nTcessaires lorsque les accords ne sont pas apppliquTs et du cas o· la responsabilitTs d'un Tchec peut Otre attribuTe peut Otre dv au fait que certains pays n'ont pas TtT englobTs dans un accord. A notre avis, tous ces points soulevTs par la dTlT- gation australienne confirment notre idTe gTnTrale concernant l'management des accords portant sur les produits dans le candre d'un project d'Organisation du Commerce International. D'une faton gTnTrale tous nos amendments rTpondent a une nOme prToccupa- tion: . celle d'assurer aux accords de la souplesse. Pour cela,il sera bon de considTrer d'une maniFre diffTrente les diverses catTgories de produits: produits agricole produits niniers, etc... A notre avis il ne serait pas indiquT d'Ttablir des rFgles rigides alors que chaque produit se prTsente sous un aspect particulier. Les diffTrents accords devraient donc prTvoir des dispositions apportant une certaine souplesse a leurs rTgles d'application. Pour toutes ces raisons, nous croyons prTfTrable de revenir sur nos propositions d'amendement lorsque les diffTrentes dTlTgations auront eu le temps de les Ttudier. LE PRESIDENT (traduction): Il est certain que les membres de la commis sion n'ont pas eu jusqu'ici la possibilitT d'Ttudier soigneusement les amende- ments proposTs par la dTlTgation de Cuba. -6- E/PC/T/C.IV/PV.5 Je me demande si, dans le cas ou nous procTderions a la constitution d'un ComitT de rTdaction, il ne serait pas indiquT de remettre a ce ComitT le texte de ces amendments. Lorsque le ComitT de rTdaction aurait travaillT sur los propositions d'amendments de la dTlTTgation cubaine, la cmmissionn les eamineraitt dansleo texte nouveau. . JosTsAntonio GUERRA (Cuba) (traducticn):s Je suis d'autant plus d'accod' aeoc lapPeoposition de notre pTesidentq.ue la pluarot de nos mendments, tinspiresdae l'dTe TcT~rale d'pportere del a soplessee adns eo fonctinnement tdes accord pprtentt cependant sur eos questions ensomm7e econdaires. Cpendant, il serait avantageux que Ia question viTe dans notre premieramendment soiit reteneo etdaiscuT-e a.r l Commission. Il s'agit la a'un principe qui n' pasTST evisagT6dans lee projet de Charte, mais qui ostnTmcesasiredJans tous les accords. Ce principe est celui suivant lequel il faudea obteanir des prixT6quitables.Il1 pourra par consTquent Oetre Twces- sairequ'ili en soit discutT6 en Teunion pTniFr-e de notre cmmiission avant le renvoi au omitTe de T6daction . l1 'nest peutFetrequeq trop facile pourm oi de demander lacccomplis- smoent 'duec tacheqcue je ea ferai. pas moi-O8me,mrais jo vodraissqul'il vtt faitiTetat de cc principe dans la TdaLction au projet Tfinitif .J'esFbre qu'ilp'oura2. enO6tre ains. LE PRESIDENT (traduction): La commission sera certainement d'accord pour procTder a une discussion gTnTrale de cet amendement, puisquc c'est le. dTsir de la dTlTgation de Cuba. M. H. BROADLEY (Royaume Uni) (traduction) : Jo me deamande pourquci l'article 44 du projet de Charte n'a pas TtT mentionnT dans l'ordre du jour. MalgrT cela,il entre certainement dans le cadre de notre discussion et il me semble que c'est a cet endroit que prendra place normalement la discussion des propositions de la dTlTgation de Cuba -11- E/PC/T/C.IV/P.V.5 M. H. BROADLEY (Royaume-Uni) (traduction) : Je me permets de demander pourquci l'article 44 du projet de Charte 'a pas Tte mentionnT dans notre ordre du jour. Il se peut qu'en procTdant a la subdivision du sujet et em indiquant une sTrie de titres, on n'ait pas mentionnT les objectifs. Sans doute est-ce pour cette raison. Mais si l'aticle 44 doit Otre I'objet d'une discussion gTnTrale, ce serait la une bonne occasiom de l'introduire dans l'ordre du jour. LE RESIDENT (traduction) Je crois avoir fait un rapport exact du travail de notre commission en disant qu'il y avait eu une discussion assez importante pour savoir si nous devions de nouveau parler des objectifs avant de passer aux points de dTtail .ou s'il ne valait pas mieux revenir aux discussions gTnTrales aprFs l'examen de ces questions de dTtail. Dans l'ensemble, la Commission a estimT que nous avions dTja eu une discussion gTnTrale en sTance plTniFre et que, celle-ci ayant eu un caractFre prTliminaire, il Ttait prTfTrable de passer a la discussion des dTtails en premier lieu afim de pouvoir ensuite revenir en arriFre au cas o· ce serait nTcessaire pour Tclaircir ou dTvelopper les idTes de la Commission au sujet des principes gTnTraux. Aussi, pour la rapiditT de nos travaux - et mOme si cela ne paratt pas tout a fait logique - il me semble qu'il sera prTfTrable de ne revenir sur tous ces points qu'a la fin de nos discussions. M. DE VRIES (Pays-Bas) (traduction) : J'appuie tout d'abord les obser- vations des dTlTguTs de l'Australie et de Cuba.. Je suis tout a fait de leur avis et je pense que, lorequ'il s'agit de passer en revue les diffTrents points permettant d'arriver a la conclusion d'un accord, il faudrait pouvoir appliquer a tous ces points les stipulations de l'article 49. A la fin de la pTriode pour laquelle un accord a TtT tout d'abord fixT, si l'on dTcide de continuer les recherches et la propagande en vue d'augmenter la consomma- tion ou pour Ttablir Ies statistiques, il faudrait appliquer a cet accord -12- E/PC/T/C.IV,P.V.5 les stipulations de l'article 49 et continuer a y appliquer Tgalement les prescriptions du chapitre VI. Je prends comme exemple l'accord Ttabli sur le caoutchouc. Le paragraphe ler de l'article 42 dispose que "les membres qui ont un intTrTt important dars la production, la consommatiom ou le com- merce d'un produit particulier auront le droit s'ils considFrent que des difficultTs spTciales existent ou peuvent se prTsenter au sujet de ce produit, de demander qu'une Ttude en scit faite". Je crois que oette disposition prOte a confusion. MOme s'il ne s'agit pas ici d'un accord concernant le commerce, la production et les prix, il faudrait que l'on parle d'un accord et pas seulement d'une Ttude. Il faudrait Tgalement que nous trouvions le moyen d'y appliquer les stipulations du cha- pitre VI. LE PRESIDENT (traduction) : Je ne veux pas dire que le point soulevT par le dTlTguT des Pays-Bas ne soit pas important. Mais je pense que nous ferions mieux d'y revenir lorsque nous posserons au point 8 de notre ordre du jour qui porte le titre "exceptions aux dispositions concernant les ac- cords inter-gouvernementaux sur les produits de base". Si le dTlTguT des Pays-Bas y consent, nous en remettrons donc la discussion a ce moment-la. Nous pourrions peut-Otre maintenant denander au dTlTguT des Etats-Unis de dire quelques mots au sujet des questions relatives au renouvellement et a la revision. M. WILCOX (Etats-Unis) (traduction): Ce paragraphe vise des questions de dTtail d'un caractFre diffTrent de celles comprises dans les autres para- graphes de cet article. Les propositions que viennent d'Tmettre certains dTlTguTs au cours de cette discussion me pa raissent contenir des points fort intTressants; tou- tefois, pour la rapiditT de notre travail, je propose que nous nous limitions, dam la phase actuelle de nos dTbats, a dire en premier lieu que les accords sur les produits devraient Otre d'une durTe determinTe, par example de 4 ou 6 ans. En second lieu, nous devrions dTcider que ces accords pourront Otre revisTs a la lumiFre de leur application. -13- E/PC/T/C.IV/P.V.5 En troisiFme lieu, nous devrions dire qu'aprFFsl1'expiration du trsme IiT,p lsa accords seront renouvelables. Enfni, un quttrFzme poinest/visT6dains 'sordre du jour,mais li nel1'est pas dans le paragraphe: 'lest que de tels accords dertaient contenir des disposi- tions relativesa& la solutio n'des litiges. Tous ces points, je crois, ne souTbveront que peu de divergences?6t nau ourrionss charger le comiT6 de Tedaction de les examiner en T6tail. LE PRESIDENT (traduction) : Je suis parfaitement d'accord, apFes oes bl- servation, pour nous en remettre au comiT6 de Tedaction pour tout ce qui concer- ne la revision et la reconduction des accords.M ais jepsense qu'il aura tout de O&me besoin de certaines instructions suppTementaires de notre Cm:mission au sujet du Teglmaent des litieos. e ene sais exactementqauelle sera la nature de ces instructions, mais elles me paraissent T6cessaires. Quelqu'un demande-t-il encore la parolee;n ce qui concerne la revisina et la reconduction des accords ?... Si personnene= dmanded Ia parole sur ce point, nous pouvons passer au Feglement des litiges. U.WILCOXO (Etats-Unis) (traduction): JepProposerai que ce point de l'ordre du jour traite des principes TeTeraux, car il ne me pareft pas Ttcessaire dl'ouvrir actuellement une discussion relative aux organismes par- ticuliersaa cTeer pour l'application de ces principes. M. ROADDLEY (oqyaume-Uni) (traduction) : Nous avons quelque peu T6fTechi a la question des litiges. Fbs le moment ·u l'on parle de leur F~glement, cela pose imT6diatement la question deli'appliction des mesures necessairesaaces Feglement.Il1 ne me semble pas q'lil yanit aA purament une question 'sarbitrage des litiges Si telT6tait le cas, je serais d'accord avecM1. Wilcxz pour nous e -remettreaa un comiT6 en ce qui cncerne c la cTeation des organimzes T6ces- saires. On pourrai, spar exemple, s'en remettreaa un Conseil des produits, ou, en erenFere instance,aa un autre Conseil pour prendre une Tocision 'aarb- trage. Mais si nous ne sommes pas d'accord sur ce point, quel sera l'organisme capable d'exercer une pression, je ne dirai pas sur les coupables, mais sur les parties contractantes qui n'appliqueraient pas les conditions de l'accord? -14- E/PC/T/C.IV/??.? Feel c:X;;n_.c envisageons-nous pour traiter des questions de ce genre ? Cela soulFve encore un autre point, celui des mesures exTcutoires a prendre contre les pays qui ne respecteront pas leurs engagements. Nous avons abordT ce problFme au cours de notre sTance, la semaine derniFre, en parlant de la qualitT de membre. C'est une question qui nTcessiterait un TTchange de uues car tout le probFme de 'sapplication doitO6tre T6lT6 dons les textes qeo le comiT6 de T6daction auraaamnettre au clair. .D UERRA ( Cuba) (traduction ): La T6T6gation de Cuba approuve le point de vue exprmT6 par lc T6T6gation du Rauyamne Uni,a. savoir que cette question devrait Tecessi rementOetre lT6eaa celle d .'aapplication des accords. Avant de pecndeo ueo Tecision sur l'orar?r charT6 du T6gececnt des litiges, et sur la proT6direaa cetoffett il eora bon qeo eo cmriT6 de T6daction soit nisaru courant de notre Tecision surc-e point .Il1 nous semble que les principes et la proTedure que nous avonsaaT6a.bliraa ce sujet, ainsi que les accords nmxmOmies, devraientO8tre reommendTF6, ou approTv6s au Tr6alable par l'Organisation . PeuO-etre une rmulele de mpromisis devrait-elle dire que l'gr~anisation man.nde que tous les accords soient confmrnes aux principes objectifs qu'elle T 6tablis,otput enepormettant une certaine souplesse danl's application de chaque accord en particulier. I1 nous paealMaintenantntTn6ceszre/tout acooccrd vewrait avoir l'approba- tion de' lOrganasrntion et que laTdecision devraiO etre prise au sein dl )'agani-ni sation ellmOrnme; en ce sens que cet accord ne doit paallerna n l'encontre des butsTgTneraux relatifs au mmererce international .'DVautre part, nouT 6tablirions enc prTc6dure et ur principe selon lesquels un litige devra, en dernicre instanceO gtredo a l'O, ganasoti,ns pourTdecision Ceci permettra;arriver a a un accord sul 1a question du con(rtleTgTnarnl de I'Organisation, en ce qui concernl'e application des accords'udune tagon gTn6rale, et e-chacun d'eux en particulier, tout en laissant la souplesse n6cessaira . la conclusion de chaque acco.d -15- E/PC/T/C.IV/PV.5 En rTsumT, je pense donc qu' il serait utile de discuter l'ensemble de la question de l'application des accords afin de pouvoir donner quelques directives au comitT de rTdaction. M. HELANDER (NorvTge) (traduction): Il peut y avoir deux sortas de litiges, ceux relatifs a l'interprTtation des accords et ceux touchant oux questions d'intTrOt. Aussi la dTlTgation norvTagienme croi-telle q'oil faudrait raiterc T6paTmrent ces deux probF~me.e li existe a&ns le projet deS9tatut un article 76 relatifa- l'inerz- pTetation, s'appliquant uniquement aux questions poraent sur ec poin )l'nteroprTation du Statut. Ne serait-il pas pr6Tirable de l'appliquer 6Taeleent aal'intoeprfTatiof de tous les accords sur les produits, conclus conformzTmentaux dispositions de cotte Charte, et non pas seulement aa cells de la Charte mOme ? En ce qui concerne la procTdure prTvue par l'article 76, j'aimerais savoir s'il est possible d'y insTrer cette phrase : "Tout membre a le droit de faire appel, en matiFre d'interprTtation, a la Cour Internatio- nale de Justice". De cette faton, tout membre pourrait avoir les droits et la sTcuritT nTccssaires en ce qui concerne l'interprTtation des ques- tions juridiques. En ce qui concerne les questions d'intTrOt, la dTlTgation des Pays- Bas pense qu'il devrait y avoir une voie de recours par le moyen de l'Or- ganisation et, en derniFre instance, par la Cour Internationale. Il faudrait done dire que les membres sont d'accord pour porter cette ques- tion devant une commission d'arbitrage ou devant une chambre Tconomique de la Cour Internationale. Mais je ne vois pas encore trFs exactement comment la chose pourra se faire. Pout-Otre devrions-nous en remettre a la 5Fme commission ? Il faudra sans doute prTvoir une dTcision gTnTrale. D De toute moniFre, il nous faut prendre une decision a ce sujet, car est une question trFs i. nortante pour les accords sur les produits. M. BROADLEY ( Royaume-Uni) (traduction) Ne srait-ce pas aller un peu trop loin que d'envisager dTs le dTbut l'autorisation pour tous les membres de porter les litiges devant la Sour Internationale de Justice ?Avant d'en arriver Ia-, de nombreuses possibilities existent I Tout d'abord, il en est une 1dan la creation de 1Organisation el1e-mame traitant des prodnits; puis dans les Conseils de prodaits et peut.-tre aussi dans l'Organisation elle-m&me, oa il doit 4tre possible- de r6soudrd certain conflits. Bien que je ne mloppose pas I. ae que, en dernicre instance, on fasse appel a. la Cour Internationale, Je pr'f'rerais que 7'on essaie de r6gler les litiges a. l'int6rieur mtme de lIorganisme que nous aurons cr66, avant d'avoir recurs a ces moyens ertrtnes, Le PESIDENT (traduction): Nous sozns saisis d'une proposition concernant le r6glement des litiges, 1interpr6tation des accords et la solution des questions d'int6rtt. Nous pourrions la formulor ainsi: le ComitO de rV61ction s 'forcera d' laborer un texte qui stipulerait que les litiges rclatife aux produits seraient r6gl6s parxecours au conseil int6ress6- Linstance sup6rieure serait la Commnssion des produitso et la d6cisiov. finale pourrait enfin 6tre prise, cr>2orm6ment a ce que nous dQsirons pour les litiges, come pour les mutres problemes relatifs a V'Organisatiox International du Correrce- Pouvons-nous adopter cettc solution et dormer des directives en ce sens au Comit6 de r6daction ?... M. WIICOX (Etats-Unis) (traduction): Cola tomberait sous l'ar- ticle 76 qui est du ressort de la 5bme Commission, celle ae l'Organisation' Peut-ttre pourrions-nous fare une recommendation h la Commission en question et lui demanderde fire entrer 6galement dans cette section les accords sur les produits, en mtae temps que l'interpr6tation de la Charte elle-crie' Y. BROA=1EY (Royaume-Uni) (traduotion): Je drois avoir une wcrtaine responsabilit6 a ce sujet, ayant soulev6 moi-mgme la, questions et je voudr-ais faire maintenant une suggestion sur laquelle jaimerais avoir Ilavis de la COnission. Je pense que tout cela d6pendra surtout des clauses ntmes .des accords sur les products. Ces accords -17/20- E/PC/T/C.IV/PV.5 doivent traiter des questions relatives a la production, au commerce et aux prix Il ost possible, par exemple, que dans ces rTglements concernant le contingentement, on dTvrait faire entrer des clauses obligeant les pays a respecter les termes des accords, qu'ils soient membres ou non de l'Organisation Internationale du Commerce. Cela ne signifie pas nTcessairement que ces pays auraient violT tous les principes de l'Organisation, enfreint les grands principes objectif gTnTraux, mais que, dans des circonstances particuliFres, ils n'auraient pas respectT les stipulations des accords' Ne serait-il pas possible, en consTquence, d'inclure dans les accords visant tel ou tel produit certaines discriminations contre les Etats qui n'en respecteraient pas les clauses ?

GATT Library

jm317yz6895

Rapport adresse par le Comite de regarding a la Commisson Mixte du Development Industrial

United Nations Economic and Social Council, November 17, 1946

United Nations. Economic and Social Council, Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, and Preparatory Commission of the International Conference on Trade and Employment

17/11/1946

official documents

E/PC/T/C.I II/18 and E/PC/T/C.I/13-20

https://exhibits.stanford.edu/gatt/catalog/jm317yz6895

jm317yz6895_92290386.xml

GATT_157

United Nations Nations Unies RESTRICTED E/PC/T/C.I & II/18 LONDON ~ ~ ~~~~~e ECONONC IL o m erPON46SE 17 Nveb 19 DU ~~CEr E L'MLILo SOCUL GONCIL CI ET SO?EA PREPARAT W SIP AIREONFERàNCE . TERNATIONALENP DSTRI RLOT MARESEECOMIRE2 OCHIT A. DE REDCTION A LA~ . x ION MEXTE DU DEVELOPPEMENT INDUSTRIELv M * Le Coion de Rédact de la Commission Mixte du Développement Indus- friel soumet son Rapport à vette Commossion. Le -Cômité de Rédaction était coMos de Délégués reprAsentant l'.,.tralie, le Brésil. la. Chine, les Etats- Unis, la France, l'Inde et le Royaume-Uni. Au cours de se, 6 séances$ le Comité a étudié soigneusoment les cdnsidérations formulées par les Délégués aex séaCoces de la Ommission Mixte. Il a pu également s'inspirer de documents qu lui ont été adre'ssés par lAustraliej, le Brésil, le CChili, la. ine, les Eta&mUns, l'Inde et. l'Observateur représentantmla .oloobieo Recommandations: 2. Le Comité de Rédaction propose à la Commission Mixte ad'adressr à la Canmission Préparatoire mmandatco ions suivantes: (i) afin de ménage'Oddrs lQ0râte du Jour de la Conférence Ionaleatic o du Commereel'tmpldé lYEloi une place pour l'Entente Internationale sur le Développement Industriel, un chapitre inclus dans la Char'te de lOr- gazdsation Internationale du Commerce devrait prévoir que tous les Etats membres s'engageront à favoriser le développement industriel et le dé- velcppement économique général et entreprendront l'acticn concertée qui êourra 8tre nécessaire pour favoriser ce développement E/PC/T/C.I & II/18 French Page 2. (ii) en raison des plans que le Conseil Econcamique et Social prépare pour favoriser le développement éànaodquqç , et des intérêts que d'au- tres institutions internationales spécialisées possèdent dans cette question, un message devrait, au cours de la présente session de la Commision Préparatoire, -être envoyé au Conseil Economique et Social pour l'inviter à prendre en considération les conclusions de la Com- mission Mixte lorsqu'il examinera la façon dont l'oeuzvre d'encourage- mt du dévelcppement incustriel doit *tre répartie entre les ditfé- rents rgiamismes internationaoxj, y copris l'Crgamisation internatica- nale du Commerce Remarques z2édurales. 3e Le Comité de Rédaction joint a.u présent rapport une note exposant le- considérations sur lesquelles il a basé ses conclusions. Une amnexe à cett note reproduit un roJet préparé par le Comité de Rédaction dûI texte des articles relatifs au développement indusltriel et au. développement éqcoi general. 14 Le Comité de Rédaction désire exprimer sa gratitude à son Président pour la sagesses la compétence et .l'autarité avec lesquelles il a dirigé i travauxe Le Comité desire également fire parvenir ses remerciements au pe somnel du Secrétariat qui s'est dépensé sans. copter ainsi qugau Rapporteu E/PC/T/C.I & II/18 French Page 3 NOTE PRESENTEE PARLE COMITE DE REDACTION DE LA COMMISSION MIXTE DU DEVELOPMENT INDUSTRIEL. DEVELOPMENT DES RESSOURCES ECONOMIQUES: 1. Le Comité estime que la Charte de l'Organisation Internationale du Comerce devrait -recouraître clairement que le dévelopment urogressif des ressources économiques dans toutes les parties du monde est désirable non seulement en soi, en tant que moyen de relever le niveau de vie dans certains pays, mais également en tant que moyen d'abcrcttre le volume des écbanges m-ondiaux, pour le plus Srand bien de toutes les na- tions participant au c^;merce international. L'amélioration des normes de proauction- et celle du revenu réel d'un pays contribuent à réaliser et à maintenir dans ce 3ays un niveau élevé et croissant de la demande effectuée de l'ensemble des marchandises et services, ce qui a 'Our effet 'aocrottre les mossibilités offertes à ce pays de participer aux changes mondiaux. Le dèvelo',,erment des resources économiques aura, égale ment, des répercussicns onmortunes sur le plan social en aumentant la game des possibilités d'emploi utile. Par conséquent, il est désirable qu'un développement Progressif existe particulièrement dans les Pays dont les industries ont atteint, à l'heure actuelle, un d-veloppement qui n'est pas en rapport avec leurs oossibilités. 2. De l'avis du.-omité, un r.es princioaux bénéfices que l'on peut retired du dévelonpement consiste en la diversification plus grande qui en r dsulte dans les industries de base, de transformation et de service. Cette diversification neut contribuer à accroitre la stability de l'éco- nomie d'urn pays, et lui procurer de r.nds aventaees sociaux et culturels. Le dvelonnemrent des industries de transformation revêtira une ÏmPortance particulière a c'est au mcyen de ce dvelo=nem6nt qu'il sera possible d'cotenir la plus gmnde diversification de la rcduction et les --eilleu.r6s-ossilbilités d'emploi. E/PC/T/C.I & II/18 French Page 4 3. Le Comité desire également attirer attentionn de la Commission sur un sujet qui intéresse.-tous les pays, à. .savoir le prompt rétablissement éconorsique et la rapnide reconstruction: industrielle des pays dont les économics ont directement souffert de la guerre-. Ces pays possèdent des ressources si e'fectives et si importantes pour le reste du monde que a. leur disparition temporaire orovoqué des difficultés dans des parties du globe très éloignées des théatres d'opérations. Dams de nombreux cas les économiLes de ces ùays étaient déjà très développées et elles sont protes à effectuer un relévement relativement rapide.qui les mettra en mesure de Procurer aux autres n-tions les matières premières, le matériel et les -roduits ianufactuzrs dont elles ont besoin pour leur développement économique. Il existe dans ces pays des techniciens qualifiés et des ouvriers expérimentés qui déjà romous aux tedmniqes industrielles moderns, sont erêts à occuFer les emplois nécessaires dont la diversité est grande. Lorsque ces pays dévastés nar la guerre seront relevés., fls seront en mesu, e d'aporter leur contribution aux progrès techniques et à l'éléva- tion de la productivity et des niveaux de vie. En conséquence, le Comité estime qu'il serait nécessaire de prendre des mesures destinées à faciliter aux pays d-vastes leûi retour rapide à un dévelappement in- terrompu par les 1hostilitéè et il `pense que ces mesures contribueront au déevelopoe.en.t rrpide et Sain des autres pays. ADAPTATION DES ECONOMIES 4. Pendant que les pays les moins développés entreprendront progressive- ment la Production d'une gàmme plus étendue de produits de base destinés à leur march intérieur, il est probable que les nations dont les éco- nomies sont plus développées, gui alimentaient autzrefcis les marchés des pays les moins développés, auront à résoudre les problèmes réaultant de lbdAptatîiLe leurs économies aux nouvelles circonstances. la gravity E/PC/T/C. I & II/18 French Page 5 et la durée de ces ircblèmes se trouveront réduites si. ces iays prennent le soin d'as.i.urer à leurs nrogr rimes de développment une base saine. Le Comité émet l'opinion que c'est seule.ent en suivant cette voie que les rays en cours de dévelopement apporteront la contribution la ,lus effective à leur bien ttre tconoc-iq.ue et æux changes internationaux, et que les pays les plus d développés n'auront de bonnes chances de réussir l'adaptatic4re -leurs éconories qu' en opérant de cette façon. D'eutre part, les mays en cours de développement auront à faire face à des oroblimes d'adaptation Ces problèmes se trouveront princioalement liés au transfert de la airL-d'oeuvre -rcvenant de l'agriculture et des a.utres industries de base au fur et à r.iesure de l'accroissement du rende- ment du travail dans ces industries, vers les manufactures e, les autres branches de l'activité économique en voie d'expansion. Ce transfert iourra né cessiter une nouvelle distribution géographique de la population avec tous les iroblèmes qui en découlent, et soulever les iroblâr.es de l'éducEtion et de la rééducation professionnelles. CONDITIONS DU DEVELOPPEMENT INDUSTRIEL. 5. Les conditions ce la mise en -,-leur, au moyen de l'industrie, des resources économiques d'un pays compremtent le capital, les débouchés , une technique a'-propriée, des cadres expérimentés, des techniciens et des artisans cualifiés en r.o-..bre suffisant. Quand l'une ou l'autre de ces conditions n'e3t pas satisfaite, des mesures tant internationales que natiinnles peuvent I!tre irises icur mo:ifier la situation. C'est ainsi que des mesures intern^.tiornles i'euvent etre -,rises -our faci- liter l'approvisionnement en capital, en biens de production et en ratières irezières, oour fournir -'es cadres ex',érimentés, des techniciens et artisans cualifiis, et pour amiliorer la. technique. Chaque pays E/PC/T/C. I & II/18 French Page 6 peut ent-i'rendre l'élaboration. et l'exécution de plans de mise en valeur destins 'à élever le niveau de la competence des cadres de l'industrie, à orga.niser l'apprentissage et le perfectionnement de ses propres ressortissants mour en faire des techniciens et des ar- tisanu et, sous réserve de ses obligatious internationales, à réserver, au moyen de measures protectrices une pnrt raisonnable du marché inté- rieur aux mroduits fabriqués sur leurs territories.. RESSOURCES EN CAPITAL. 6 Un pays peut avoir besoin de ca'itaux p our moderniser -et amilioer la technique de ses industries, développer les industries qu'il possède ou en établir de nouvelles. Les camitawc meuvent aussi être nécessaires pour améliorer ou accroître les prestations de services '.ublics, tels que les services des transports et des communications, les services de distribution d'eau et d'énergie électrique. -es pro- jets tels que ces derriers, :ai sont indispensables à la mise en valeur progressive des >ayr, peuvent ne -mts être imédiatement ni directement rémunérateurs, et les miesures internationales -,euvent se réveler d'autant plus nécessaires si l'on veut quel'offre des ca-itaux soit suffisante. 7. Le Cmité estime que l'offre' international de capitaux sera Darticulireremaent nmcessaire aux pays 1oir évolués et à ceux qi ont souffert de la guerre. Cette offre veut se manifester par la voie soit dé l'investissement privé, soit des organisms gouvernementaux, soit enfin de la Banque Internationale pour la Reconstruction et la Mise en valeur. Etant donné l'isotance du développement industriel dans l'expansion du coerce mondia le Comité estime que tous les membres de l'Organisation Internationale E/PC/T/C. I & II/18 French Page 7 du Commerce doivent reconnaitre la responsibility qui leur incombe.. ,le coopérer dans les limites de leurs car.cit s, aves les organis.-.es internationax commotents pour assurer, en »articulier aux pays dont les ressources en capital sort li.-itées, un afflux régulier de canil. L'Organisation Internationale du Ccmrnerce devra participer aux discussions concernant des propositions en ce sens qui mourront s'éta- blir entre ses membres et d'autres organismes internationaux. En outre, le Comité estim..e que les Etats membres doivent s'engager a ne -as em- pêcher, ar des entrsves injustifiées, les autres Etats menores à avoir accès ^.ux resources encaoital 8. Un pays qui amorce un programme de mise.en valeur im-liquant des de im;crtati ns de biens ca--itaux en qantit6s im-sortar.tes meut avoir à e er l'éventualité de difficultés en mantière de balance ;les comptes, partìculièrement s'il. s'en remet à l'é-,argne natiznale nour obtenir le capital nécessaire. Le Comité estinme. que si ` un moment cuelconque un Days prévoit l'imminence de semblables difficultés il doit être autcrisé à établir un contrôle qualitatif de sesimcnortations de pour maintenir entre ses irportations de biens capitaux et ses impor- tations de biens de consarim-ation un ê quilibre judicieux. eu turellement, le maintien de ce contróle des importations ne se justifiera que tant que subsistera. la -perspective de difficultés en ratière de balances d-s coeites. Une note sur ce sujet a été envoyée à la IIème Commission. E/PC/T/C.I/t II/18 French Page -8 9. Les plans de production et dce mise en valeur fIeront umto uis tous les pays une te-wande d'équipement en capital et de .-atières preniè- -es de toute sorte. Pour la plupart des pays, y compris ceux qui encou- rageznt activement leur développement industriel et le dieveloppeue'nt de leur éconoie dans son WeWCkiub b cette demanded ee peut recevoir satisfac- tion qu'à l'aide des ressources qu'ils pourront -poteir- .sous une for- me ou sous une autre d'autres pays. aussi le Comité estime-t-il que les Etats mimbrés de l'Organisation doivent reconnattre qu'ils ont envers les autres Etats membres l'obligation de ne pçs les empdchcr,-par des entra- vos déraisonnables, d'avoir accès aux biens capitaux .et aux -2atièrcs pro- Dibres dc toute sorte dont ils ont besoin.. Il va sEQg J.re qcr'un tel en- gagement ne saurait être pris quo sous résorve de.l'applicaiion des au- tros dispositions de la Charte. Par excmplej.lcs .pays fournisseurs qui souffrent de la pénurie d'un produit détcroiné, cn particulier dans la période de transition suivant iMédiate.aont l'aprè;s-guerre, aurcmnt la fa- culte d'appliquer des restrictions selon la procedure privue à l'ar- ticle 19 de la Charte. En présence de telles circonstances, cepcndant on espère qu'ils tiendront cariapte des. besoins des autres pays et l24mte- ront ces restrictions au. strict minimum. 10. L'une dos néthodes les plus importantes pour favoriser à travers, le mnde le développemcnt industrial consiste à propager, particulièreuont dans les pays dont le développeLent ne correspond pas à leur potentiel économiquy, la connaissance des techniques dc production. Cotte diffusion peut être 'éalisée en parties à l'aide dc d osuros nationals et intcrnatio- nales qui so proposcnt d'assurer le plus large rayonnement possible E/PC/T/C.I et II/18 French Page 9 (sous -réserve des considérations ce s;curité nationale) à la connaissan- ce des perfectionne=nts nouveaux survenus dans tous les pays greco aux transfor.atieas de la technique et à la recherche scientifique; et en partie à l' aide de ..esures individuelles entreprises par les établis- sements privés des pays moins industrialisés oui obtiennent accès aux brevets, devis descriptifs et inventions techniques. Ces enterprises pourraient y parvenir, par exemple, en s'associant à des entreprises si- tuies dans les pays parvenus à un itade d'industrialisation p.us avancé et qui ont acquis une expérience plus :ranEe. Encourager daim lm pays plus évolués les techniciens et les artisans qualifies à se rendre, défi- r.itiveLent ou te .zporaire;.ent, dans les pays .,oins évolués peut aussi contribuer au progrès technique en ces pays. D'autre part, les pays moins évolués doivent prendra des dispositions pour levcr le niveau dos connaissances tachniquez et technicolocjiques de leurs ressortissants et devront pouvoir facilement envoyer leurs ressortissants faire des stages de formation et de pcrfectionnetaent dans les pays plus évoluées. RESPONSABILITES RECEPROQUES. 11. Dans l'èxécution des programjes de développement industriel et de sise en valeur génerale de l'éconouie, les pays uloins évolués et les pays parvenus à un stacle d'évolution plus avancé, dépendront ainsi mu- tuelleatnt les uns des autrcs. En ce qui conccrne l'offré internationa- le des ressources que nécessite la -ise on valeur d'une économie, no- taent en capitaux d'établissement, en installations, en technique. perfectionnée et en personnel qualifié, le Comité estine que tous les pays doivent reconnaitre qu'ils ont des responsabilités récipriques E/PC/T/C.I et II/18 French Page 10 Il a déjà été signals que les pays qui sont en état âc fire bénéfi- cior les autres de cos ressourcOs na devront pas les ampêcher, par. des entraves injustifiées, d'yacoécer. Touteefois, il n'ost pes maoins im- pcrtant que les pays bénéficiaires appliquent aux pays fournisseurs, tant à leurs ontreprises qu'à leurs ressortissanle, urn traitement confor- ne à la teneur de leurs cnga;cucnts international en cotte uatière, et d'une façon générale s'abstiennent de toute iaesure injustifiée quipsoit de nature à porter pr6judice aux intrêts du pays fournisseur. Débouchés et mesures de protection. 12. Les industries nouvelleraent crées sont généralement, du moins dans les premiers temps, tributaires ces aarchés nationaux pour l'écoulement <le leurs produits. Aussi le Couit Ostiqu-t-il que, chaque fois qu'il sera nécessaire, les pays membres qui désirent favoriser leur dzévelop- peæent industriel derront avoir ou se fire rcconnattre, dans des li- iites raisonnables, la liberty de recourir à dses d de protection de façon à assurer aux produits intéressés une part-équitable de leurs uerchés intérieurs. Toutefois, coaie un pays qui, pour favoriser son a.<veloppeac-nt industriel, roco=:t sons raisonr valable, à des Ne0ures de protection, grève indàtent son .éconscie intérieure et impose au coiaerce international des rcstrictions injustifiées, il est souhai- table que les pays qui favorisent le développement ne fassent pas un usage abusif de tells measures de protection. 13. Le recours, de la part d'autres pays, à une politique de dum- ping pourrait être particulièrement préjudiciable aux pays qui désirent mettue en oeuvre un programme de mise en valeur ou de reconstruction E/PC/T/C.Ict II/18 French Page 11 Toutefois, le Cojuté prés ant que la IIc Commission prend à cct égard les uesures ndccssaires, ne roccizaneza à la Commission uixte aucune ucsure spdciale or. rue ie cette éventualité. 14. Etant donné que les pays membres ne sent pas parverus au degré d'évolution et qu'ils appliauent des tarfis douaniers de niveaux dif- firents, le Couito estine aue ces facteurs doivent 8tre pris en consi- dération, d'une manière générale par les Etats -cmlibres au cours de tou- tes les négociations de tarifs qu'ils sent appelés à entreprendre, et par l'Organisation lorsqu'elle sera avpelçe à dvcider si un pays a exc- cutc5 ses obli::ations cn ce qui concorne ces négociations. Une note sur cette question a été adressée à la IIe Commission. NATURE DES . ESURES DE PROTECTION. 15. La question de la nature des ...esures de protection dont lèmploi meut être autorisé ro-ur fav^iser b ve1ov;,ernt a re tonu -articuliè- re..;ent l'tter.ticn cau Oc.ci t6. r'accord -gâri.ral 'est ait au Cc:.tà Gour estiter cu'il convier'xait 'e laisser une larce suree ec liber- ts dans l'eLrploi des subventions et des tarifs protecteurs, l&i où las tarifs ne sont pas c:-nventionnellecent li;-s .un taux :i. par suite d'accords négociés volontairement entre Etats membres aisi «ue l'_nvise la Charte . iwssi le Coitc- a-t-il fait prtor princi- pale;nt l.a discussion de cette question sur les .y;r, s par lesquels un membre pourrait obtenir une dérogation partielle aux obligations -asstwes au cours de telles négociations et ç la r-lec-Lentation con- tenue dans la Charte concernant l' e::l!oi *es autres forces do protaotton. 1o. ee Co..itç cst *-r-enu &b la concl usion que de tells dçro ations devraient tt-ro accores dans des circonstances appropri;e. L'accord fut é :al:on.t fait sur la procédurc d( tciù à l'.1-rticle 4.., para&rapho 3, du projet de chapitrec qui fiwurc cn .annexe. Le Co.ité a ètadié avec E/PC/T/C.I et II/18 French Page 12. une attention particulibre la possibilité d'utiliser comme moyen de pro- tection la regleæentation quantitative des L-mrortations. Il estime que , sous reserve de l'applica.tion de la-procédure propose, ce moyen nc doit être eiplcyé que lorsqu'il, est maoins on6reux pour le pays qui accorde la oretection et lorsqu'iJ rc-' tepour le cou.:arce international des restrictions L.oins grave que ne le fcraient d'autres for-ms de protec- tion. Le Co té a receuilli los observations d'un délégué relatives au recours eux accord préférentiels régionaux, mais présumant que ces ac- cords font l'obict, de la part de la IIo Caomisio dlun exane. ap- pronfonai, il a estiïa que la.Coaission n' avait pas à aller au-delà. ATTRIBUTIONS DE FONCTIONS 17. Le Comité a étudié avoc soin la question de savoir comment les fonctions internationales relatives au c;çveloppcænt industriel pour- raient 8tre re=plies au mieux; il a également étudié le rôle que devrait jouer, dans leur accomplissement, l'Organisation international du Cou.zerce. Il est clair que l'Organisation Internationalc du Commerce a un rôle à jouer en ce qui concerned la développemcntindustriel, au mcins dans la measure o`u les pays recourent aux moyens de la politique co=crciale pour f'avcriser ce dc-veloppeicnt. Si l'on envisage les buts que sc fixe la Charte, et le forctionneont effectif de l'Ormarisat-ion Internationale du Çto3erce, il y a de serieuses raisons pour doter l'Organis ation des pouvoirs qui- lui pcræettront de rezplir cs fonctions positives dans le &omaine du dcvoloppc.crnt industrial, notamaont en apportant l'aide technique n;cessaire aux Etats nembres pour l'établis- secnt et l'exécution des plans relatifs à cc d&veloppecent. En con- s6quenceq, le Conité a introduit dans lc project d'article annz au- pré- sent rapport -une disposition. oui. habilitc l'0rganisation Intei-ationale ..du Cormerce, dans la limite dc. sa cooétence et de ses ressources, à lMur apporter une telle assistance. E/PC/T/C.I & II/18 French Page 13 18. Cette tâche, par suite de son caractère essentiellement administratif, conviendrait à une institution spécialisée et son accomplissement par l'Organisation Internationale du Commerce pourrait constituer un moyen pour elle de coopérer efficacement avec les Etats membres et lui per- mettrait ainsi de gagner leur confiance et le concours de leur bonne volonté. De plus, cette tâche donnerait aux membres du personnel de l'Organisation une expérience fondée sur la continuité des diverses pc- litioues de développement national - envisagées tant du point de vue positif que du point de vue des mesures de protection - et ainsi elle les aiderait à conserver l'impartialité essentielle à l'exercice des pouvoirs discrétionnaires que la Charte confère à l'Organisation. 19. Toute±cis, le Comité a conscience que ce problème ne peut pas c4te envisagé que du point de vue de la Charte. Les divers aspects du déve- loocement industrial intéressent un certain nombre d'institutions inter- nationales, notamment la sous-Commission du Développement économique, qui est l'un des organes du Conseil Economique et Social, l'Organisa- tion des Nations Unies cour l'Education, la Science et la Culture, la Banque Internationale pour la reconstruction et la mise en valeur, l'Organisation Internatiorale du Travail et l'Organisation pour l'Agri- culture et l'.limentation. Le Ccmite a conscience également que le Conseil Econcmique et Social examireza prochairement la question de la répartition judicieuse, evfrg les différentes institutions, des res onsabilités non encore attribuées dans le domaine du développement économique et les moyens par lesquels il sera possible de coordernner utilement leurs activités, et :ue les décisions du Conseil en ces ma- tières doivent reposer, non seulement sur les considérations qui sont de la compétence de cette commission, mais aussi sur d'autres reasons, peut-être d'une portée plus large. En consequence, le projet de E/PC/T/C.I & II/18 French Page 14 paragraphe 3 de l'article 2 qui dote l'Organisation du pouvoir d'apporter aux Etats-membres une assistance techrdque, a été placé entre crochets pour indiquer que son insertion doit être regardée come provisoire tant que le Conseil Economique et Social n'aura pas exprimé ses vues sur cette question. 20. Aussi est-il proposé que le Conseil Economique et Social soit invité, lorsqu'il examinera la question de l'attribution des fonctions en ce qui concerne le développement industriel, à peser soigneusement les raisons exposées ci-dessus et auxquelles le Comité a été sensible, et, en particulier, à décider si l'insertion du projet de paragraphe 3 dans l'article 2 est conf orme à ses -propres. vues. Un projet de résolution à cet effet est soumis à l'examen du Comité. 21. Etant donné oue de nombreux facteurs, en dehors de ceux qui ont trait directement à l'Organisation Intemrnationale du Commerce, méritent d'être pris en considération dans ce domaine, le Comité exprime l'espoir que les gouvernements représentés à la Commission préparatoire, mais qui ne font pas également partie du Conisei-1 Economique et Social, soient invités à soumettre leurs observations lorsque le. Conseil ea- minera ces problèmes. E/PC/T/C. I &: II/18 French Page 1 5. PROJET DE CHAPITRE SUR LE DEVELOPPMENT ECNONOMIQUE Article I - Importance .lu développement économique . Les Etats membres reconnaissent que le développement industrial et le développement économique général de tous les pays et en particulier de ceux dont ls resources sont encore relctiver.ent peu développées amélio- rera les pcssibilités d'emploi, augmentera la productivité de la ria- d'oeuvre, accroitra la demande de proâuits et de services, Mntribuera à 1l stabilité a.cnomiquea.ccro±tra les échanges internationaux ei rehausse- ra le niveau lu révenu, réel, consclidant ai rsi 1. liens internationatux d.ern- terte et d'_.ncrd. krticie 2 - Plans du Dévelbnover-.n Econcmique. 1. _es _t-ts .enbres sIenz.zncit à favoriser de ±"gaon continue le déve- -CJustri-e E i' icloopperrnt éonomique général de leur pays et de leurs territCoires respeotifs en vue ae contribuer à la réalisation des buts de 'Crrisation 2. Les mtets rrabres décident de- coopérer, par l'inter.6édiaire au. Conseil Econcrricue et SocirO des 'Nations Unies et des institutions spécia- lisées irterftiorales appropriées, à ' abortionn des plans et des pro . _ Zranes *iestùir.és à favoriser le d loppernt industriel et le développe- ment économiue général. A lr . 1_ ande de tout Etat m3nbre, l'Orgwnisatior le. conseillera au sujet de ae-z plans de développement économique, e> das la measure de ses possibilités, elle lui fourniri_ une aide techr.ique pour l'aider à rt.:liser ses plans et réaliser ses progr mmes-7 Article ,. -' drns ce realiser le dévelcolve=e.nt écocmiaue. 1. Les mtats radnbres reconnaissant que le progrès dudévelcpement éco- nomi que st sfcrztion d' une disoxnibilité satisfaisant e: E/PC/T/C.I & II/18 French Page 16 (a) en capitaux (b) en biens de production., en moyens techniques modernes, en personnel spéeialise et.an cadres compétents. - 2. Les Etats membres dé-cident de ne pas impose, d'obstacles exagérés qui empcheraient les Etats membres d'obtenir l'accès aux moyens dont ils ont besoin pour développer leur économie. 3. Les Etats membres décident de coopérer, par l'intermédiaire des institutions % ternationales appropriées en vue de fournir ces moyens. 4. Des Etats membres décident de traiter les tutres Etats membres, les entités cozmerciales ou les personnes qui leur fourniront des moyens servant à leur dévelcpp6ment économique, conftrmément aux dispositions des engagements international qjui sont actuellement en vigueur ou qui seront contracts en application du pragraphe 5 de l'article 50 ou de toute auî- tre façon, et, en général, de ne prendre aucune mesure exagérée qui seavé- rerait préjudiciable aux intérêts de ces Etats membres, entités commercia- les ou personnes 5. L'Organisation recevra par l'intermédiaire de tout Etat memhne lesé ou avec la permission de elui-ci, les plaintes des entités commerciales ou personnes qui relèvent de sa juridiction, relatives à des mesuPes prises par un autre Etat membre qui sont incompatibles avec les obligations qu'il a contractées en verta des paragraphes 2 3 et 4 du présent article. Si une plainte de cebùe nature est formnUées l'Organisation peut, à son gré, invi- ter lés pays iembr}es intéressés a négocier en vue de parvenir à un accord satisfaisant pour les deuï parties et employer ses bons offices à cette isrticle 4. - .ide s;ouvernémentale au Développement- économicue. - 1. Les Etats membres reconnaissent çepe, dans le cas de certaines indfi- fl_*vil peu. etr:e nécessaire de faire appel à une aide gouvernementale E/PC/T/C.I & II/18 French Page 17 spéciale destinée à en facilité l'tablissement cu: le relèvement, et que cette aide pourra prendre la forme de measures de protection. 2. Les Etats-membres reconnaissent qu'un recoure déraisonnable à ces measures de protection grèverait indÙrent leur prcprer'iconcmie, imposerait * au comerce international des restrictions injustifiées et pourrait 8tre de nature à susciter d'inutiles difficultés d'adaptation aux économies d-'eu- tres pays. 3. (a) Si un Etat merbre, dans l'intérgt de scon prcgramme de dévelcppemnt, se propose de recourir à des mesures de protection -ui risquent d'entrer en Conflict avec l'une quelconque des obligations qu'il a souscrites aux termes de la Charte ou en conséquence de celle-ci, il en informera l'Organisation et lui présentera tcut argument à l'appui de la mesure cuPil se propose de prendre. L'Organisation en informera prcmptement ceux des Etats membres dont le ca-mmerce serait sensiblement affect par cette mesr, et leur offrira iycecsion d'exprimer leur opinion. L'Organisation examinera ensuite. avee diligence, la measure propose, compte enu des dispositions du présent .'ha- pitre, des arguments invoqués par l'Etat membre requer-wnt des opinions ex- primées par les Etats membres lésés, et en s'ncvirar de tcua critèe¾re=- latifs au rendement de la production et de tous alutres facteurs, dont elle pourra déterminer l'existence, comte 'venu du degré de développement et de reconstuution économique atteint par cet Etat membre. (b) Si, à la suite des enquêtes menées conformément au paragraphe 1 er, l'Organisation entérine une measure oui serait incompatible avec aucune obli- gation que l'Etat membre requérant a assume à la suite de ,négooiatios avem l'autrfs Etats membres, ern' conséquence du chapitre IV de la présente 05harte, ou qui réduirait les advantage que d'autres Etats membres retirent d'une telle obligation, des négociation.s seront entamrées, souis les auspioews et avec l'aidade 1Crl'rnisaton entree lVEtat môacre _:uét-edo-&'Wte. tats E/PC/T/C.I & II/18 French Page 18 membres lésés, afin d'arriver à un accord sur le fond, aux termes duquel l'rgamisation pourra relever l'Etat membre requérant de l'obligation en question ou de toute autre obligation pertinente déritant ce la Charte, sous réserve des limites que l'Organisation sera autoarsée à fixer* (c) Si, en conséquence des enqu*tes menées conforméent au paragrae t'er, 1'Organisation entérine une mesure, autre que celles visées au para. phe 2, : qui serait incompatible avec une obligation dérivant de la prêsen Charte, l'Organisation pourra., à sa discrétion, relever l'Etat membre re rant de l'obligation en question, sous réserve des lim4tes que lOrgaxis tion sera autorisée à fixer. E/PC/T/C.I & II/18 French Page 19 PROJECT DE RESOLUTION A.ADRESSER AU CONSEIL ECONOMIQUE ET SOCIAL Sour.s par le Comité de Eédaction à i'exaien. de la Cammission Liixte La Commission préparatoire décide d'ir.viter le Conseil Econcrique et Social ) à tenir cc=nte &cs racs d_ sa Ccission lvtixte, figurant aux paragmaphes 17 à 21 dcQ son Rapport, lorsqu'il étudiera la répartition des f'nctions ayant trait aux mesures internationales à prendre pour favcriser la mise er vanlcur écoric&;aue et 2) à 'aire connaitre à la Commissicrn Prparatoire si le paragra- phe 3 de l'article 2, fizur-nt pour le mcIcnt à titre provisoire dans le project _e Charte, est conform aux vues du Corseil Eccnmique et Social sur la répartitiorn juicieuse des fonctions ayant trait à la mise enr valeur éconcinique. E/PC/T/C. I & II/18 French Page 20 PROJET LA MESSAGE A LA IIe COMMISSION En s 'inspira-nt des recommandations que la Commission mixte se propos. de faire à la Co.=issicn Fricratoire _u sujet du dévteloppenent industri et écono..i.que général ..l Cc. i5sicn :'.ixte prie la. 2e Commission d'intrc- dui-re d.z-ns l'^rticle 18, au ch itre t:raitant de la politique co:rerciale, une disposition dest..n6e à ssurc-r que, en ce qui concern l'engaogenent d* réduire les droits de dou-e et dVabolir les pr féérencez tarifrires à 1' i porta.tion, l'Organisaticn et les autres Etats membres tiennent compte, en examinant la mesure dans lauelle un Etat me.-ebre peut réduire les droits de douane, du nontant des droits wppliqués par cet Etc.t, et du besoin éventuel qu'il éprouve d'utiliser des ,esures de prot.etion en vue de favoriser acm développement ind=ibriel et son développenent éccncuique gé- néræl. La Commission mixte demande égalnent qu'à l'article 20 une dispositl soit prise relativement à Lr Cituation. d'un Etat r.e-br_ qui prévoit, CooE* consequence à ses pl_.ns de eléveloppen.ent 6u de rcconstracti'on in&:striels, que l'ensemble de ses re sources Donétairos internationales seront insuf- fisantes poar financer des .portations en biens de capital-dont il a besc a moins qu'il n'applique des r &le:àentaticns à certaines categories de .prc duits de consommation.

GATT Library

qz364dz7087

Relations of the Preparatory Committee with the World Federation of Trade Unions : (Note by the Secretariat)

United Nations Economic and Social Council, November 21, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

21/11/1946

official documents

E/PC/T/DEL/13 and E/PC/T/DEL/1-17

https://exhibits.stanford.edu/gatt/catalog/qz364dz7087

qz364dz7087_90210093.xml

GATT_157

United Nations Nations Unies RESTRICTED ECONOMIC CONSEIL LONDON AND ECONOMIQUE 21 November 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT RELATIONS OF THE PREPARATORY COMMITTEE WITH THE WORLD FEDERATION OF TRADE UNIONS (Note by the Secretariat) The Heads of Delegations will recall that under Rule 46 of the Rules of Procedure it is provided that the Committees of the Preparatory Committee "may consult with the World Federation of Trade Unions, the International Co-operative Alliance, the American Federation of Labour, and the International Chamber of Commerce, either directly or through committees established for the purpose. Such consultations may be arranged on the invitation of the working committee or on the request of the Organization." Both the World Federation of Trade Unions and the International Chamber of Commerce requested opportunities for consultations with the working Committees of the Preparatory Committee, and in reply were invited to submit their views in writing, when consideration would be given to arrangements for further consultation with these Organizations. The International Chamber of Commerce replied to this invitation by submitting their views on a number of matters under discussion in the Working Committees, and they have been afforded an opportunity for consultation with the principal Committees or with the chairmen and secretaries and certain leading members of the committees. The International Chamber of Commerce have indicated to the Executive Secretary that they are satisfied with the arrangements for consultation which have been made so far. The World Federation of Trade Unions at first delayed any reply to the invitation from the working committees, except to LONDON E/PC/T/DEL/13 Page 2 send to the Executive Secretary a copy of a communication addressed by the Federation to the Secretary-General of the United Nations, informing him that the arrangements suggested by the Preparatory Committee were inadequate to allow of effective collaboration with the Federation. The Federation felt that the arrangements fell short of the spirit of the decisions of the Economic and Social Council in this matter, and requested the Secretary-General to consider possibilities for improving the postion. Subsequently the Federation submitted in a statement to Committee II a number of questions relating to the work of the Preparatory Committee, and pressed for an early reply. The Executive Secretary, in reply to these representations, wrote to the Federation in terms of the letter attached as Appendix I. Further communications from the WFTU are attached as Appendix II. Heads of Delegations are invited to consider: 1. What further reply 3hould be returned to the WFTU regarding the questions addressed by the Federation to the Preparatory Committee. In this connection it is suggested that delegations might submit their views on the WFTU's questions to the Executive Secretary, with instructions to communicate them to the WFTU together with a renewal of the invitation to pursue the discussions atthe Second Session of the Preparatory Committee. 2. What reply should be returned to the request by the WFTU for permission to address the committee in Plenary Session. In this connection, if the WFTU are invited to address the committee then it will clearly be desirable to send a similar invitation to the International Chamber of Commerce. LONDON E/PC/T/DEL/13 Page 3 APPENDIX I Church House, Dean's Yard, Westminster, S.W.1. 19 November 1946 Dear Monsieur Duret, As your enquiry concerns the work cf several of the Working Committees of the Preparatory Committee, Dr. Coombs has passed me your letter of 18 November. I understand that you are anxious to have an early reply to the points raised in your statement made on 15 November to Committee II. As the questions you have raised are of a far reaching character and require careful consideration by several of the Working Committees in relation to the extended discussions which they have already had, I am wondering whether the best procedure would not be to envisage further detailed consultations when the Preparatory Committee reconvenes at a second session which is planned to be held in Geneva, beginning 8 April 1947. The interval would give you an opportunity of further consideration of these important matters, in the light of the interim report which the Preparatory Committee will be publishing at the conclusion of the present session. I should also be happy to try to arrange for further discussions during the present session between representatives of the Federation and the Chairmen and some members of thé various Working Committees. Please let me know if these arrangements are acceptable to you. I would add that the suggestions I have made in the first paragraph of this letter are dictated by the desire that the consultations with your Organization should be as thorough as possible, and therefore, not unduly hurried, as might necessarily be the case in the concluding stages of the current session of the Committee. Yours faithfully, (Signed) E. WYNDHAM WHITE Executive Secretary Monsieur Jean Duret, Representative of the World Federation of Trade Unions. Alexa Hotel, 71-73, Lexham Gardens, W.8. LONDON E/PC/T/DEL/1 3 Page 4 APPENDIX II November 20th 1946 Dear Mr. Wyndham-White, I have received your letter of the 19th November and I am very grateful for the efforts you have made to assist me in my work at this Conference. However, with regard to the questions I submitted on behalf of the World Federation of Trade Unions, I should have preferred to hear the replies at a plenary session of Committee II, whose terms of reference cover most of these questions. I should indeed have been very pleased to hear the delegates of the many nations represented at the Conferencè give their opinion on the questions submitted by the W.F.T.U. which includes the trade union organizations of their respect- ive countries, even if the replies given you could not be con- sidered as complete and final. I am confident that you will do all you can to enable me to carry out the task with which I have been entrusted by the W.F.T.U. I am, Sir, etc. Jean Duret. LONDON E/PC/T/DEL/13 Page 5 November 20th 1946 Monsieur Julio A. Lacarte, Deputy Executive Secretary. Dear Monsieur Lacarte, I am instructed by the World Federation of Trade Unions to make a speech in a plenary session explaining the Federation's attitude to the main points discussed at the Conference. I shall be most grateful for any assistance you can give me in the carrying out of my instructions. I am, Sir, etc. Sgd. J. Duret Representative of the World Federation of Trade Unions at the Preparatory Committee of the International Con- ference on Trade and Employment.

GATT Library

jc502vj6999

Report of Ad Hoc Sub-Committee

United Nations Economic and Social Council, October 30, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V: Administration and Organization

30/10/1946

official documents

E/PC/T/C.V/8 and E/PC/T/C.V/1-18/CORR.1

https://exhibits.stanford.edu/gatt/catalog/jc502vj6999

jc502vj6999_90220102.xml

GATT_157

United Nations Nations Unies RESTRICTED ECONOMIC CONSEIL LONDON AND ECONOMIQUE E/PC/T/C.V/8 AND ECONOMIQUE 30 October 1946 SOCLAL COUNCIL ET SOCIAL ORIGNAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMITTEE V ADMINISTRATION AND ORGANIZATION REPORT OF AD HOC SUB-COMMITTEE The Sub-Committee appointed by Committee V at its last meeting met from 4 p.m. to 6 p.m. on 29 October 1946, and considered the various suggestions put forward in the course of the Committee's discussion at its second and third meetings. The Sub-Committee agreed unanimously that the following amendments to the text of Articles 67, 68, 69, 70, 71 and 77 of the United States Draft Charter should be recommended to Committee V for its approval: Article 67 That this Article be amended to read as follows: 1. "The Secretariat shall consist of a Director-General and such staff as may be required". 2. "The Director-General shall have authority to appoint such Deputy Directors-General as he deems necessary. Such appointments shall be made in accordance with regulations approved by the Conference". Article 68 Paragraph 1, fourth line: That the words "He shall be eligible for re-appointment" be deleted. Paragraph 2: That the first sentence be amended to read as follows: LONDON E/PC/T/C. V/8 Page 2 "The Director-General or a deputy designated by him shall participate without the right to vote, in all meetings of the Conference, of the Executive Board and of Commissions and Committees of the Organization". Article 69 Paragraph 1: That paragraph 1 as amended be incorporated in Article 67. Paragraph 2: That paragraph 2 be deleted but without prejudice to subsequent reconsideration at such time as the character, composition and functions of the proposed Commissions have been more clearly determined. Article 70 Paragraph 1, first sentence: That the following words be added to the end of the first sentence after the word "service": "In accordance with regulations approved by the Conference." Paragraph 1, second sentence: That the following words be added to the end of the second sentence after the word "integrity": "due regard being paid to the importance of recruiting the staff on as wide a geographical basis as possible." ~~rps bai asps Article 71 Paragraph 2, first sentence: - That the words "with particular reference to the importance of food and agriculture in relation to the subjects dealt with in Chapter 6" be deleted i it rene;,to isa aen&t, itwas agreed that the United States e rion o diin the pcorporating elsehere in the raft Chartrer anzappropiate reference:to the special importance of ccul ord and a iei lation toc cmmodity arrangements. Article 72 Fourth line: That the words "These persons may be appointed without regard to their nationality" be deleted. Article 77 Title: That the title of this Article be amended to read "Payment of Contributions." Second sentence: That the second sentence be deleted and the following substituted therefor: "A Member of the Organization which is in arrears in the payment of its financial contributions to the Organization shall have no vote in the Conference if the amount of its arrears equals or exceeds the amount of the contributions due from it for the preceding two full years. The Conference may, nevertheless, permit such a member to vote if it is satisfied that the failure to pay is due to conditions beyond the control of the member". The Sub-Committee further recommends that paragraphs 1, 3, and 4 of Article 71 together with Article 73 and Article 74 of the United States Draft Charter be approved without change. In view of the somewhat temporary nature of paragraph 2 of Article 70 and paragraph 1 of Article 71, the Sub-Committee considered the possibility of these provisions being combined in a special Chapter. It was agreed, however, that this rnatter might best be left to the Drafting Committee which it is understood will probably be set up by the Preparatory Committee to function during the interim period. LONDON E/PC/T/C.V/8 Page 4 It was also areed that the Report of the Preparatory Committee to the Economic and Social Council should stress the importance of the closest possible relationship being speedily developed between the International Trade Orgnization and the United Nations. (signed) . D. Y. DAO Chairman, Sub-Committee.

GATT Library

pf704cq8266

Report of Committee I

United Nations Economic and Social Council, November 19, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

19/11/1946

official documents

E/PC/T/16 and E/PC/T/W.14-E/PC/T/17

https://exhibits.stanford.edu/gatt/catalog/pf704cq8266

pf704cq8266_92290024.xml

GATT_157

United Nations Nations Unites £tW& lYa U&t. <II& LONDON iCONOMLC E/PC/T/16 19 November 1946 AND M AECOENOlIQUE ORIGINL: NGLISH SOCIAL COUNE- I ET SOC[AL ~~~~ PREERPAALTRAY .CbiERECIE OFTH INTRN^TIOn CONMENCE ON TRE ND EWLOYMNT REPORT OF COOÎsIITT GEMENTL NARRPTIVE STÀTME}T 1. The main Oommittee has helAt four meetings. â the first and secord.metinigs there was a general discussion of the issues involved and the Committee decided to divide its work into-,he two foflloing parts: (a) Internationa2 agreement relating to the achievement and maaintenance of high and steadily rising levels of effective demand, employment and economic activity. (i) General undertakings. of neinbers. (ii) Recourse in case a member is damaged by failure of another member to fuifil undertakings. (iii) Consultation and exchange of information. (iv).- ,.ssignment of functions. (b) International agreement rllating to industriaJ development. 2. By a previous decision of the Preparatory Committee industrial development was to be considered jointly by Committees I and II. The joina committee which was accordinrey set up. has cove: d item 2 of Ahe aboommigenda. * Sub-Cmnmittee consisting of Delegates il, C=L^s>tra.Ja.-B=z'i CubaK India, the United Xingdom and the . : rr: LONDON E/P/T/16 Page 2 United States, was appointed to work out a detailed agenda includ- ing all the proposals hitherto raised in connection with item 1 of the above agenda, and to prepare a synopsis of these proposals. 3. The Sub-Committee had before it the passages dealing with employment in the United States "Proposals for Consideration by an International Conference on Trade and Employment" and "Suggested Draft of a Charter for an International Trade Organization of the United Nations", as well as papers by the Delegations of Australia, Belgium, Brazil, Cuba, India, the Netherlands and the United Xingdom, and by the Polish Observer. ,4. The Sub-Committee held four meetings. It started to prepare a synopsis of the various proposals, but found that it was able to collate all the various texts into a single draft on which all the members of the Sub-Coiumittee *.ere prepared te express their tenta- tive agreement a5 a ba3is for discussion by the main Cozmittee. 5. . ât its third rieetin,. zho main Càmmittee considered the report of che Sub-Co.mittce mia made a fevi amendments te the draft Clauses ànd the dzaf t resolution on employment, which the Sub- Com5ittee had, prepared l'or it. t its fourth and final meeting *'he mai.n Committce adopted it-. final report, which is now presented for 'the consideration of the Preparatory Committee. LONDON E/PC/T/16 page 3 PART II d. 1E, RELATION O EZLOYLMNT TO THE PURPOSES OF THEORGANIZA.TION 1. In crder to maintain international trade at high and stable level, * t is necesary to maintain a high and stable .level of demand for goods and services throv;hout the world as well as to aohieve a reduction in trade barriers. At the same time lull and productive employment and - the' maintenance of high and stable levels of effective demand cannot make their maximum contributions to raising standards ol living without the reduction of harml tràde barriers. 2. It is a zlain purpose of the United Nations, recognised in article 55 of. thc Charter of that Organization, to promote "higher standards of living, full employment, and conditions of economic and social progress and de\ -.opmeret". Some discussion took place as to the meaning to be attached to the phrase "full emplcyment". In the less industrialized oountri:s whose economies are more essentially based on primzary production. a deficient demand shows itsci± not so ruch in mass unemployment (the common form in industrialized countries,) as in under- employment or unprofitable employment among their primy producers. Pcr this reason the main objectives of employnent policy were defined to include the -avoidance of under-emplcyment as wcJ11 as of uemrpoicymnt. 3.. :It was alse pointed out that if the phrase "full empley.n±" wre to be îiterpreted -in. the literal sense, nazely th'-t no one able *nd wdil.±ng te worlc should ever be unempioyed -for however short a period , -governenta mieht be held te obe oommitted to types of action which they w`uld net .-in fact be prepared to carry outj It should, of course, be -opèn to any government to idcpt as strict an intérpretation as it :desfreJp but for the present purpose it seemed appropriate to interpret 'full employment" as a condition in which useful erployment opportunities are available te aIl those able nnd willing to work. It is the maintenance of such a condition and of the high and stable leve. of LONDON E/SC/T/16 Page 4 demand associated with it wbrich is of real concern from the inter- national point of vievwr. - '. TEE X,'UNTMZNC:E OF DOMETIC EMILOYY Theae whs general agreement.that. governments owe a responsibility not only to theïrown citizens but 4eso to the citizens of other countries to do all that is within theïr power to. maintain full and productive eeplQy1uent and h±gh anl& stable levels of eniard within their:own territories4 i decline of demand in an important country, by reducing its imports from'.otlier countries or by causing a burdensome BUXrIlus in worla rarkets of' commodities, which . it wp.s previously prod&icing for its own consumption, is'liable tc lead to the spread of une zloyment cr uicler.employment outside its borders.; Por this reason, governments should agree to take action designed. to achieve and maintain eill and productive em'Ilyment of their doomestio labour and high arnd stable levels bf effectivee abnestic demand. The type of measure .wh ir:ght be takeen fcr'this' purpose.should, of course, be left to the individual decisions of the, g0vernrnei concerned., whioh must be free to choose the measures which are appropriate to their own domestic institutions. This choice should be unfettered., although, of course, it is recognized that the measures chosen should be copatlb2ble with .he other. purposes .and provisions of the Interatioal Trade i-gar.:zat' . -. C« : ; :vEMvMOBNT O? DOETIC MSO!JPcM I mC CTIVIWY .' * e .toynt' of labour in amr country is not the sole. conditions wbioh, l addition to father factors such as -tie level of --frade barriers, deterndiie the level .o?_effective demand on the :part. of tchat country for the pro~cIts aof other. co uritres. . c ountry, ;wich fails. to &evelop its resources effectively, or which fails to-akce every. opportunity to raise the productivityy of its labour, .will, in effeot, LONDON E/PC/T/16 Page 5 be failing to expand to the maximum its effective demand for goods and services. Accordingly all governments should recognize that they have a ccmmron interest in the productive use of the worlds resources, and should agree to take action designed progressively to develop their economic resources and to raise their standards of productivity. Here again the choice of measures should be left to the government of each individual country, provided that the measures chosen are compatible with the other purposes and provisions of the Intefnational Trade Crganization. D. F;JR IJBOJR ST;DMiS 1. If full employnent is to make its due contribution to the higher standards of living and conditions of economic -and social progress to which Article 55 of the Charter of the United Nations refers, it is necessary that a fair share of the product should accrue to the worker. All countries have a common interest in the maintenance of such fair labour standards, particularly in the case of production for export, since otherwise one country's products may be undercut by those-of another in which labour is unfairly exploited.- Labour standards cannot, of course, be uniform in all countries, but must be related to national productivity. But there was wide support for the view that governments should agree to take whatever action may be appropriate and feasible to eliminate sub-standard conditions- f labour in theseproduction for export and generally throughout their economies. 2. A few delegations expressed some doubt whether an agreement on this subject should be included in these employment provisions. These doubts were based on two grounds: (a) It would be wrong to attempt to set toc high a standard in certain countries, since this would seriously handicap the expansion of production în those countries which, having LONDON E/PC/T/16 Page 6 plentiftlauppli4B of-labour but -relatîvely little capital equipment or industrial. skïll must fer a tiime base theixï development on lower remuneration that than iu morse developed countries. (b) Since the International Labour Organization is the zpec±alïzed agency which has been specifically charged witl tlvc pio.?lemn it would lead tbo a duplication of uünctiorns *o ;.cJ.ds au agreement ôn this subject in the Charte: of the proposed ii:er.tional Trade Organization; 3. On poînt (a) it was generally agreed tkiat, i à ai agreemezne on labour conditions is included in the employment rovs.ons.it rust be made'olear that there cannot be any sinZ! e rr ,r'aïard of fair labour conditions appropriate to all.countr-ies, but that the standard must in eaci case be related to the pro&Jot-ty cf the country conperned. 4 On point (b) it was generally agreed. that t^;rnr.in vwok on this queseSin should continue to be carried out by the Diteriiatiolal. Labour Srganîzation, and that, if any agreement on this subject is included in the Charter o! the International Trade Organizaticn, those countries, which are also members of the International La.bour Crgan.ations should co-cperate closely with that Organization in carryirg G':t the agreement. The reason for proposing that tome agreement on this subject should> nevertheless# be included is that labour standards in any cc-.umtrwy and in partibular in its production for export, are a .matter which vitally affect the employment of labour and thc . lovi o? international trade. E. HM:ViiL OF ML USTMTS IN T BNC2 0F RIETS 1. . country, even though it is maintaining fe eloyment at homey .is.deveelapîng its economic resources an. raising its standard of LONDON E/PC/T/16 Page 7 productivity, and is maintainin; fair labour standards, may, nevertheless, exercise a deflationary pressure upon other countries. This will be se if it is persistently buying from abroad and investing abrcad too little in relation to its exports.. Indeed its export surplus ray be the means -hereby it is maintaining its own domestic employment. 2. It vrac not suggested that countries which are experiencing difficulties through unfavourable balances of payyments ray not themselves be partly responsible for the maladjustients. For example, countries with adverse balances of payments, whose difficulties are being intensified by flight of capital from theïr currencies, might properly be called u-pon tc put a stop to such capital export. But insofar as. the pressure on their balances of payr-ents is due te the failure of countries vith excessively favourable balances of payments te spend theïr external purchasing pcver on irtorts or to utilize it fer pro&uctive investment abroad, the main responsibilit:' for the necessary re-adjust- mehi should nrt fali on the countries v.hich are under pressure. 3. There was %,ide support for the vievi that where fundamental diseqùilibrium in a country's balance et payments involved ether countries in persistent balance of payment difficulties, which affected adversely the maintenance of employment in those countries, the ccuntry concerned should make full. contribution ta action designed te correct the maladjustment. The particular measures that should be adopted (e.g. the stimulation of imp.orts.or the removal of special encouragements te exports, an appreciation of the count-y's exchange rate, an upward- revision of its- internal price and cost 'structure, an increase in foreign investment, etc.) should, of course, be ieft te the government concerned te determine,. The problem here lies in a sphere in which the International idnetary Fund. has a very special concern, and it is most uesirablé that in this field. both the national Governnents concerned ana the International Trade Crganization should co-eperate fully with the Fund. E/PC/T/16 Page 8 P. SAFEGUARDS FOR COUNTRIES SUBJECT TO EXTERNAL DEFLATIONARY PRESSURE 1. After further consideration of the position of countries whose economies are subjected to deflationary-pressure as a result .of a serious or abrupt decline in the effective demand of other countries, it was generally agreed that there must be adequate safeguards to Ieet this contingency. 2. In this connection it was noted that the Articles of agreementt of the International. Monetary Pund contain, for Moebe:s of -thp Eund, some important safeguards: (a) Thé provisions relating to exchange control permit the control of, capital exports 9o that nc country suffering from an external deflationary pressure need find. its troubles inteni4fied! by flight of capital f.rom its currency. (b) *, country vwhich finds itself in a "fundamental disequilibriumn" as a result of the maintenance of its oin domestic prices, costs and incomes in conditions of external def'latioxi, can apply for an appropriate.,depreciation of the exchange value aof its currency and stch a depreciation zculd not be frustrated by competitive depreciation on the part of other Members cf the FPnd which are not in a similar "fundamental disequilibrium". In this regard lt was noted that the Executive Directers cf the International Monetary Pund have'interpreted the .:rticles of àAgreement of the Pund to mean "that steps which are necessary to protect a Member from unemployment of a chronic or persistent character, arising from pressure on its balance of payments, are among the measures necessary to correct a fundamental disequilibrium."' (c) If a country or group of countries has so large an export surplus that its ?rewy becomes "scarce" in the Fund, other countries would permitted to restrict their purchases from Lt to the necessary degree without restricting their purchases from each other. LONDON E/PC/T/16 Page 9 3. The Articles of agreement of the International Trade Organization should also contain adequate safeguards. It was in any case proposed that countries in balance of payments difficulties should be permitted to inposé quantitàtivè restrictions on their imports, and it was recognized this would ccnstitute an important safeguard of the type in question. The examination. in &etaij of this or the other various safeguards, whidh might be contained in the other àrtioles of the International Trade Organization, was not considered to be the task ofCo~mmittee I. It is suggested&that., when such safeguards come under discussion, ail relevant parts of the constitution of the.proposed International Trade Crganization should be carefully examined.to ensure that there are adequate satoguards ?or a country subjected to pressure as the result of a decline in the effective demand of other countries. 4.- It was generally felt that the clauses relating directly te employment should give general recognition to this need for adequate safeguards by requiring the.International Trade Organization to have regard, in the exercise of its functions as defined in the other articless of the Trade Organization, te the need c,2 countries tG take action, within the provisions of the International Trade Organization, te safeguard their economies against deflationary pressure in the event of a serious or abrupt decline in the effective demand of other countries G. INTENATIONiàL OCTION TO MLINVMTiN EXMLOYIENT 1L In present circumstances the.direct action necessary to maintain full and productive employment and a high and stable level of effective demand must, in the main, be the SuMn of individual national efforts. Nevertheless there are certain ways Là -which the ajpropr:iate inter- governmental specialized agencies might, acting within their respective spheres and consistently with the terms of their basic instruments, make some direct o-zntribution to the maintenance of emoioyment and the * stability o? world demand. LONDON E/PC/T/16 Page 10 2. It was considered that the Economic and Social Council, in consultation with the appropriate inter-governmental specialized agencies, might usefully study the possibilities in this field. In addition to a consideration of the effects on employment and production of a lowering of barriers to trade, such studies might well cover such measure as the synchronization of credit policies so as to ease terms of borrowing over a wide area in times of general deflationary pressure, arrangements to promote stability in the incomes, and so in the buying power, of producers of primary products, the timing of expenditure on international capital projects and the encouragement of a flow of capital in periods of world deflationary pressure to those countries whose balance of payments needs tempcrary support in crder to enable them to maintain their domestic policies for full and ptcductive. er.mloyment. H. Tie FUNCTIONS 0F THE ECONOISC -JD SOCLL COUNCIL ,m TXE SEECLZIZED .-GENCIES 1. The international' structure which ray be necessary to achieve these employment objectives was considered. Effective action in this sphere will.involve separate action by.governments and by a number of inter-governnental specialized agencies.. yet such' action =ust be properly ccncerted if the national and international measures for offsetting a general depression are to be properly timed and of the right magnitude.. 2. There should, aocordingly, be some international body under whose sponsorship governments and inter-governmental rpecialized agencies can aonsult with a view to concerted action to maintain employment, and the appropriate body fcr this purpose would seem to be t.he Economic and Social Council of the United Nations, together with its Economia and Employment Commission and its Sub-Commissions, to whom this task has already been entrusted. LONDON E/PC/T/16 Page 11 3. The functions, which, it was thought, the Economic and Social Council should either perform itself or sponsor through arrangements with the appropriate inter-governmental specialized agencies, cover (i) the rogular collection, analysis and exchange of relevant information; and (ii) the organization of consultation with a view to concerted national and international action in the field of employment. In addition to these continuing functions, it was considered the Economic and Social Council should initiate those studies of possible direct international action for the rMaintenance of employment to which reference has been made in Section G., paragraph 2 above. 4. The work, which it is suggested, the Economic and Social Council and the inter-governmental specialized agencies concerned undertake on this subject will be of great importance. The information which is to be collected should, as far as possible, cover the. level and composition of the national incomee and expenditure and of the balance of payments, as well as statistics of employment, 'unemployment, production, etc . s far as is appropriate and practicable, it should cover future programmes and probable future trends in order thgt the needs of employment policy may be intelligently anticipated. Close and regular consUltation for concerted action by governments and inter-.gcvernmental specialized agencies will be necessary in orcer to see how far national policies (e. g. for expenditure on public works) or axy relevant international policies can be timed so as to make their most effective joint contribution to the maintenance of world demand. I. THE FORM OF THE EMPLOYMENT PROVISIONS 1. The suggestion that the Economic and Social Council should continue to fulfil these general functions in employment policy need LONDON E/PC/T/16 Page 12 not conflict with the special link that should exist between employment and trade. Governments may find it difficult to assume the commercial obligations of the proposed Internationia Trade Organization in the absence of undertakings by others to do their best to maintain a high and stable level of effective demand and employment policies must not conflict with commercial obligations. It is necessary for these reasons to link the trade obligations and the employment obligations closely together. For this reason it is considered it would probably be mcst arpropriate to include the emnloyment-wd.ertakings in the Charter .-ohe t tdcna.2.radvtOrganization. 2, There is. licviever, one pointooncarning employment vrhich should probably be trentea differently aIn Section G. paragraph 2 above, it was suggested that the Economic and Social Council and the anrrarriate inter-gc-erzriental srecialied agencies should be invited by the International Conference on Trade and Employi.ent to consider what action might be tak-en in the international field to assist in maintairning ful-. and productive employment and a high and stable level of world derrand, It is thought that this invitation might best be extended in a separate resolution. 4. draft of this resolution fcr the consideration of the International Conference on Trade and Enmloyment is set cut in the next paragraph. 3. Text of Draft Resclution on International Action Relatinz to Emrleyzent.* THE PREPi2âTORY COIQ..TÉ:EV OF THE !NESNATION.,L CONzERENC ON TR5AE AIM EMELOYIMT CON5IDERIM TEHT a significant contribution can be maclde to the achievement and maintenance of full and productive employment and of ,high and stable levels of effective demand by international action sponsored. Dy the Economic and Social Ceuncil and carried cut in wl-3- LONDON E/PC/T/16 page 13 agencies acting within their respective spheres and consistently with the terms and purposes of their basic instruments HEREBY ASKS the Economic and Social Council to undertake at an early date, in consultation with the appropriate inter-governmental specialized agencies, special studies of the form which such international action might take AND SUGGESTS that in addition to covering the effects on employment and production of a lowering of barriers to trade, the studies of the Economic and Social Council should.include a consideration of such measures as: 1. The concerted timing, to the extent which may be appropriate and practicable ih the interests of employment policy, of national and international measures to influence credit conditions and the terms of borrowing; 2, National or international arrangements, in suitable cases, to promote due stability in the incomes cf producers of primary products, having regard equally to the interests of consuming and producing countries; 3. The timing, to the extent which may be appropriate and practicable in the interests of employment policy, of capital expenditure on projects which are either of an international character or are internationally financed; 4. The promotion, under appropriate safeguards, of an international flow of capital in periods of world deflationary pressure to these countries whose balance of payments needs temporary support in order to enable them to maintain domestic policies for full and productive employment. LONDON E/PC/T/16 Page 14 APPENDIX TEXT OF SUGGESTED CHAPTER ON EMPLOYMENT Article A Relation of Employment to Purposes of Organization. 1. Members recognize that the avoidance of unemployment or under employment through the achievement and maintenance in each country of useful employment opportunities for those able and willing to work and of high and steadily rising effective demand for goods and services is not of domestic concern alone, but is.a necessary condition for the expansion of international trade and, in general, for the realization of the purposes of the organizaticra They also recognize that measures to sustain deinand and ermployment should be consistent with the other purposes and provisions of the organization, and that in the choice of such measures, each country shculd seek to avcid creating balance of payments difficulties for other countries 2, They agrec that, while the achievement and maintenance of effective demand and employment must depend. primarily on domestic measures, such measures should be assisted by the regular exchange of information anci views among members and, so far aé possible, be suppleim.ented by international action sponsored by. the Economic and Sociaal Council of the United Natiàns and carried out in collaboration wit-h the appropriate international specializes agencies, acting within their respective spheres and consistentlyy with the terms and purposes of their basic *instruments. Article B The Maintenance of Domestic Employment Each member shall take action designed to achieve and maintain full and productive employment and high and stable levels of effective demand within its own jurisdiction through measures appropriate to LONDON E/PC/T/16 Page 15 its political and economic institutions and compatible with the other purposes of the organization. Article C The Development of Domestic Resources and Productivity Bach' member, recognizing that all countries have a common interest in the productive use of the world's resources, agrees to take action designed progressively to develop economic resources and. to raise standards af productivity within its jurisdiction through measures compatible with the other purposes of the organization. article D Pair Labour Standards Bach merrber, recognizing that ail countries have a cc.mon interest in the maintenance of lair labour standards, related to national productivity, agrees to take whatever action may be appropriate and feasible to eliminate sub-standard conditions cf latucr in.production for export and generally throuEhout its jurisdiction. l.rticle E The Removal of Maladjust.ents in the Balance of payments Bach member agrees that, in case cf a fundamental disequilibrîum in its balance of payments involving other ccuntries ;n persistent balance of payments difficulties. which handicap them in maintaining employment, it will make its fhll contribution tc action designed to correct the maladjustment. Article . Safeguards for countries subject to External Dèflationary Pressure The Organization shal bhavsé reard, in the exercise of its functions as detineci in the othériartioles of this Charter, to the neea o members to take action within the provisions of the International Trade Organization to safeguard their economies against deflationary pressure in the event of a serious or abrupt decline in the effective demand of other countries. LONDON E/PC/T/16 Page 16 Article G. Consultation and Exchange of Information on Matters Relating to Employment Members agree to participate in arrangements undertaken or sponsored by the Economic and Social Council of the United Nations, including arrangements with the appropriate inter-goverrnmental specialized agencies (a) for the regular collection, analysis and exchange of information on domestic employment problems, trends and policies, including as far as possible information relating to-national income, demand, and the balance of payments; and, (b) for consultation with a view to concerted action on the part of governments and inter-governmental specialized agencies in the field of employment policies.

GATT Library

cs004yp1286

Report of Committee II. General Commercial Policy (Restrictions, Regulations and Discriminations)

United Nations Economic and Social Council, November 24, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

24/11/1946

official documents

E/PC/T/30 and E/PC/T/30

https://exhibits.stanford.edu/gatt/catalog/cs004yp1286

cs004yp1286_92290034.xml

GATT_157

United Nations Nations Unies ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL LONDON E/PC/T/30 24 November 1946 ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT REPORT OF COMMITTEE II GENERAL COMMERCIAL POLICY (RESTRICTIONS, REGULATIONS AND DISCRIMINATIONS) 'I . LONDON E/PC/T/30 P RT I Page 2 PART I INTRODUCTION 1. At its third executive session on 16 October 1946, the preparatory Committee established a Committee to deal with general commercial polioy (restrictions, regulations and discriminations), At its first meeting, this Committee, known as Committee II, elected Dr. H C. Coombs (Australia) as Chairman and Dr. . B. Speekenbrink (Netherlands) as Vice Chairman, 2. The Commttee adopted a provisional agenda, corresponding to the subheadings under Chapter IV of the Charter for an International Trade Organization suggested by the Government of the United States. The items of this agenda were first discussed in the main Committee, and in most cases subsequently referred to Sub-Committees which were requested to report, their findings to the main Committee. The question concerning the relations with non-members, however, was dealt with in a different manner (see paragraph 13). In all, the main Committee held thirteen meetings, of which eight were devoted chiefly to the organisation of its work and initial discussion of the various items on the above-mentioned agenda, one to consultation with the International Chamber of Commerce and. the World Federation of Trade Unions, and four to consideration of the reports submitted by the Sub-Committees. 3. As has been pointed out in the report of Committee I, a Joint Committee of Committees I and II was set up to consider the question of international agreement relating to industrial development, 4. One of the Sub-Committees referred to above, namely, the Technioal Sub-Commîttee, included delegates for all the countries represented on the Preparatory Oommittee. The questions referred to this Sub-Committee were discussed in full at its meetings. The LONDON E/PC/T/30 PART I Page 3 Sub-Committee attempted to reconcile differences of view; and insofar as this was not possible, the views of the countries concerned were recorded. 5. The other Sub-Committees were draftinrg Ccmmittees with limited representation. The items.on the agenda referred to them were previcusly discussed in detail in the main Committee, and the function of the Sub-Committees was to suggest provisions which, in view of the comments or proposals made, might prove acceptable to the Preparatory Comrnittee, or alternative provisions to be considered by that Committee, 6. Information concerning the questions referred to the various Sub-Committees and the arrangements they made for their work is given below. 7. The Sub-Committee on Procedure was originally set up to deal with questions related to the procedure to be followed by the Preparatory Committee in connection with the negotiations proposed, in article 18 of the United States Draft Charter. This Sub-Committee .was also charged with questions connected with: General most-favoured-nation treatment Tariffs and tariff preferences Emergency provisions, consultation, nullification of impairment Territorial application, The Sub-Committee was composed of delegates for Canada, Chile, Cuba, Fance, India, the United Kingdom and the United States; in addition, the delegate for Brazil participated in its work. It held fifteen meetings under-the chairmanship of Mr. Speekenbrink (Netherlands). Mr. Leddy; (United States) functioned as Rapporteur. 8. The Technical Sub-Committee dealt with the following questions: General Commercial Provisions: National .Treatment on Internal Taxation and Regulation freedom of Transit Anti-dumping and Countervailing Duties, Tariff Valuation LONDON PART I Page 4. Customs. Formalities Marks of Origin Publication and Administration of Trade Regulations - - ;Y l Notice to Restrictive Regulations Information, Statistics and Trade Terminology General Exceptions e : (totthc C'hapeer on mnoral Conrmercial Policy) mmittee-Cci=Piinb e mer nnder the uxV1-. ,hhchair ansïop of' Senar VleelaS(Ch delegates lel1oga of different nafunnalitydA'nctione& as Rappohtuursal Teeofinml rcpcrt ofommittee-Caormr'tt wus submitted to tmmimaeeinandrratt 4r1 jpprword as ao*,meing dccur.nt. 9. s. uestionZ relating to quantitative rs tridtionr; ane. exchange centrolewerc. ref'rred to a DraCtimg Sue-oomQitteo cn :uantitative Restandtixchanger E.cI,l.n Controi, Tme Sub-Cnmnidede irclucle doleAates fcr .ustralia, Brazil, France, India, thi gnited K;nZdom and the tnited States; in additeone the rcprasentative of the nal Monetary :paonepartioipatedticipated. in the work. The Sub-. Cenmitteeimrt unxet5the vidirmaei chaL.rmnshHp of Dr. S. C. Coombs (;uMrralea). (M. MeadKingnotcd YiÏlater and i3.at Mr. Gunter (Unitfunctions Ifunc as Pappc.rceurs.P'u, e rx o0. Zulstticns re2aiig to subs dies on primary products were referred to a Jommt Seeb-Crmemmtc ef Conritd es II an5. IV, con isting of' deleAates lia,3Bstra1ii- arazil., C-neda, the N-therlands, the United. Kingdcmnitedthe Uii:te States,w It met tvice under the chaiimanship of Mr. AcCarthy (;ustralihw. Mr. Scneenger (Uritedfunctionedctioned as Rapporteur. 11. Questncer coriccniidieubsc1Xes on manufactured arwicles vere referred to amSub-Conmittee on which were represented delegates of. India, the United Kingdom and the .United States. Thismmub-Connittee met onze ;nf.rmally; LONDON E/PC/T/30 PART I Page 5 12. Questions concerning state trading, were refeerred to a Sub- Committee including delegates for China, Cztechoslovakia, New Zealand, the United Kingdom and the United States. This.Sub-Committee held six meetings under the chairmanship of Mr. Sbaokla (United Kingdom), and Mr. Johnson (New Zealand). .s Rapporteurs' functioned, Mr. Armstrong (United States) and later, Mr. Young (United Kingdom). This Sub-Committee was assisted in its work by a smaller Sub-Committee on marketing boards, comprising delegates for the Netherlands, the Union of South Africa, and the United States of America. The last mentioned Sub-Committee met informally. 13. The delegate for the United Kingdom was entrusted .with the task of reporting to the Committee on the question concerning relations with non-members. 14. When dealing with questions concerning tariffs, tariff preferences and quantitative restrictions, Committee II considered a message received.from the Joint Committee on Industrial Development. Matters concerning preferences in the form. of quotas were considered first by delegates for the countries primarily' concerned - Australia, Canada., New Zealand, the United Kingdom and the United States of America - who met informally and advised the main Committee. 15. The work of the Committee is reviewed in Part II of this report, in which the various items considered are arranged chiefly according to the repartition of work among the Sub-Committees referred to above. 16. The draft texts of the respective Articles of the Charter, as approved by the Committee, are reproduced. in the- Appendix in the order in which the Articles are dealt with in Part Il. For reasons indicated. in Section 2 of Part II, no approved text of the Articles considered by the Technical Sub-Committee is included. .. statement on Multilateral Trade. Agreement Negotiations (Procedures for Giving Effect to Certain Provisions of the Proposed Charter of the International Trade Organization by Means of a General Agreement on Tariffs and Trade Among, the Members of the Preparatory Committee), as approved by Committee II, is given as an Annexure to this report. E/PC/T/30 PART II Section 1 Page 1 PART I1 REVIEW OF WORK SECTION 1 GENERAL MOST-FÂVOURED-NATION TREATMENT TARIFFS AND TARIFF PREFERENCES ETC. Most-favoured-nation treatment (Article 8) * 1. The Committee was in agreement .with the principles: (a) that members of the International TradeOrganization should, grant each other general unconditional most-favoured-nation treatment in respect of' all customs matters, and (b) that existing preferences .which are of long standing and which have important effects on the economies of the countries concerned should be excepted from the most-favoured-nation clause pending their elimination by negotiation pursuant to the provisions of article 18. The Committee compared the most-favoured-nation provisions set forth in the original draft of Article 8 with the standard most-favoured nation clause developed by the League of Nations for inclusion in bilateral agreements. It wias concluded that there are no important differences of substance between the two versions and that the version incorporated in Article 8 is preferable because of its brevity. The most-favoured-nation clause recommended by the Committee incorporates certain concepts (for example "the like product", "country of origin", etc.) which have been customarily included in commercial agreements in the past but which have never received a precise definition. The. Committee was of the opinion that the matter of defining such concepts should be left for study by the International Trade Organization after its establishment. LONDON E/PC/T/30 PART II Section 1 Page 2 2. The principal differences between the original text of Article 8 and that recommended by the Committee, and the- reasons for these differences, are as follows: (a) Public Works contracts - governmental purchases of supplies Under the original draft of paragraph 1 of A.rticle 8 the grant of most-favoured-nation treatment would have extended, to: (i) the awarding of governmental contracts for public works and (ii) the purchase by governments of supplies for governmental use (i.e. not for resale). Under tho revised draft recommended by the Committee these subjects would be removed from the scope of the most-favoured-nation clause. With regard to (i), relating to the awarding of public works contracts, the Committee was of the opinion that this subject is more closely related to the question of the treatment of foreign nationals and corporations than to the treatment of' the trade in goods. It is considered that Chapter IV should be confined to matters affecting trade and that questions relating to the treatment of nationals, etc., should be the subject of future agreements developed under the auspices of the International Trade Organization, as contemplated under para- graph 5 of Article 50 of the Draft Charter. Under this paragraph of Article 50, as well as under article 64, the International Trade Organization could recommend the adoption of special agreements deal- ing with public works contracts. With regard to (ii), relating to governmental purchases of supplies for governmental use, this commitment was removed from the scope of the most-favoured-nation clause in the light of the fact that LONDON PART II Sectior 1 Page 3 a suitable clause dealing with such governmental purchase is recommend- ed for inclusion in .Article 26 (Non-discriminatory Administration of State Trading Enterpris es). In this connection, the Committee gave consideration to the provision in .Article 9 of the Draft Charter for national, as distinct from most-favoured-nation, treatment in respect of governmental purchases of supplies for governmental use. Such a provision would require the elimination of the many "buy-national" laws under which national governments are required to give preference to domestic products in purchasing their administrative supplies. "s it appears to the Committee that an attempt to reach agreement on such a commitment would lead to exceptions almost as broad as the commitment itself", the Committee recommends that this commitment de deleted from Article 9. (b) Temporary exceptions from most-favoured-nation clause Under the original draft of paragraph 2 of article 8, certain long-standing preferences were temporarily excepted from the most-favoured-nation clause (i.e. they were excepted pending their elimination by negotiation under Article 18) provided that they were in effect in either 1939 or 1946 (whichever date resulted in the lower preferences). Also, under t original draft the preferences thus excepted were limited, roughly to imperial or commonwealth preferences and Cuban-American preferences. Under the revised draft of paragraph 2 of article 8 recommended by the Sub-Committee, the preferences excepted excepted from the most-favoured-nation clause would be those remaining after the negotiations contemplated in articlee 18" rather than those in effect on a particular date. Also, the categories of- preferences thus exccepted would be broadened to LONDON E/PC/T/30 PART II Section 1 Page 4 include not only imperial and Cuban-American preferences but also preferences in force between neighboring countries in 1946. The following new paragraph should be added at the end of this page: "One Delegation suggested that Articles 8 and 18 should be inter- preted in such a way that, so long as a preference remained accord- able in one part of a preferential system specified in paragraph of Article 8, that part of the preferential system according the preferences should be at liberty to extend the same, or a lesser measure of preference to any other part of the same preferential system which at present did not enjoy it." The base dates in the original draft of' paragraph 2 of Article 8 would have determined, in a precise way, those preferences to be eliminated under the most-favoured-nation clause and those preferences to be subject to negotiation under Article 18.. Accordingly, the removal of the base dates from this paragraph will require that some other method be found of establishing a basis for negotiations with respect to preferences. Recommendations on this point are included in the report of the Committee.relating to the proposed multilateral trade-agreement negotiations among :members of the Preparatory Committee (see below). Reduction of Tariffs and Elimination of Preferences (Article 18) 1. The Committee was in general agreement with the basic principles that members of the International Trade Organization should enter into reciprocal and mutually advantageous negotiations with each other directed to the substantial reduction of tariffs on imports and exports and to the elimination of import tariff' preferences; that these negotiations should procecd in accordance with certain rules; and that members which unjustifiably fail to fulfil their obligations regarding tariffs and preferences should not be entitled to.receive the benefits resulting from the fulfilment of these obligations by other members. LONDON E /PC/T/30 PART II Section 1 Page5 One delegation, while recognizing that the proposed negotiations are to be conducted on a reciprocal and mutually advantageous basis, and that the obligations undertaken pursuant to such negotiations would be subject to re-adjustment by the International Trade Organization in accordance with. tne principles and procedures set fortn in the Chapter on Economic Development recommended by the Joint Committee on Economic Development, nevertheless questioned the application to countries in the early stages of economic development of the principle set forth above that tariffs should be reduced substantially. Another delegation suggested that the rules governing the negotiations should take, into account the relative levels of the tariffs of each country in the light of the situation of those countries which are in the early stages of industrial development. While suggesting this additional rule, this delegation indicated its willingnese to raise with its government the question whether the principles and procedures recommended by the Joint Committee on Economic Development and referred to in the paragraph above do not adequately meet the requirements intended to be satisfied by the additional rule suggested. 2. Scope of negotiations Under the original draft of paragraph 1 of Article 18 the pro--. posed negotiations would have extended to tariffs on imports and exports and airport tariff preferences. Under the revised draft the scope of the negotiations has been broadened to clearly cover charges on imports and exports other than tariffs, The additional charges in question are intended to mean charges analogous to tariff's; they are not, for example, intended to include non-discriminatory LONDON E/PC/T/30 PART II Section 1 Page 6 internal taxes which are collected at the time of importatior The reference to negotiations regarding state -trading margins, which appeared in the original draft of paragraph 1, has been omitted from the revised draft. It was believed that undurtakings to negotiate with respect to such margins, in the manner provided for in the case of tariffs and preferences, were adequately provided for in the revised draft of Article 27 (Expansion of trade by state monopolies of individual products) which was recommended by Committee II. 3. Rules governing negotiations Certain drafting changes were suggested with regard to the rules governing negotiations set forth in the original draft of paragraph 1: (a) Sub-paragraph (a) as originally drafted provided that "Prior international commitments shall not be permitted to stand in the way of' action with respect to tariff preferences". In the light of the discussions within the Committee it was agreed that the intention lying behind this provision could be more clearly expressed as follows: "Prior international commitments shall not be permitted to stand in the way of negotiations with respect to tariff preferences, it being understood that action resulting from such negotiations shaIl not require the modifica- tion of existing international obligations except by agreement between the contracting parties or, failing that, by termination of such obligations in accordance with their terms". (b) Sub-paragraph (b) as originally drafted provided that negotiated reductions in most-favoured-nation tariffs should operate automatically to reduce or eliminate margins of pre- ference in effect on 1 July 1959. In view of the impractic- ability of establishing a common base date for negotiating preferences, the revised draft recommended by the Committee LONDON E/PC/T/30 PART II Section 1 Page 7 omits any reference to a base date to be used in applying this rule. Three delegations thought that the rule should not operate automatically, but that members should be free to negotiate for a reduction in the preferential rate as well as in the most-favoured-nation rate, provided that the margin between the two negotiated rates is smaller than that existing on a (prior) date to be agreed upon. (o) An additional rule has been included, as sub-paragraph (c) of paragraph 1 of .Article 18, which provides that during the negotiations the binding or consolidation of low tariffs or of tariff-free treatment shall in principle be recognized as a concession equivalent in value to the substantial reduction of high tariffs or the elimination of tariff preferences. The Committee also considered the question as to whether a rule should be included in Article 18 to the effect that the elimination of quantitative restrictions. (as defined in Article 19) on the one hand, and the binding of preference-free treatment on the other hand, should be considered as concessions equal in value to the reduction of tariffs or the elimination of preferences.. It was agreed that since preference- free treatment and quantitative restrictions were to be dealt with under general rules incorporated respectively in articlee 8 (most- favoured-nation treatment) and articles s 19-22 (quantitative restrictions) they could not properly be included in the rules governing selective tarif? negotiations. at the same time, it was recognized that, in accordance with the plan for conducting tariff' negotiations among the members of the Preparatory Committee, those countries would not be called upon to subscribe to the most-favoured-nation and quantita- tive restrictions provisions until selective tariff negotiations had been completed. and vice-versa. It was believed that this circum- stance would assure that due weight will be. given in the tariff LONDON E/PC/T/3O PART Il Section 1 page 8 negotiations to the benefits to be derived from the elimination of quantitative restrictions and the general grant of must-favoured- nation treatment. 4. Withholding of tariff benefits from members of the organisation which fail to carry out obligations for the reduction of tariffs and elimination of preferences Several changes were made in the original draft of paragraph 3: (a) The original draft provided that the International Trade Organization could authorize a member to withhold tariff reductions from another member which "failed to negotiate" as required by paragraph 1. Under the revised draft the Organiza- tion could authorize withholding for failure to negotiate "in accordance with the rules laid down in paragraph 1" (i.e. in sub- paragraphs (a), (b), and (c) of paragraph 1). Thus, for example, a country having low tariffs could not be accused under paragraph 3 of failure to negotiate adequately because of unwillingness to reduce its tariffs substantially. Also, under the revised draft, a country could bring a complaint before the Organization in the event that another country failed to consider reductions of high tariffs in return for bindings of low tariffs. (b). Under the original draft of paragraph 3. the withholding of tariff benefits by members would have been restricted to tariff reductions effected pursuant to negotiations under paragraph 1. Under the revised draft, members would be authorized to withhold any tariff benefits, including bindings, granted pursuant to negotiations. The purpose of this change is to assure that low tariff countries which, may not have granted. many tariff reductions) will not be placed in auz unfavourable bargaining position in dealing with members of the Organization who may be reluctant to carry out the obligations of paragraph 1 of Artical 18. LONDON E/PC/T/30 PART II Section 1 (c) Language has been included in paragraph 3 of article 18 which is designed to assure that the Organization, in deterinin- ing whether a member has unjustifiably failed to negotiate adequately as required by paragraph 1, will take into account the situation of the member under the Charter as a whole, including the Chapter of the Charter relating to Economic Development. Refecrence was made to the message submitted to Committee II by the Joint Committee on Industrial Development (E/PC/T/C.I & II/18) in which it was requested that a suitable provision be included in article 18 whereby the Organization then considering the contribution which a member can rnikc to a reduction in tariffs, take into account the height of the .tariff of that member, and the need, if any, of that member to use protective measures in order to promote industrial and general economic developments". The changes in Artic1e 18 described under (a) and (c), above, take into account these suggestions made by th; Joint Committee. Emergency Actionn in Respect of Imports of Particular Products (Article 29) 1. The Committee was in agreement with the principle. that members of the Organization, in the event of unforeseen developments and of injurious effects on their trade caused or threatened because of the obligations laid down in Chapter Il (including tariff or preference concessions) should be permitted to withdraw or modify the obligations to the extent and for the time necessary to prevent the injurious effects. The. Committee also agreed that this right should be subject to adequate safeguards and to the- possibility of counter-action by other members in the event of the abuse of the right. LONDON E/PC/T/30 PART II Section 1 Page 10 2. Three basic changes have been incorporated in the revised draft of Article 29: (a) Language has been inserted in paragraph 1 of the Article which makes it clear that members invoking the article may withdraw or modify concessions in respect of preferences as well as concessions in respect of tariffs and obligations regarding quantitative restrictions et cetera. (b) A provision has been included under which members may, in critical and exceptional circumstances, modify or withdraw concessions under the article, on a provisional basis, without prior consultation with the other interested members of the Organization, provided- that consultation is entered into immed - iately following upon the taking of such action. Two delegations questioned the desirability of permitting action under the Article without prior consultation even in emergency circumstances. One of these delegations also proposed that if action without prior consultation was permitted to a member, immediate counter-action by other affected members should also be permitted, without the delays involved in obtaining the permission of the International Trade Organization to take such action. (c) Provision has been made to assure that, ordinarily, counter- action taken under Article 29 will not be disproportionate to the original action. At the sane time, the Organization would be authorized to permit more severe counter-action in cases of abuse of the privileges granted by the .Article. Consultation.-Nullification or Impairment (Article 30) 1. The Committee was in agreement that members of the International Trade Organization should stand ready to consult with one another LONDON E/PC/T/30 PART II Section 1 regarding any matter affecting the operation of the provisions of ,Chapter IV of the Charter relating to trade barriers. The Committee also agreed that any member should be entitled to request the Organiza- tion to set aside any obligations under Chapter IV, and the Organiza- tion should be authorized to set aside such obligations, in the event that any situation should arise, whether or not caused by an action of another member, which would r,.llify or impair any object of the Charter. If some member is adversely affected by the setting aside of obligations, it should be entitled to withdraw from the Organization on short notice. 2. Under the original draft of Article 30 a member could be authorized by the Organization to suspend the application to another member of obligations under Chapter IV only in the event that the second member was found to have taken some action (whether or not in conflict with Chapter IV) which nullified or impaired an object of Chapter IV. -Under the revised draft recommended by the Committee. any action by a member, or the development of any situation; which impaired or nullified any object of the Charter (including any object set forth in Chapter III o the Charter relating to Employment) could be an occasion for the lodging of a complaint with the Organization.. The Organization could make recommendations to the members concerned and, in serious cases, could release any member (and. not merely the complaining member as in the original draft) from its obligations under Chapter IV. Members adversely affected by the suspension of obligations on the part of another member would, as in the original draft, be entitled to withdraw from the Organization on short notice. Two types of cases will illustrate the kind of action which would be permitted under the revised draft of article 30 but which LONDON E/PC/T/30 PART II Section 1 Page 12 was precluded under the original draft of the article: (a) A.member might seek, and. obtain from the Organization, a release from its obligations under Chapter IV on the grounds that i.1,s economy was suffering from deflationary pressures caused by the lack of effective demand for its goods from abroad (possible impairment of the objects of Chapter III), In such cases it is contemplated that the Organization, before granting any such release, would consult with the Economic and Social Council or with other specialized international agencies to determine whether some other remedial action were not open to the country seeking the release. (b) A member importing a particular product might be released from appropriate obligations under Chapter IV in order to adjust competitive conditions between two exporting countries (for example in cases in which one of the exporting countries was deliberately exploiting substandard labour contrary to the objectives of Chapter III). Also, the request for such a release might be made by one of the exporting.countries (in the example above the exporting country suffering from unfair competition caused by substandard labour in the other exporting country) rather than by the importing country. Territorial application n of Chapter IV - Customs Unions - Frontier Traffic (Article 33) 1. The Committee was in agreement that the trade barrier provisions of the Charter should apply to each of the customs territories under the jurisdiction of the member countries; that an appropriate exception from these provisions should be made for advantages accorded to facilitate frontier traffic, for advantages incident to the forma- tion of a customs union, and for new preferential arrangements LONDON E/PC/T/30 P ART II Sectlion 1 Page 13 approved by the Organization under-paragraph 2 of' .Article 55; and that suitable definitions of' customs territories and customs unions should be included in Chapter IV. 2. In addition to certain drafting amendments, the following changes were recommended in Article 33: (a) The original draft of the article provided that Chapter IV should not prevent "the union for customs purposes of any customs territory and any other customs territory". Under the revised draft this exception would extend to "the formation of a union for customs purposes etc", thus permitting measures.which in fact represent a transitional stage toward a customs union. (b) A new paragraph has been added which (i) recognizes that new preferential arrangements (for example those of a regional character) may in exceptional circumstances be justified and (ii) makes it clear that the Organization would be authorized to approve such arrangements under paragraph 2 of Article 55 of the Charter. Two delegations reserved their rights with regard to preferences of regional character. One of them stated that such preferences have an intrinsic value by themselves and should not be subject to` the procedure as provided in paragraph 2 of' article 55, Submission of Report on Procedures for Proposed Multilateral Trade Agreement Negotiations Committee II has prepared for the consideration of the Preparatory Committee, in accordance with its assignment, a report setting forth recommended procedures to be followed in connection with the negotiations regarding tariffs and preferences to be conducted among the members of the Preparatory Committee pursuant LONDON E/PC/T/30 PART II Section 1 Page 14 to Article 18 of' the Draft Charter and in accordance with the Committee's Resolution of This report, entitled "Multilateral Trade Agreement Negotiations: Frocedures for Giving Effect to Certain Provisions of' the Proposed ITO Charter by means of' a General .Agreement on Tariffs and Trade among the Members of the Preparatory Committee", is intended for adoption as part of the final report of the preparatory Committee. It was believed that the text of' the Report will be largely self-explanatory. It may be noted, however, that the paragraph in the Report which points out the importance of' avoiding new tariff measures which :would tend to prejudice the proposed negotiations is not,'of course, a legally binding obligation such as might prevent countries from introducing tariff' changes regarded as urgent. with regard to the proposal in the report that the tariff agreement among the members of the Preparatory Committee 'should be multilateral in form and in legal application, one delegation considered that bilateral tariff agreements or agreements limited to a small group of countries the benefits of which are generalized under the operation of the most-favoured-nation clause, would be preferable because they might be more easily revised when necessary. LONDON E /PC/T/30 PART II Section 2 Page 1 SECTION 2 GENERAL COMMERCIAL PROVISIONS (EXCEPT MOST-FAVOURED-NATION TREATMENT) AND GENERAL EXCEPTIONS A substantial degree of agreement among all Members participating on the Preparatory Committee was reached on questions of the principle underlying these provisions. However, as was to be expeoted, there were numerous differences of opinion, and a number of reservations were made on account of national variations in the practice of detailed administration. Complete reconciliation of views was not possible to the extent that agreed text for these Articles could be prepared, within the time at the disposal of the Committee. A. greater degree of unanimity might have been possible if more time had been available, In addition, many of the Delegates' suggestions were merely drafting points and it was felt that these should be dealt with by the Drafting Committee which meets in New York in January 1947. LONIDON E/PC/T/30 PART II Section 3 Page 1 SECTION 3 QUANTITATIVE RESTRICTIONS AND EXCHANGE CONTROL General Elimination of Quantitative Restrictions (Article 19) 1. There was wide agreement with the proposal for a general rule against the use of import and export restrictions and prohibitions, the rule being subject to exceptions for the use of restrictions in specified circumstances and under specified conditions. 2. The work of the Committee was based on the assumption that the problem of ensuring adequate support for industrial development, which was the subject of study by the Joint Coommittee of Committees I and II, would be adequately covered in other Articles. 3. There was wide agreement for the view that during a post-war transitional period it should be permissible to use such restrictions for the equitable distribution of products in short supply, for the maintenance of war time price control by countries undergoing shortages as a result of the war, for the orderly liquidation of temporary surpluses of government owned stocks and of industries which were set up owing to the exigencies of war, but which it would be uneconomic to maintain in normal times. These last two exceptions would be subject to consultation with other interested Members; and all these exceptions would be limited to a specified post-war transitional period, which might, however, be subject to some extension in particular cases. 4. There was wide agreement for an exception to the general rule against expert restrictions or prohibitions so as to enable a country to take temporary action to relieve critical shortages of foodstuffs or other essential products. LONDON E/PC/T/30 PART II Section 3 Page 2 5. There was also wide agreement for an exceptional use of restrictions to apply standards of classification and grading of commodities in international commerce, subject to safeguards against their misuse for the purpose of giving disguised protection. 6. Consideration was given to the suggestion that there should be an exception permitting import restrictions on agricultural or fisheries products. (a) to accompany measures restricting the domestic production or sale of like products and (b) to remove a temporary domestic surplus by means which involved selling that surplus at prices below the current market price to certain groups of domestic consumers. There wvas wide agreement for the view that a clause on these lines was desirable; but two Delegations proposed that the exception should not be confined to agricultural and fisheries products in order to give similar protection to agricultural or underdeveloped countries. One delegation, on the other hand, took the position that the exception should cover only agricultural products. There was wide agreement for the view that any supplies of the product which were en route at the time at which public notice was given of the restrictions should not be excluded, though they might be counted against any quotas in the importing country. It was generally agreed that this point should be covered in this Article unless it were already adequately met in Article 15. It was suggested that restrictions imposed under this exception should not be imposed on seasonal commodities at a time when similar domestic products were not available; and it was generally agreed that this suggestion might usefully be further considered at the next meeting of the Preparatory Committee. There was wide agreement for the view that LONDON E/PC/T/30 PART II Section 3 Page 3 restrictions on imports imposed to match a restriction on domestic production should not be such as to reduce the proportion of import to domestic production below the level which might otherwise have been expected to rule, it being necessary to judge the situation not only in the light of the position at a previous period but also in the light of any changes in conditions which might have oocurred, since that date. The view was, however, expressed that such a , rule might weigh unduly on the domestic producers, since the exporter, in other countries might be able more readily to find alternative markets. 7. The suggestion was put forward by some Delegations that the .exception in the case of agricultural products should. be widened by permitting restrictions on imported without restrictions on home production so as to maintain domestic prices at a level sufficient to cover domestic costs of production or -so as to enable a domestic surplus to be cleared. It was suggested that this could be accomplished by deleting the last three sentences of sub-paragraph 2(o) of Article 19. After discssion it was felt by other Delegations that such proposals would extend the scope of the exception to an undesirable degree. 8. Some Delegations put forward the suggestion that the wording of the exception in the case of agricultural products should be changed so that the words "for instance" would be inserted after the words "to remove a temporary surplus of the like domestic products, Other Delegations felt that this suggestion would permit an undesirable expansion of the exception and therefore opposed the suggestion. 9. There was general agreement for the use of restrictions or prohibitions on private trade in order to protect the position of State trading enterprises operated under other Articles and for the use of import or export quotas imposed under intergovernmental commodity agreements concluded under this Charter. LONDON E/ PC/T/30 PART II Section 3 Page 4 10. The suggestion was also made that it should be permissible to use import restrictions, under proper safeguards, as an anti-dumping measure in those cases of intermittent dumping in which import duties did not provide a suitable instrument of control. After consideration it was generally agreed that as for as the establishment of new industries are concerned, the position should be sufficiently covered by proposals of the Joint Committee of Committees I and Il. In respect of the threat of intermittent dumping to established industries there was wide agreement with the view that the position was probably already adequately covered under Article 29; but one Delegation remained uncertain whether this was in fact the case. 11. It was suggested that expert restrictions should be permitted for the preservation of scarce natural resources even if there were no restriction on domestic consumption, as would be required under Article 32 (j). While it was recognized that there might be cases in which such action would be unobjectionable, the view was widely expressed that such an exception, unless subject to sufficient safeguards, might unduly restrict access to raw materials. It was generally agreed that the point might usefully be further examined at the next meeting of the Preparatory Committee. 12. It was suggested by one Delegation that restrictions on exports should be permissible for the safeguard of living standards, for the facilitation of industrial development and for the stabilization of domestic prices so as to achieve a balanced development of the national economy, and that import restrictions should be permissible for the enforcement of governmental measures to regulate domestic production, distribution and consumption so as to maintain a dynamic equilibrium between the diverse economic activities of a nation in the process of industrialization. After discussion of these suggestions, there was LONDON E/PC/T/30 PART Il Section 3 Page 5 wide agreement in the Committee that these proposals were already adequately covered in the proposals of the Joint Committee of Committees I and II on industrial development and by the proposals made by the Committee in regard to the use of import restrictions under Article 20 to safeguard the balance of payments. These latter proposals are in line with a request received from the Joint Committee that provision "should be made to cover the position of a Member who, as a result of its plans for industrial development or reconstruction, anticipates that its accruing international monetary resources will be inadequate to finance the needed imports of, for example, capital goods, for the carrying cut of such plans unless it imposes regulations in respect of certain classes of goods, for example, consumer goods." 13. Some delegations announced that, because they thought the procedure laid down in Article D, paragraphs 4(a) and (c) of the Draft Chapter on industrial Development needed further examination, they might propose an addition to Article 19:2 to include another exception in the following terms: "Import restrictions for the purpose of economic development as a protective measure provided that they are less restrictive in their effect than other forms of protection and provided that they are in conformity with the criteria laid down for the purpose by the Organization." Other delegations considered that this point was sufficiently met in the Draft Charter relating to Industrial Development. Some of these indicated they might wish to reconsider their attitude to that Chapter, if such an addition were made. 14. The Committee considered the question of the treatment of certain existing preferential arrangements were established under inter- LONDON E/PC/T/30 PART II Section 3 Page 6 national agreemrnnts but not effected by tne normal method of a difference in rates of duty. In these special circumstances they recommend that any such arrangements remaining after the negotiations contemplated for April 1947 should be dealt with by a provision in a protocol to the Charter or (pending the conclusion of the Charter) to the General Agreement on Tariffs and Trade to the effect that the member applying these arrangements shall be entitled to continue them or equivalent measures, pending either: (a) an arrangement under Chapter VI, if the member countries concerned desire that the product should be made the subject of such arrangement, or, (b) some other arrangement regarding the matter between the member countries concerned. The Committee agreed further that only a very limited number of commodities fell under this heading and that the countries concerned should establish the facts about there so that this recommendation on the subject could be taken into account in the forthcoming negotiations. It was further recognized that the concessions or lack of concessions an respect of the items concerned would, for purposes of assessing the results of the negotiations, stand on the same footing as concessions or lack of concessions in respect of particular tariff or preference items. Restrictions to safeguard the Balance of Payments (Article 20) 1. There was general agreement for the view that it should be permissible for a country to restrict imports when such restriction was necessary to safeguard its external financial position, particularly in view of the fact that in many cases there will be domestic LONDON E/PC/T/30 PART Il Section 3 Page 7 employment, reconstruction, development or social policies which result in increases in the demand for imports. It was recognized that in many cases policies of internal reconstruction and development might be an essential factor in restoring equilibrium to a country's balance of payments on a sound and lasting basis. 2. Consideration was given to the best method of ensuring that such a safeguard should be available for the protection of a country's external financial position without giving freedom for the unnecessary use of import restrictions. There was wide agreement with the view that countries should undertake to observe certain princples in the use of such import restrictions, and that, since the fundamental objective was to safeguard a country's external financial position, these principles should be based upon movements in the county's monetary reserves. Import restriction, it was suggested, should only be newly imposed or intensified in so far as was necessary to stop or to forestall the immunent threat of a serious decline in monetary reserves or, in the case of a member wath very low monetary reserves, to achieve a reasonable rate of increase in its reserves. 3. There are, however, many factors to which due regard regard must be paid in interpreting any such rules. There may be special non-recurrent movements of funds affecting a country's reserves; a country may have special credits outside its monetary reserves which it might be expected to use to a proper extent and at a proper rate to meet a strain on its external position; country which has high reserves may, nevertheless, have high future commitments or probable drains upon its resources to LONDON E/PC/T/30 PART II Section 3 Page 8 meet in the near future. All such factors -would have to be taken into account in interpreting movements in a country's resolves . 4.. It was generally agreed that there should be an undertaking to remove or to relax restrictions on the same general principles, as a countr's external financial position improved. 5. It was also generally agreed that, an order to avoid unnecessary damage to the commercial interest of other Members, import restrictions imposed to safe guard a Membr's external financial position should not be carried to the point off total exclusion of any particular class of goods. 6, Consideration was given to the relation which should exist between Members and the Organization in order to ensure that Members should, on tne one hand, not be able to abuse the application of import restrictions on these grounds, but should, on the other hand, have some certainty that they could .apply them when necessary. For these purposes, it was generally agreed that there would have to be arrangements for consultation between the Members and the Organization for complaint to the Organization, and ultimately for the Organization to recomend the withdrawal or modifacation of restrictions if these were being properly applied . LONDON E/PC/T/30 PART II Section 3 Page 9 7. In this whole process of consultation, review and recommendation, the Organisation; it was recognized, would have to keep in the closest contact with the International Monetary Fund. The Fund is the specialized agency which deals with the financial aspects of balance of payments problems; and the use of import restrictions to safeguard the external financial position of Members could only be properly considered by the Organization if, at every stage, it invited the Fund to participate in its consultations. 8. It was widely agreed that a first stage in this process should be consultation as to the natue of a country's balance, of payments difficluties, the various corrective .measures which may be available, and the possible effects of such measures on the economies of other Members. It was thought that a Member which was considering the imposition of restrictions for the ;first. time should as a. general rule undertake such consultations before imposing the restrictions and, in cases in which previous consultation was impracticable, should under- take such consultations as soon as possible after imposing the restrictions. The Organizat.on should, it w.s generally thought, be able to initiate consultations with any Member vwhich was already imposing restrictions on these grounds, and should in any case, always initiate such consultations with any Member which found it necessarly substantially to intensify its restrictions. It was thought that the Crganization should, within two years of its institution, review all. restrictions existing at its institution and subsequently maintained on the grounds of safeguarding Members' external financial positions. 9. Many Members which may find it necessary to impose restrictions to safeguard their external financial position.nay wish to obtain some security that the. restrictions which they are .applying or intend to apply will not be challenged.,or that if their external position should become sufficiently difficult they would be able to impose restrictions LONDON E/PC/T/30 PART II Section 3 Page 10 which would not be challened. For this reason, it was generally agreed, a Member should have the right to obtain the previous approval of the Organization for restrictions which it was already applying or intending to apply, so that it could not be challenge by another Member when it applied them. It was generally considered that such previous approval should.relate to the general extent, degree and duration of the restrictions and should not prevent another Member thereafter from bringing a complaint to the Organization that the restrictions were being applied in a manner which unnecessarily damaged its commercial interests. 10. Similarly, a Member might seek the previous approval of the Organization not in relation to any actual restriction which it was already applying or intending to apply but in relation to the contingent future conditions which, if they occurred, would justify it in applying restrictions. For example, it might be agreed between the Member and the Organization that the Member could not in any circumstances during an agreed period ahead be reasonably expected to allow its monetary reserves to fall below an agreed figure. 11. It was widely agreed that it should be open to any Member to bring a complaint to the Organization that another Member was applying restrictions when they were unnecessary to safeguard its external financial position or that it was doing so in a way which unnecessarily damaged the commercial interests of the complaining Member. In this case the Organization, if it were satisfied that the complaining Member had made out a prima facie case that its commercial interests were adversely affected, should consider the complaint. It should have power after consultation with the international monetary Fund to recommend the withdrawal or modification of the restrictions; and if the Member in question failed to withdraw or modify the appropriately LONDON E/PC/T/30 PART II Section 3 Page 11 such other Members of the Organization would be released from such obligations towards the Member in question as the Organization might specify. The Organization should, however, not be able to recommend the withdrawal or general relaxation of restrictions insofar as it had given previous approval for them; nor should it be able to do so on the grounds that the Members' external financial difficulty could be avoided by a change in the Members' domestic employrnent, reconstruction, development or social policies. 12. It was generally agreed that a Member imposing restrictions on. balance of payments grounds should be permitted to select imports for restriction in such a way as to promote its domestic employment, reconstruction, development or social policies, in accordance with its own judgement as to the essentiality of the products concerned. 13. It was generally agreed that if there were a persistent and widespread application of restrictions on these grounds, there should be a procedure whereby the Organization in consultation with the International Monetary Fund should initiate discussions with the Members to consider whether other measures might not be taken by the countries with favourable or those with unfavourable balances of payments or by the Economic and Social Council or any appropriate intergovernmental specialized agencies to remove the underlying disequilibrium. 14. It was generally agreed that the principles and procedures for restricting imports ùnder private trade to safeguard a Member's external financial position should be applied mutatis mutandis to the restriction (to a greater extent than would otherwise be permissible) of imports by a State trading organisation. It should, however, be provided that the disclosure of information LONDON E/PC/T/30 PART II Section 3 Page 12. which would hamper the commercial operations of such a State trading organization would not be required. 15. There was general agreement for the view that in the early years after the war the Organization, in'the functions proposed for' it under this Article and under Article 22, should pay due regard to the difficulties of post-war adjustment with which the Members would be confronted in varying degrees. 16. The Committee had referred to it a request of the Joint Committee of Committees I and II "that in Article 20 provision should be made to cover thé position of a Member who, as a result of its plans for industrial development or reconstruction, anticipates that its accruing international monetary resources will be inadequate to finance the needed imports of goods, for example, capital goods, for the carrying out of such plans unless it imposes regulations. in respect of certain classes of goods, for example, consumer goods". This point is met in the draft text of Article 20 which is appended to this report. Under paragraph 2(a) a country could apply quantitative import restrictions to anticipate the imminent threat of a serious decline in its monetary reserves. Moreover, it is theresuggested that in interpreting this principle due regard should be had to any commitments 'or other circumstances such may be affecting a country's needs for reserves. It follows that a country wihch was threatened -with a serious ,decline in its reserves and which had heavy external payments to meet in the near future could protect its external financial, position by import restrictions. 17. In paragraph 1 of the draft Article 20 it is recognized that `Members .ay need import restrictions as a means of safeguarding their external financial position ..... particularly in view of LONDON E/PC/T/30 PART II Section 3 Page 13 their increased demand for the imports needed to. carry out their domestic,.,., development policies"; and in paragraph 3(e) of the draft *rticle 20 it is laid down that "the Organization shall not recommend the withdrawal or general relaxation of restrictions on the ;;rounds that the existing or prospective .balance of paynents difficulties of the Member in question could be avoided by a change in the Membber'.s domestic ....... development ,...,. policies". Thus it is clear that a Member could not be required t modify its domestic development plans on the rounds that they imposed a strain on its balance of payments and thus made control of imports necessary.. 18. In paragraph 4 of draft article 20 it is expressly laid down that "a Membe may select imports for restriction, on grounds of essentiality in such a way as to promote its domestic . development .... policies", so that a Member could if necessary restrict the import of consumer goods without restricting the import of capital goods. 19. The Draft article would, however, prevent a Member from *applying restrictions if its foreign exchange resources were -sufficient for it to finance all types of imports. In other words, the Member would be permitted-under Article 20 tu restrict only to the extent necessary to safeguard its monetary reserves. Up. to this point it would have te admit imports of one class or another. Members would also be under an obligation not to apply any restrictions of a selective character in a manner which unnecessarily damaged the commercial interests of other Members. * .~~~~~~~~~~~~~~e LONDON E/PC/T/30 PART II Section 3 page 14 20. Many of the problems which have been examined by the Committee in connection with this article and with Articles 22 and 23 are necessarily of very direct concern to the International monetary Fund and, to a less extent, to the International Bank for Reconstruction and Development. Trade restrictions applied to safeguard external financial rescurces will inevitably be of common interest to the International Trade Organization and to the International Monetary Fund. In particular, since it is generally agreed that trade restrictions should be avoided whenever possible, the question arises of the possibility of alternative means under the procedures of the Fund and the Bank for meeting a disequilibrium in balances of payments. 21. In considering these problems the Committee has been much helped by the benefit of the views of the observers from the Fund and the Bank. It is generally felt that it would be of great assistance to the work of the Preparatory Committee if the Fund and the Bank could be invited to study the Draft Articles 20, 22 and 23 appended to this report so as to be in a position to put their considered views on these issues before the next meeting of the Preparatory Committee. 22. One delegation suggested to the Committee that there should be amendments providing for (1) broadening the criteria under which restrictions could be imposed for balance-of-payments reasons, (2) eliminating the provision for complaints by Members against such restriction maintained by other Members, and (3) the use of quantitative restrictions as a means for creating favourable conditions for the industrial development of an economically undeveloped country. It was generally agreed that these proposals to some extent had been met in this Chapter and in the Chapter on Industrial Development, and that further changes would expand the use of quantitative restrictions too far. .LONDON E/PC/T/3C PART II Section 3 Page 15 Non-dliscriminatory Administration of Quantitative Restrictions (Article 21) 1. There was wide agreement with the proposal that there should, be a general rule, for non-discrimination in the use of quantitative restrictions, the necessary exceptions to this Seneral rule being listed. in the subsequent Article. 2. In applying the principle of non-discrimination to import restrictions it was generally agreed that the following represented a desirable set of principles which should also apply to tariff quotas: (a) Wherever possible a global quota should be fixed in advance for tho importation of the product in question; (b) Where (a) is not practicable, restrictions might be applied by import licenses without a global quota; (c) Whether issued within a global quota or without a global quota import licenses or permits should, in general, not tie the import to a particular source of supply; (d) Where (c) is not practicable, the restrictions might take the form of a quota allocated among the various sources of supply. In this case the general principle should be to allocate the quotas on commercial principles such as price, quality and customary sources of supply. These commercial principles might be applied in principle in either of two ways: (i) Agreement might be sought between the exporters - which had a substantial interest in supplying the product. (ii) Where (i.) is not reasonably practicable, reference should be made to shares in a previous representative period, due account being taken of special factors which may have affected the trade in tho product.- The Member should make the initial decisions about the shares LONDON E/PC/T/30 PART Il Section 3 Page 16 of the quotas under (ii) but should be prepared to enter into consultations about adjustments; (e) No conditions should be imposed such as to prevent any Member country from making full use of its share in any quota, subject to importation being made within any prescribed period to which the quota may relate. 3. It was generally agreed that Members should undertake to supply adequate information about the administration of their import restrictions. In cases in which import licenses were used, information should be supplied at the request of any Member having a substantial interest in the trade about the administration of the licenses and about the licenses granted, but there should be no obligtion to reveal the names of importing or supplying firms. Where quotas were fixed public notice should be given in advance of the size of the quota; and where the quota is allocated among supplying countries all Members having an interest in supplying the product should be given prompt notice of the shares of the various countries ln the quotas. Exceptions from Rule of Non-discrimination (Article 22) 1. It was generally agreed that there must be the following exceptions from the general rule of non-discriminption in the application of quantitative restrictions: (a) Members should not be precluded, from the imposition of restrictions which have the equivalent effect of the exchange restrictions which a country could, impose under Article VII Section 3(b) of the Articles of Agreement of the International Monetary Fund (scarce currencies clause). (b) A group of territories which have a common quota in the International Monetary Fund. should, be able to impose restrictions LONDON E/PC/T/30 PART Il Section 3 Page 17 against imports from other countries in order to protect their common monetary reserves. (c) Members should be able to assisted by measures not involving a substantial departure from the general rule of non-discrimination, a country whose economy has been disrupted by war; but this freedom should have a closing date, 31 December 1951. (d) Some elemet of discrimination in impact and export restrictions may be needed in order to carry out intergovernmental commodity agreements under the commodity policy provisions of the Charter or in order to apply the restrictions which have been suggested for the post-war transitional period to ensure an equitable distribution among consuming countries of products in short supply (see paragaphe 3 and 9 of the report on Article 19). 2. A more difficult problem arises in the treatment of inconvertible currencies. It is generally agreed that the objective is to establish multilateral trading over as wide an area as possible and. that for this purpose it is desirable that currencies should become convertible as soon as is safely possible. But so long as seme currencies remain inconvertible there is difficulty in reconciling the full application of tho principle of non-discrimination with the courses of action which are imposed upon Members by their external financial situations. This difficulty is of course fully recognized, as far as exchange restrictions are concerned in the provisions of Article XIV of the Articles of Agreement of the International Monetary Fund. The problem here is to make appropriate provision for this difficulty In the trade field. 3. The nature of the difficulty may be conveniently expressed by considering the position of country A which has a favourable balance of payments with country B which has an inconvertible currency. LONDON E/PC/T/30 PART II Section 3 Page 18 This favourable balance can be settled only by: (a) Accumulation by A of inconvertible balances of B's currency or by a loan to 23 in A's currency, or (b) an increase in A's imports from B; or (c) a reduction of A's exports to B. 4. If A is unable or unwilling to make the appropriate loan under (a) and if the costs of B are too high to enable A to accept B's exports without infringing the rule of non-discrimination, the only poseibili. reduction in A's exports to B. It has been argued. that A can always avoid this difficulty by selling the exports which would otherwise have gone to B to countries with convertible currencies and there was general agreement that where the majority of countries had convertible currencies, this would normally be thee case. It has been argued, on the other hand, that countries which normally conduct a large proportion of their trade with countries whose currencies are inconvertible, might be obliged to restrict their trade substantially because of the limited import capacity of countries wlth convertible currencies, and.that consequently the additional purchase of imports from Country B, even on a discriminatory basis, might be less restrictive of world trade than the full applïcation of non-discrimination. It was furthermore agreed that any provisions made to deal with this general problem should also cover the problem of balences of inconvertible curriencies accumulated before the entry into force of the Charter. 5. It was agreed that in any case Members should.be entitled to attach conditions to their exports such as would be necessary to ensure that exporting country would receive for its exports its own currency or the currency of any member of the International Monetary Fund specified by the exporting country and thus avoid the LONDON E/PC/T/33 PART Il Section 3 e ~Pag 19 danger of being, in effect, compelled to accumulate balances of inconvertible currency. 6; It was generally agreed that there must be some provision also to deal with the corresponding impart problems, but it was felt that thore were serious dangers in a wide exception from tho rule of non-discrimination even during the post-war transitional period. If such a period were at all prolonged, it would permit the establishment of bilateral patterns of trade and discriminatory practices generally which would effectively prevent the development of multilateral trade which is a central objective of the Charter. It was argued that such arrangements would tend to became self- perpetùating and that their possibility would, in effect, delay the achievement of sound and lasting equilibrium in the balances of payments of the countries with inconvertible, currencies and: would . thus postpone for an indefinite period 'their ability to make their currencies convertible. On the other hand, it vas argued that if countries with. inconvertible currencies had to..face the full rigour of international competition, they would be forced to restrict their imports from all sources to a degree which would seriously impair their prospects of recovery, and it was further argue. that the existence of some provision to enable countries with convertible currencies to apply discriminatory restrictions in special - circumstances would encourage countries with inconvertible currencies to take the risk of accepting convertibility at an earlier stage than they would have otherwise been prepared to do, 7. It was generally agreed that a solution of the difficulty could be found, by permitting discriminatory import restrictions under two conditions, both cf which vould have to be fulfilled. (a) that the discrimination should increase the Memberes total imports above the maximum level which would be possible in the LONDON E/PC/T/30 PART II Section 3, Page 20 bsence of the discrimination. The intensity of the import - restrictions which a Member in permitted to impose under -Article 20 is determined by the pressure upon its monetary reserves. This fixes the amount of imparts which it can afford from countries with convertible currencies. The purpose of this condition is to ensure that a.Member will purchase as much as it can afford from these. source and that it would not be pormitted to discriminate unless this would, enable it to secure additional imports from countries with inconvertible curroncies. It would thus impossible far a Member to decrease its total imported from countries with convertible currencies.-by discriminatory restrictions. (b) that the discrimination should. either correspond to exchange restrictions permissible under the Articles of Agreement of the International Monetary Fund, or should, parry with it the approval 'of the Organization in agreement with the International Monetary Fund, which is the intergovernmental specialized agency which in is competent in the field. The Member would. not be entitled, to impose discriminatory import regulations which did. not have equivalent effect to exchange restrictions permitted to the Member under the Articles of Agreement of the International Monetary. Fund, or under the terms of a special exchange agreement .between the Membor and the Orgaznization (see paragraph- 5 of- the report on Article 23) * if the Member were not imposing exchange restrictions it would be able to impose discriminatory import restrictions in special circumstances only with the prior approval of the * Organization in agreement with the Fund.. 8. In view of the advantages which may be expected. to accrue to the trade of all countries from the other provisions of the LONDON E/PC/T/30 PART II Section 3 Page 21 Charter, it was generally considered appropriate that the discriminatory element in any trado restrictions applied. undor this provision (or exchange restrictions having equivalent effect) should, from tho outset, be liable to be withdrawn or modified if tho Organization, after consultation with tho International Monetary Fund, found that they were being applied. inconsistently with the exceptions provided under this Article or in a manner which diseriminated unnccessarily against the trade of another Member. It should, hewever, always be possible for a Member to souk the Organization's prier approval for its action and in this case it would not be open to challenge to the extent to which such approval was given; where the Member was not imposing exchange.restrictions this prior appreval would be obligatory. 9. It was suggested to the Committee that if there were an abrupt or serious decline in effective demand by one or more Members, the imposition of non-discriminatory import restrictions under Article 20 by other Members might in some cases be more injurious to world trade than discriminatory restrictions, and that provision should be made in this Article for permitting such discriminations if the Organization considered. that this general situation existed and warranted their application. After consideration, it was agreed, that the Organization would have adequate powers under the revised Article 30, taking into account paragraph (F) of Chapter III on Employment Provisions, to meet this contingency. 10, A main objective of the Organization is to achieve the earliest possible elimination of all discriminations which restrict the expansion of world trade. The difficulties which the Article is designed to meet may bc hoped, to narrow very considerably as an increasing number of Members accept the obligations of Article VIII, Sections 2, 3 and 4 of the Articles of Agreement of the International LONDON E/PC/12/30 PART Il Section 3 Page 22 Monetary. Fund. It is therefore generally agreed that the provisions sub-paragraphs l(d) (iii) and (iv) of this Article should be reviewed when three -quarters of the Members of tho Organization have made their currencies convertible, or in any event, not later than the end of 1951. Exchange Arrangements (Article 23) 1. The problem of foreign exchange arrangements in relation to the Organization is a question of great importance, since commercial obligations can be fundamentally affected by such matters as exchange control, exchange depreciation, multiple exchange rates, etc. The International Monetary Fund is the specialized. agency which has been instituted to deal with these matters, and it is desirable as fer as possible to avoid overlapping functions between it and the Organization. Where trade matters and exchange matters inevitalbly overlap it is desirable that there should be the maximum consultation and co-operation between the Fund, and Organization. 2.. It was agreed that Members should undertake not to seek by exchange action to frustrate the purposes of this Charter, nor to seek by trade action to frustrate the purposes of the Articles of Agreement of the International Monetary Fund. 3. It was agreed, that the problems would be much simplified if all Members of the Organization were also Members of the International Monetary Fund. The Committee came to no decision on the question of requiring common membership, however, as some of the delegations felt it may well be necessary to allow freely for independent Membership of the Organization and the Fund. 4. Consideration was therefore given to the question whether. special provision should not be made for a country which wished to become a Member of the Organization without become a Member of the Fund. It was generally recognized. that somee such provision might LONDON E/PC/T/30 PART Il Section 3 Page 23 provo to be necossary, but it was thought that examination of this issue could. usefully wait until the probable Membership of the Organization and of the Fund became clearer. Pending this further examination, the Draft Article 23 in the Appendix to this Report has been expressed ln a way which implies that Members of the Organization would in general be expected to be members of the Fund, but that meane could be provided for non-members of the Fund. to join the Organization. 5. It was widely agreed that if the general principle were adopted that Members of the Organization should. also be Members of the Fund, oppertunity must nevertheless be left for a Member of the Organization to exercise the right which it would have under the Articles of Agreement of the International Monetary Fund to withdraw at short notice from the Fund. - a right which would. be compromised if a Member. of the Organization were roquired. to be a Member of the Fund, and. were not free to withdraw from the Organization at short notice. 6. It was generally conesidered appropriate that any Member of the Organization which was not also a Member of the Fund should not have full freedom in exchange matters, since by exchange arrangements it might frustrate its trade obligations. There was a wide measure of agreement for the suggestion that such a Member should enter into a special. agreement with the Organization in exchange matters which would. provide that the purposes common to the Organization and. the Fund would not be frustrated as a result of Action in exchange matter by the Member in question, In such cases the Organization would accept the opinion of the Fund whether action by the Member. in question in exchange matters was permissible under the terms of the special. exchange agreement; and the Member would undertake to provide the Organization with the-information necessary for reaching such a decision. LONDON PART II Section 4 page 1 SECTION 4 SUBSIDIES A. Subsidies on Primary Products 1. In general the intention of Article 25 of the United States Draft Charter is to give members whose interests are prejudiced by subsidization the right to a full international consideration of their case, to oblige subsidizing members to participate in such consideration and to provide for limiting subsidization so that its prajudicial effects may be reduced. 2. As concerns primary products, the Article recognizes that, when trade is distorted by the special difficulties referred to in Chapter VI, the procedures of that Chapter rather than those. of this Article should apply. 3. In view of the fact that export subsidies are recognized as being more likely to distort trade than so-called "domestie" sub- sidies, the article looks toward the early elimination of the former in most cases but merely to the limitation of the latter. Never- theless it is emphasized that the Article envisages gradual rather than sudden modifications of subsidies in cases where such modifica- tion calls for substantial economic and social adjustment in the affected member countries. 4. The points considered in revising the text of Article 25 of the Draft Charter are indicated below: (a) Wherever the Charter has words such as "injury to the trade of a member", it was thought advisable to say "prejudice to the interest of a member". It was felt that, this wording would. in practice facilitate application.. LONDON E/PC/T/30 PART Il Section 4 page 2 (b) The word "limiting" in the last sentence of paragraph 1 (as shown in the Appendix) is used in a broad sense to indicate maintaining the subsidization at as low a level as possible, and the gradual reduction in subsidization over a period of time where this is appropriate. (c) One delegation suggested that the Interim Drafting Committee be requested to consider adding, after the words "imports of such product" in the first sentence or paragraph 1, the words "or of closely competitive products". .Another delegation declared that it was not in a position to judge whether such a request should be made. (d) It was suggested that the Drafting Committee consider whether it is necessary to retain the cross reference clauses beginning, "Except as provided" at the beginning of paragraph 1. (e) The words added at the end of the second sentence of paragraph 2 are designed to make it clear that payments to producers from the proceeds of domestic taxes from which export products are exempted are looked upon. as "domestic" rather than export subsidits. The added words, and the sentence to .hich they are attached, are essentially explanatory of part of the first sentence of paragraph 2. (f) The substitution of the phrase "a complete analysis of the practices in question and the facts justifying them" for the words "an explanatory statement", in the fourth sentence of paragraph 2 is associated with a discussion of possible results of the determination mentioneded in the following sentence. It was felt that under certain circumstances some export subsidies right be justified as being consistent with the objectives of the Charter. LONDON E/PC/T/30 PART Il Section 4 Page 3 (g) It was considered whether the words "the like product" in the first sentence of paragraph 2 could be construed in such a way as to permit escaping the provisions of this paragraph. in cases when the exported product differs slightly from a pro- duct sold in the domestic market. It was decided, however, that this would be a case falling under the terms of Article 30 and thus that the measure, whether or not in conflict with the terms of Chapter IV of the Suggested Charter, would imply nullification or impairment of the Chapter. The subsidizing member would, therefore, be obliged to .give sympathetic consider- ation to the views of other interested members and, assuming good faith, the problem could probably be solved., The implica- tions of qualifying words, such as "the like or similar product", might be considered by the Drafting Committee. (h) Certain delegations felt that the period of three years prescribed in the third sentence of paragraph 2 for giving effect to the provisions of that paragraph was unduly long. It was agreed that the question of shortening this period should be taken up at a later stage, after the countries had had the opportunity of considering the effect of' such a shortening on their domestic legislation. (i) One delegation reserved its position in regard. to para- graph 2 in the following words: "The adoption or maintenance' of subsidies or similar measures to promote the production or exportation of certain special commodities in a member country which has suffered from a chronic adverse balance of. payments should be allowed until. such a time as its equilibrium in the balance of payments will have been actually attained, when the question of such measures may be reconsidered through LONDON E/PC/T/30 PART II Section 4 Page 4 consultation by the countries concerned." This delegation also suggested that paragraph 3 should be amended so that "thc share of any such special export in world trade, whether or not acquired as a result of the use of subsidies or similar measures, should not be subject to limitation by its share in world trade during any previous representative period, except when it is proved to be part of a burdensome world surplus." Certain delegations, however, advised against these amendments because of the adverse effect which such subsidies would have upon the trade of other countries. (j) The new paragraph 3 would render it possible for interested members, in consultation with the Organization, to operate a domestic stabilization scheme for a primary product if the stabilized domestic price is at times below the export price and if, through effective production controls or otherwise, the scheme operated so as not to prejudice the interest of members. Some delegations thought that this was implicit in paragraph 2. and that the explicit exemption under paragraph 2 might render it .more difficult to apply paragraph 2 so as to cover other legitimate exceptions. Accordinglyy empty square brackets were added at the end of the new paragraph to indicate that suggestions may be forthcoming to cover other exceptional cases. (k) One delegation raised the question of whether the comparison made in paragraph 3 should not be between the export price and the price paid to domestic producers, and requested that a later opportunity be given to the delegation to consider this matter. LONDON E/PC/T/30 PART Il Section 4 Page 5 (1) The new sub-paragraph (a) of the renumbered paragraph 4 indicates that the consultative procedure of, Chapter VI with reference to primary products in the case of which special diffïculties may arise may be applied when subsidies on such products call for determination by consultation under the terms of paragraph 1 or 2. In this connection and in relation to the provisions of the original paragraph 3 of the Draft Charter, it was suggested that the Drafting Committee considers Article 25 in connection with Chapter VI and with Article 55, paragraph 6, with a view to simplifying the texts in question. They are intended to provide: (i) a uniform type of consultative procedure for dealing with primary commodities in the case of which special difficulties may arise either in the initial period of transition or thereafter, and (ii) an adequate consultative procedure for dealing with non-primary products according to the general intentions of article 25 expressed in the opening sentence of this report. (m) One delegation announced that it would reserve its position regarding the provisions of sub-paragraphs (b) and (c) of (the renunbered) paragraph 4. (n) One delegation expressed the opinion that the Interim Draft Committee should consider the provisions in Article ll of the United States Charter in connection with Article 25. It felt specially that article ll should, in about the same way as paragraph 2 (a) of Article 19 does for quotas, provide fort the legitimation of subsidies, if these were accepted after consultation by interested members. LONDON E/PC/T/30 PART II Section 4 Page 6 B. Subsidies on manufactured Goods The question of subsidies on manufactured goods was submitted in the light of a document submitted by the United States Delegate at a meeting of the Drafting Sub-Committee on Industrial Development in connection with proposal that the existing provisions of the United. States Draft Charter bh' ba altred so as to provide leeway for the use of measures assist developing industries under certain circumstances. It is pointed Out in the last-mentioned document that Article .25 of the Draft Charter ``would permit. without serious qualification, the use of govermental subsidies for the purpose of establishing and expanding a manufacturing industry". The requirements laid down. in Article 25 in respect of such subsidies, it is stated are moderate and 1'; 1. If the subsidy does not reduce imports no requirements are made 2. If the subsidy does reduce imports the only requirement - subject to what is said below - is that it be reported to the International Trade Organization together with indindication concerning the probable effect of the subsidy and the reason why: it is necessary.. 3. Even if the subsidy should cause serious injury to international trade the only requirement is that the members granting it discuss with members whose interest is seriously prejudiced the possibility of limiting the subsidy. In view of these facts no change in the draft text of the article on subsidies, as it appears in the appendix to this report, was considered necessary. One country drew attention to the fact that only the richer countries were able adequately to support their industries by means of subsidies. LONDON E/PC/T/30 PART Il Section 5 Page 1 SECTION 5 .STATE TRADING Non-discriminatory Administration of State Trading Enterprises. (Article 26) The provisions of Article 26 of the Draft Charter were, on the whole deemed acceptable to the Committee, subject to the modifications indicated below. 1. It was considered that this Article - in conformity with certain others in that Charter - should be modified so as to refer to goods only. Hence the words "or services" were deleted in the first paragraph. 2. In paragraph 1 of Article 26 the words "distribute or produce" in the first sentence have been placed in square brackets for the reason that certain delegations consider that it should be possible for a Member government to confer exclusive or special privileges upon certain types of enterprise, e.g., for carrying on certain types of manufacture, without at the same time exercising effective control over the trading' operations of such enterprise. In order to make their point of view clear these'Delegations wish to add in square brackets "and exercises effective control over the trading operations of such enterprise,". Other Delegations, however, consider that in such circumstances it would be proper that the government conferring the exclusive or special. privileges should assume the responsibility of exercising effective control over operations affecting the external trade of such enterprise. 3. The ilustrative examples of ``commerciall consideration" by which the State Trading enterprise of a member state should be guided in fulfilling its obligation of non-discrimninatory administration, were supplemented to include "differential custems treatment". LONDON E/PC/T/30 PART II Section 5 Page 2 4. Attention was paid to the nature of the "specifio and detailed information" which the member maintaining a state enterprise was required to provide by the terms of the Draft Charter in order to make possible a determination whether. the trading operations of the enterprise fulfilled the requirements of paragraph 1. It was argued that such ente-prise should not be called upon to-provide more information than a private enterprise trading under the same or similar conditions. Accordingly, the last sentence of paragraph 1 was amended so as to fall in liue with the provisions of Article 30 of the Charter. 5. Since paragraph 1 of Article 8 of the Draft Charter had been amended by deletion of the provision relating to governmental contracts, it was felt necessary to insert a new paragraph in Article 26 dealing with the subject. A distinction was made as between governmental purchase for resale which are covered by this paragraph, and purchases for governmental use and not for resale. The.discussion on this latter. point was prompted by the consideration that in some countries purchases of industrial and other equipment of various types from abroad might weIl) be effected through the medium of state enterprise and that, while it might be difficult in certain circumstances to observe the rule of commercial considerations" for such purchases, it was at least necessary to provide that the rule of "fair and equitable treatment" should apply- but that in applying it full regard should be given to all relevant circumstances. The question was raised whether purchases on the basis of the so-called "tied loans" would be considered to conform with this rule. The view was generally held that a country receiving a loan would be free to take this loan into account as a "commercial consideration' when purchasing its requirements abroad. The position of countries making such "tied loans" was another question. E/PC/T/30 PART II Section 5 Page 3 6. Two change were made in the definition of a state enterprise in the last paragraph of this Article. For greater clarity, the words "directly or indirectly" were deleted and the words "effective control" were substituted for the tenn "a substantial measure of control". 7. A small sub-committee composnd of representatives of the Netherlands, the Union of South Africa and the United States consiared the question of Marketing Boards. It was agreed that when such Boards buy or sell they would come under the provisions relating to state trading . Where they lay down regulations governing private trade their activities would be covered by the relevant Articles of the Draft Charter. The report of the Sub-Committee on Marketing Boards was noted by the Sub-Committee on State Trading with the understanding that the tem marketing Boarda was confined to Boards established by express govermnental action. Expansion of Trade by Stats Monopolies of Individual Products. (Article 27) The principle underlying Article 27 of the Dratt Charter, being the counterpart of paragraph 1 of Article 13 of that Charter, was considered generelly acceptable. The changes which were recommended and which are listed below serve mainly two puposes - first, to provide a more accurate basis for the determination of the "negotiable margins" and. secoandly, to take into account the special nature of fiscal monopolies, 1. The references. to Article 28 of the Draft Charter in the first sentence was provisionally removed (See Article 28 below). 2. The term "landed cost, before payment of any duty, of such products purchased by the monopoly from suppliers in Member states" .as subs-ituted for the wording of (a) of that Article reading "the price at which such product is offered for sale to the monopoly LONDON PART II Section 5 Page 4 by foreign suppliera" since it ;as considered that a more offer did not provide a firm basis for the calculation of' the margin. A similar change was made in (b) in respect of exports. Moreover, since in certain courtries imports by state monopolies are subject to customs duty, it was considered appropriate to choose a definition which, while talking into account all costs up to the moment of' entry, excluded duties and other char-es (e.g. internal taxes, transportation and distribution), It was generally agreed, however, that it would be open to countries to negotiate, if they wishedd, a margin representing the difference between the total cost of a product, (i.e. including internal taxes, coats of distribution and transportation etc. and, where appropriate, profit) and the monopoly's first hand selling price in the home market. 3, It was considered that, when calculating the margin under (b) of Article 27, allowance should be made for a margin of profit; that margin, however, should not be so excessive as to restrict the volume of trade in .the product concerned. Accordingly, the words "a reasonable margin of profit" were added. 4. It was considered appropriate that, in applying the margin determined by negotiation, landed costs and selling prices might be averaged over a recent period of years, and a sentence to that effect was added. 5. In view of the changes likely to be made by other Sub-Cormittees in the Articles of the Draft Charter (in particular in relation to .quantitative restrictions and to "escape clauses") it was felt advisable to delete the reference to Chapter C of the Draft Charter and to substitute therefor the words "subject to the other provisions of this Charter". The sentence was further LONDON E/PC/T/3 0 PART II Section 5 .Page 5 modified so as to permit of account being taken, in the case of imports, of rationing of the product to consumers, and in the case of exports, of the quantities available for export. G. Attention was paid to the special position of monopolies operated for revenue purposes. It was contended that their profits (and consequently the margins between their ``landedd costa" and selling prices) had to be regarded as a form of internal taxation, A new paragraph (2) was added to cover the case of such monopolies. 7. One delegation wishedd to reserve its position generally upon this Article. Expansion of Trade by Complete State Monopolies of Import Trade. (Article 28) Although Article 28 of the Draft Charter was not discussed as to substance, it was decided that it should remain provisionally as it appears in the Draft Charter. LONDON E/PC/T/30 PART II Section 6 Page 1. SECTION 6 RELATIONS WITH NON-MEMBERS The Comittee-considered the relevant Article of the United States Draft Charter which reads: "Article 31 Contractual Relations 'ith Non-Members - Treatment of Trade of Non-Members "1. No Member shall seek exclusive or preferential advantages for its trade in the territory of any non-Member which would result, directly or indirectly, in discrimination in that territory against the trade of any other Member. "2. No Member shall be a party to any agreement or other arrangement with any non-Member under which such non-Member shall be contractually entitled to any of the benefits under this Charter. "3. With regard to countries which, although eligible for membership, have not become Members or have withdrawn from the Organization, no Member shall, except with the concurrence of the Organization, apply to the trade of such countries the tariff reductions effected by such Member pursuant to article 18. This paragraph shall become effective upon the' expiration of one year from the date on which the Organization is established: Provided, that this period may be extended by the Organization for further periods not to exceed six months each. "4. Members undertake to review any international obligations they may have which would prevent them from giving full effect to paragraphs 1 and 2 of this Article and, if necessary, for that purpoese, to terminate such obligations either by agreement cr in accordance with their terms." The Committee decided to leave the question of relations with non-Members for further consideration at a later stage. LONDON E/PC/T/30 APPENDIX Page 1 APPENDIX .!RAFT TEXTS OF ARTICLES. 1. Most-favoured-nation Treatment, Tariffs and Tariff Preferences etc. General Most-Favoured-Nation Treatment (Article 8) l. With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imparts or exports, and' with respect to the method of levying such duties and charges, and with respect to all rules and. formalities in connection with importation or expectation, and with respect ;to all matters affected. by the provisions relating to national treatment in Article 9, any advantage, favour, privilege or immunity granted by any Member country to any product originating in or destined. for any other country, shall be accorded immedintely and unconditionally to the like product originating in or destinecd for all other Member countries. 2. The provisions of paragraph 1 of this Article shall not be construed to require the elimination of any preferences in respect of customs duties and other charges imposed on importation which do not exceed the preferences remaining after the negotiations contemplated in Article 18, and which fall within the descriptions set forth in (a), (b) or (c),below: (a) Preferences in force exclusively (1) between territories in respect 'of which there existed on 1 July 1939 cammon Bovereignty or relations of protection or suzerainty, or (ii) between the territories comprised in Annex X to this Chartor*. * This Annex would relate to the countries of the British Commonwealth. LONDON E/PC/T/30 APPENDIX Page 2 / Each Member to which provision (i) applies shall provide a list of such territoris, which lists shall be incorporated in an annex to this Charter. (b) Preforences in force exclusively between the United States of America and the Republic of Cuba. (c) Preferences in farce on 1 July 1946 exclusively between neighbouring countries. Reduction of Tariffs and Elimination of Preferonces (Article 18) 1. Each Member, other than a Member subject to the provisions of Article 28, shall, upon therequest ofany other Member or Membors, enter into reciprocal and mutually advantageous negotiations with such pther Member or Members directed to the Substantial reduction of tariffs and other charges on imports and exports, and to the elimination of import tariff preferences. These negotiations shall proceed in accordance with the following rules: (a) Prior international commitments shall not bo permitted. to stand in the way of negotiations with respect to tariff preference, it being undorstood that action resulting from, such negotiations shall not require the modification of existing international obligations, except by agreement between. the contracting parties or, failing that, by termination. of such obligations in accordance with their term. (b) All negotiated reductions in most-favoured.-nation import tariffs shall operate automatically to reduce or eliminate margins of preference. (c) The binding or consolidation of low tariffs or of tariff- free treatment shall in principle be recognized as a concession equivalent in value to the substantial reduction of high tariffs or the elimination of tariff preferences. LONDON E/PC /30 APPENDIX Page 3 2. Each Member participating in negotiations pursuant to paragraph 1 of this Article shall koep the Organization informed of the progress thereof and shall transmit to the Organization a copy of the agreement or agreements incorporating the results of such negotiations. 3. If any Member considers that any other Momber has failed, within a reasonable period of time, to fulfil its obligations under paragraph l of this Article, such Member may refer the matter to the Organization, which shall investigate the matter and make appropriate recommendations to the Members concerned. The Organizationa if it finds that a Member has, without aufficiant justification, having regard to the provisions of the Charter as a whole, failed to negotiate with such complaining Member in accordance with the requirements of paragraph l of this Article, may determine that the complaining Member, or in exceptional cases the Members of the Organization generally, shall, notwithstanding the provisions of Article 8, be entitled to withhold from th, trade of the other Member any of the tariff benefits which the complaining Member, or the Members of the Organization generally, as the case may be, may have negotiated pursuant to paragraph 1 of this Article. If such benefits are in tact withheld so as to result in the application to the trade of the other Member of tariffs higher than would otherwise have beer, applicable, such other Member shall then be free, within sixty days after such action is taken, to withdraw from. the Organization upon the expiration of sixty days from the date on which written notice of such withdrawal is received by the Organization. The provisions of this paragraph shall operate in accordance with the provisions of Article 56. Emergency Action on Imports of Particular Products (Article 29) 1. If, as a result of unforeseen developments and. of the effect of the obligations incurred under or pursuant to this Chapter, any LONDON E/PC/T/3O APPENDIX Page 4 product is being imported into the territory of any Member in such increased. quantities and under such conditions as to cause or threaten serious injury to domestic producers of like or similar products (or, in the case of a product which is the subject of a .concession with respect to the preference, to producers in a territory which receives or received. such preferenco), the Member shall be free to withdraw the concession, or suspend the obligation, in respect of such product, in whole or in part, or to modify the concession to the extent and for such time as may be necessary to provent such inJury. 2. Before any Member shall take action pursuant to the provisions of paragraph 1 of this Article, it shall give notice in writing to the Organization as far in advance as may be practicable and. shall afford the Organization, and the other Members having a substantial interest as exporters of the product concerned, an opportunity to consult with it in respect of the proposed action In critical and exceptional circumstances such action may be taken provisionally without prior consultation: Provided: That consultation shall be effected immediately following upon tho taking of such accion. If agreement among the interested. Members with respect to the action is not reached, the Member which proposes to take or continue the action shall, nevertheless, be free to do so, and if such action is.taken or continued the other affected Members shall thon be free, not later than sixty days after such action is taken, to suspend, upon the expiration of sixty days from the date on which written notice of such suspension is received. by the Organization, the application to the triade of the Member taking such action, of such substantially equivalent obligations or concessions under this Chapter the suspension of which the Organization does not recommend against. In serious cases the Organization may authorize an affected Membor to suspend. concessions LONDON E/PC/T/30 APPENDIX Page 5 or obligations in addition to these which may be substantially equivalent to the action originally taken. Consultation - Nullification or Impairment (Article 30) 1. Bach Member will accord sympathetic consideration to, and. will afford adequate opportunity for consultation regarding, such representations as may be made by any other Member with respect to the operation of customs regulations and formalities, quantitative' and exchange regulations, state-trading operations, sanitary laws and. regulations for the protection of human, animal or plant life or health, and generally all matters affecting the operation of this Chapter. 2. If any Member should. consider that any other Member has adoptod any moasure, whether or not it conflict with the terms of this Charter, or that any situation has arisen, which has the effect of nullifying or impairing any object of this Charter, the Members concerned shall give sympathetic consideration to such written representations or proposals as may be made with a view to effecting a satisfactory adjustment of the matter. If no such adjustment can be effected the matter may bo referred to the Organization, which shall, after investigation, and if necessary after consultation with the Economic and Social Council of the United Nations and. any other appropriate international specialized. agencies, make appropriate recommendations to the Members concerned. The Organization,. if it considers the case serious enough to justify such action, may authorize a Member or Members to suspend the application to any other Member or Members of such specifed obligations or concessions under this Chapter as may be appropriate in the circumstances. If such obligations or concessions are in fact suspended, any affected Member shall then be free, not later than sixty days after such action is taken to withdraw from the Organization upon the expiration gf sixty days from the date on which written-notice by the Organization of such withdrawal is received. LONDON E/PC/T/30 APPENDIX Page 6 Torritorial Application of Chapter IV -Customs Unions- frontier Traffic (Article33) 1. The provisions of Chapter IV shall apply to the customs territories of the Member countries. If there are two or more customs territories under the jurisdiction of any Member, each such customs territory shall be considered as a separate Member country for the purpose of interpreting the provisions of Chapter IV. 2. The provisions of Chapter IV shall not be construed to prevent (a) advantages accorded by any Member country to adjacent countries in order to facilitate frontier traffic; or (b) the formation of union for customs purposes of any customs territory of any Member country and any other customs territory: Provided, that the duties and other regulations of commerce imposed by any such union in respect of trade with other Member countries shall not on the whole be higher or more stringent than the average level of.the duties and regulations of commerce applicable in the constituent territories prior to the formation of such union. 3. Any Member proposing to enter into any union doscribed in paragraph 2 (b) of this Article shall consult with the Organization and shall make available to the Organization such information regarding the proposed union as will enable the Organization to make such reports and recommendations to Members as it May deem 4. The Members recognize that there may in exceptional circumstances be justification for new preferential arrangements LONDON E/PC/T/30 APPENDIX Page 7 requiring an exception to the provisions of Chapter IV. Any such exception shall be subject to approval by tho Organization pursuant to parapraph 2 of Article 55. 5. For tho purpose of this Article a customs territory shall be understood to mean any area within which separate tariffs or other regulations of commerce are maintained with respect to a substantial part of the trade of such area. A union of customs territories for customs purposes shall be understood to mean the substitution of a single customs territory for two or more customs territories, so that all tariffs and other restrictive regulations of commerce as between the territories of Members of the union are substantially eliminated and substantially the same tariffs and other regulations of commerce are applied by each of the Members of the Union to the trade of territories not included in the union. 2. General Commercial Provisions (except Most-favoured-nation Treatment and General Exceptions (See Introduction, paragraph 16, and Review of Work Section 2) 3. Quantitative Restrictions and Exchange Control General Elimination of Quantitative Restrictions (Article 19) 1. Except as otherwise provided. elsewhere in this Charter, no prohibition or restriction, other than duties, taxes or other charges, whether made effective through quotas, import licences or other measures, shall be imposed or maintained by any Member country, on the importation of any product of any other Member country, or on the exportation or sale for export, of any product destined for any other Member country. LONDON E/PC/T/30 APPENDIX Page 8 2. The provisions of paragraph 1 of this Article shall not extend to the following: (a) Prohibitions or restrictions on imports or exports imposed or maintained during the early post-war tranasitional period, which are essential to (i) the equitable distribution among the several consuming countries of products in short supply, whether such products are owned by private interests or by the Government of any Member country, or (ii) the maintenance of war-time price control by a country undergoing shortages subsequent to the (iii) the orderly liquidation of temporary surpluses of stocks owned or controlled by the Government of any Member country or of industries deveoloped in any Member county owing to the exigencies of the war which it would be uneconomic to maintain in normal conditions: Provided , that restrictions under (iii) of this sub-paragraph may be imposed. by any Member only after consultation with other interested Members with a view to appropriate international action. Import and export prohibitions and restrictions imposed or maintained under this sub-paragraph shall be removed as soon as the conditions giving rise to them have chased, and in any event, not later than 1 July 1949: Provided, that this period may, with the concurrence of the LONDON E/PC/T/30 APPENDIX Page 9 Organization, be extended in respect of any product for further periods not to exceed six months each. (b) Export prohibitions or restrictions temporarily imposed. to roliove critical shortages of food-stuffs or other essential products in the exporting country. (c) Import and export prohibitions or restrictions necessary to the application of standards for the classification and grading of commodities in international commerce. If, in the opinion of the Organization, the standards adopted by a Member under this sub-paragraph are likely to have an unduly restriction effect on trade, the Organization may request the Member to revise the standards, Provided that it shall not request the revision of standards internationally agreed under paragraph 6 of Article 16. (d) Export or import quotas imposed under intergovernmental commodity agreements concluded in accordance with the provisions of Chapter VI. (e) Import restrictions on any agricultural or fisheries product, imported, in any form, necessary to the enforcement of governmental measures which operate (i) to restrict the quantities of the like domestic product permitted. to be marketed or produced, (ii) to remove a temporary surplus of the like domestic product by making the surplus available to certain groups of domestic consumers free of charge or at prices below the current market level. LONDON E /PC/T/30 APPENDIX Page 10 Any Membor imposing restrictions on tho importation of any product pursuant to this sub-paragraph shall give public notice of. the total quantity or value of the product permitted to be.imported during a specified period and of any change in such quantity or value [provided that any supplies of the product in question which were en route at the time at which public notice was given shall not be excluded but may be counted, so far as practicable, against the quantity permitted to be imported in the period in question.] Moreover, any restrictions imposed under (i) of this sub- paragraph shall not be such as will reduce the total of imports relative to the total of domestic production, as compared with the proportion which might reasonably be expected to rule between the two in tho absence of the restrictions. In determining this proportion the Member shall pay due regard to the proportion prevailing during a previous representative period and to any special factors which may have affected or may be affecting the trade in the product concerned. The Member shall consult with any other Members interested in the trade in question, who wish to initiate such consultations. (f) Import and export prohibitions or restrictions imposed on private trade for the purpose of establishing a new or maintaining an existing monopoly of trade for a State trading enterprise operated under Articles 26, 27 and 28. Note on Article 19 The words in square brackets in 2 (e) should be retained only if the matter is not fully covered in Article 15. LONDON E/PC//T/30 APPENDIX Page 11 Restrictions to Safeguard the Balance of Payments. (Article 20). 1 Members may need import restrictions as a means of safe- guarding their external financial position and as a step towards the restoration of equilibrium on a sound and lasting basis, particularly in view of their increased demand for the imports needed to carry out their domestic employment, reconstruction, development or social policies. Accordingly, notwithstanding the provisions of Article 19, Members may restrict the quantity or value of merchandise permitted to be imported insofar as this is necessary to safeguard their balance of payments and monetary reserves. The use of import restrictions under this paragraph shall conform to the conditions and requirements set out in paragraphs 2, 3 and 4 of this Article. 2. Members undertake to observe the following principlés in the use of such restrictions:- (a) To refrain from imposing new or intensifying existing restrictions except to the extent necessary (having due regard to any special factors which may be affecting the level of the Members' reserves, to any commitments or other circumstances which may be affecting its need for reserves, or to any special credits or other resources which may be available to protect its reserves) (i) to stop or to forestall the imminent threat of a serious decline in the level of monetary reserves, or (ii) in the case of a Member with very low monetary reserves to achieve a reasonable rate of increase in its reserves. LONDON E/PC/T/30 APPENDIX Pge 12 (b) To eliminate the restriction when conditions would no longer justify the imposition of new restrictions under sub-paragraph 2(a) of this Article and to relax them progressively as such conditions are approached. (c) Not to carry their imposition of new import restrictions or the intensification of existing restrictions under paragraph 2 (a) of this Article to the point at which it involves the complete exclusion of imports of my class of goods. 3, (a) Any Member which, while not imposing restrictions under paragraphs 1 and 2 of this Article, is considering the need for the imposition of restrictions; before imposing such restrictions (or, in conditions in which previous consul- tation is impracticable, as soon-as possible after imposing such restrictions) shall consult with the Organisation as to the nature of its balance of payments difficulties, the various corrective measures which may be available, and the possible effects of such measures on the economies of other Members. The Organization shall invite the International Monetary Fund to participate in the consul- tations. No Member shall be required during such discussions to indicate in advance the choice or timing of any particular measures which it may ultimately determine to adopt. (b) The Organization may at any time invite any Member which is imposing import restrictions under paragraphs 1 and 2 of this Article to consult with it about the form and extent of the restrictions, and shall invite a Member substantially LONDON W/PC/T/30 APPENDIX Page 13 intensifying such restrictions to consult accordingly within thirty days. Members agree to participate in such discussions when so invited. In the conduct of such discussions the Organization shall consult the International Monetary Fund and any other appropriate International specialized agencies, in particular in regard to the alternative methods available to the Member in question of meeting its balance of payments difficulties. The Organization under this sub-paragraph shall, within two years of its institution, review all restrictions existing at its institution and subsequently maintained under paragraphs 1 and 2 of this Article. (c) Any Member applying or intending, to apply restrictions on imports under paragraphs 1 and 2 of this article may, if it sò desires, consult with the Organization with a view to obtaining the previous approval of the Organization for restrictions which it intends to maintain or to impose or for the maintenance or position in the future of restrictions under specified conditions. The Organization shall invite the International Monetary Fund to participate in the consultations. As a result of such consultations, the Organization may approve in advance the maintenance, imposition or intensification of import restrictions by the Member in question insofar as the general extent, degree and duration of the restrictions are concerned; and to the extent to which such approval has been given, the action of the Member imposing restrictions shall not be open to challenge under paragraph 3 (d) of this Article insofar as it relates to conformity with paragraphs 1 and 2 LONDON E/PC/T/30 APPENDIX Page 14 of this Article. (d) Any Member which considers that any other Member is applying import restrictions under paragraphs 1 and 2 of this Article in a manner inconsistent with the provisions of paragraphs 1 and 2 of this Article or of Articles 21 or 22, or in a manner which unnecessarily damages its commercial interest, may bring the matter for discussion to the Organization; and the Member imposing the restrictions undertakes ta discuss the reasons for its action. The Organization shall, if it is satisfied that there is prima facie case that the complaining Member's interests are adversely affected, consider the complaint. It may then, after consultation with the International monetary Fund on any latter falling within the competence of the International Monetary Fund, recommend the with- drawal or modification of restrictions which it determines are being applied in a manner inconsistent with the provisions of paragraphs 1 and 2 of this Article or Articles 21 or 22, or in a manner which unnecessarily damages the commercial interests of another Member. If restrictions are not withdrawn or modified in accordance with the recommendation of the Organization within sixty days, such other Members shall be released from such obligations incurred under this Charter towards the Member applying the restrictions, as the Organization may specify. (e) The Organization in reaching its decision under sub- paragraph 3(d) of this article shall not recommend the withdrawal or general relaxation of restrictions on the grounds that the existing or prospective balance of payments difficulties of the Member in question could LONDON E/PC/T/30 APPENDIX Page 15 be avoided by a change in that Member's domestic employment, reconstruction, development or Social policies. Members agree, however, that in carrying out such domestic policies they will pay due regard to the need to restore sound and lasting equilibrium in their balances of payments. 4. In giving effect to the restrictions on imports imposed under this Article, a member may select imports for restriction on the gounds of essentially in such a way as to promote its domestic employment, reconstruction, development or social policies; but the Member shall avoid all unnecessary damage to the commercial interest of other Member and will accept an invitation to consult with any other Member which considers its interests to be so damaged. 5. If there as persistent and widespread application of quantitative import restrictions under this Article, indicating the existence of a general disequilibrium which is restoring international trade, the Organization shall seek consultation with the International Monetary Fund. The Organization may then in collaboration throughout with the International Monetary Fund, initiate discussions t o consider whether other measures might not be taken, either by those countries whose balances of payments are under pressure or by those countries whose balances of payments are tending to be exceptionally favourable, or by any appropriate inter-governmental agency or c . agencies to remove the underlying causes of the disequilibrium. LONDON E/PC/T/30 APPENDIX Page 16 Members agree that they will take part in such discussions. 6. Throughout this section the phrase "quantitative import restrictions" includes the restriction of imports by State trading Organizations to an extent greater than that wihich would be permissible under Article 27 of this Charter,[provided that no Member shall be required to disclose information which would hamper the commercial operations of such a State trading Organzation]. 7. Members recognize that in the early years of this Charter all Members will be confronted, in varying degrees, by problems of economic adjustment resulting from the War. During this period the Organization shall, when required to take decisions under this Article or under Article 22, take full account of the difficulties of post-war adjustment which face the Members concerned. Notes on Article 20 1. The phrase immediately before the asterisk in paragraph 5 is intended to cover the Economic and Social Council of the United Nations as well as the inter-governmental specialized agencies. 2. The words in square brackets in paragraph 6 should only be retained if the matter is not adequately covered in the Articles dealing wîth State trading organizations. Non-Discriminatory Administration of Quantitative Restrictions (Article 21) 1. Subject to the provisions of Article 22, no prohibition or restriction shall be applied by any Member pursuant to this Section on the importation of any product of any other Member country, or LONDON E/PC/T/30 APPENDIX Page 17 on the exportation of any product destined for any other Member countryr unless the importation of the like product of all third countries, or the exportation of the like product to all third countries, is similarly prohibited or restricted. 2. In pursuance of the principle set forth in paragraph 1, Members undertake in applying import restrictions to observe the provisions contained in the following sub-paragraphs:- (a) Wherever practicable global quotas (whether allocated among supplying countries or not) should be fixed, and notice given of their amount in accordance with sub- paragraph 3 (b) of this Article. (b). Where global quotas are not practicable import restrictions may be applied by means of import licences without a global quota. (c) lmport licences or permits which may be issued in connection with import restrictions (whether or not within the limits of global quotas) shall not, save for purposes of operating quotas allocated in accordance with sub- paragraph 2(d), require or provide that the licence or permit be utilized for the importation of the product concerned from a particular country or source. (d) In cases were these methods of licensing are found impracticable or unsuitable, the Member concerned may apply the restrictions in the form of a quota allocated among supplying countries. In that event, the shares of the various Member supplying countries should in principle be determined in accordance with commercial considerations, LONDON E/PC/T/30 APPENDIX Page 18 such as e.g. price, quality and customary sources of supply. For the purpose of appraising such commercial considerations, the Member applying the restrictions may seek agreement with respect to the allocation of shares in the quota with all other Mermbers having a substantial interest in supplying the product cornered. In cases where this method is not reasonably practical, the Member concerned should allot to Member countries having a substantial interest' in supplying the product, shares based upon the proportions of the total quantity or value of the product supplied by such Member countries during a previous representative period, due account being taken of any special factors which may have affected or be affecting the trade in the product. (e) No conditions or formalities shall be imposed which would prevent any Member country from utilizing fully the share of any such total quantity or value which has been allotted to it, subject to importation being made within any prescribed period to which the quota may relate. 3. (a) In cases where import licences are issued in connection with import restrictions, the Member applying the restriction shall provide, upon the request of any Member having an interest in the trade in the product concerned, all relevant information as to the administration of the restriction and as to the import licenses granted over a past recent period and on the distribution of such licences among supplying countries; provided, however, that LONDON E/PC/T/30 APPENDIX Page 19 there shall be no obligation to supply information as to the names of importing or supplying firms. (b) In the case of import restrictions involving the fixing of quotas (whether or not allocated among supplying countries), the Member applying tho restrictions shall give public notice of the total quantity or value of the product or products which will be permitted to be imported during a specified future period, and of any change in such quantity or value. (c) In the case of quotas allocated among supplying countries, the Member applying the restriction shall promptly inform all other Members having an interest in supplying the product concerned, of the shares in the quota, by quantity or value, currently allocated to the various supplying countries. 4.. Wîth regard to restrictions imposed in accordance with sub- paragraph 2. (d) of this article or under sub-paragraph 2 (e) of Article 19, tne selection cf a representative period for any product and the appraisal, of any special factors affecting the trade in the product shall be made initially by the Member imposing, the restriction: Provided, that such Member shall upon the request of any other Member having a substantial interest in supplying that product, or upon the request of the Organization consult promptly with the other Member or with the Organization regarding the need for an adjustment of the base period selected or for the re-appraisal of the special factors involved. 5. The provisions of this Article shall apply to any tariff quota established or maintained by any Member. LONDON E/PC/T/30 APPENDIX Page 20 Exceptions from the rule of non-discrimination (Article 22) 1. The provisions of.this Section shall not preclude: (a) restrictions with equivalent effect to exchange restric- tions authorized under Article VII, Section 3 (b) of the articles of Agreement of the International monetary Fund; (b) prohibitions or restrictions in accordance with sub- paragraphs 2 (a) (i) or 2 (d) of Article 19; (c) conditions attaching to exports .which are necessary to ensure that an exporting country receives for its exports its own currency or the currency of any member of the International Monetary Fund specified by the exporting country; (d) restrictions in accordance with Article 20 which either: (i) are applied otherwise consistently with article 21 against imports from other countries by a group of territories with common quota in the International Mdonetary Fund, or (ii) assist in the period until,31 December 1951, by measures not involving substantial departure, from the provisions of article 21, a country whose economy has been disrupted by war, or, both (iii) provide a member with additional imports above the maximum total of imports which it could afford in the light of the conditions in paragraph 2 of Article 20 if its restrictions were consistent with Article 21, and (iv) have equivalent effect to exchange restrictions which are permitted to that member under the Articles of Agreement of the International Monetary Fund or under the terms of any special exchange agreement which may have been made between the LONDON E/PC/T/30 APPENDIX Page 21 member and the Organization under Article 23: Provided that a member which is not imposing restrictions on payments and transfers for current international transactions many apply import restrictions under Section (iii) of this sub-paragraph in special circumstances and only with the prior approval of the Organization in agreement with the International Monetary Fund. 2. If the Organization finds, after consultation with the Inter- national Monetary Fund on matters within the competence of the Fund, that import restrictions or exchange restrictions on payments and transfers in connection with imports are being applied by a member in a discriminatory manner inconsistent with the exceptions provided under this Article or in a manner which discriminates unnecessarily against the trade of another member, the member shall within sixty days remove the discriminations or modify them as specified by the Organization: Provided, that a member may, if it so desires, consult with the Organisation to obtain its previous approval for discrimination, under the procedure set forth in Article 20, paragraph 3 (c), and to the extent that such approval is given, the discriminations shall not be open to challenge under this paragraph. 3. When three-quarters of the members of the Organization have accepted the obligations of Article VIII of the Articles of Agreement of the International Monetary Fund, but in any event before 31 December 1951, the Organisation shall review the provisions of this Article, in consultation with the International Monetary Fund, with a view to the earliest possible elimination of discriminations under sub-paragraphs (d) (iii) and (iv) of this LONDON E/PC/T/30 APPENDIX Page 22. Article which restrict the expansion of world trade. Exchange Arrangements (To replace Articles 23 and 24 of the Draft Charter) 1. The Organization shall seek co-operation with the International Monetary Fund to the end that the Fund and the Organization may pursue a co-ordinated policy with regard to exchange questions with- in the competence of the Fund and questions of quantitative restric- tions or other trade measures within the competence of the Organization. 2. Members agree that they will not seek by exchange action to frustrate the purposes or this Charter, and that they will not seek by trade action to frustrate the purposes of the Articles of Agree- ment of the International monetary Fund. 3. In order to avoid the imposition of trade restrictions and discrimination through exchange techniques, and in order to avoid the danger of conflicting jurisdiction between the Organization and the International Monetary Fund in exchange matters, members of the Organization shall also under take membership of the International Monetary Fund; Provided, [that any country which is wiling to join the Organization but is unwilling to join the International Monetary Fund may become a member of the Organization if it enters into a special exchange agreement with the Organization which would become part of its obligations under this Charter, and provided further that a member of the Organization which ceases to be a member of the International Monetary Fund shall forthwith enter into a special exchange agreement with the Organization, which shall then become part of its obligations under this Charter. 4. A special exchange agreement between a member and the Organiza- tion under paragraph 3 of this Article must provide to the satis- faction of the Organization, in collaboration throughout with the LONDON E/PC/T/30 APPENDIX Page 23 International Monetary Fund, that the purposes common to the Organization and the Fund will not be frustrated as a result of action in exchange matters by the member in question. 5. A member which has made a special exchange agreement under paragraph 3 of this Article undertakes to furnish the Organization with such information as it may require, within the general scope of Article VIII, Section 5, of the Articles of Agreement.of the International Monetary Fund, in order to carry out its functions relating to this special exchange agreement. 6. The Organization shall seek and accept the opinion of the International monetary Fund whether action by the member in exchange matters is permissible under the terms of the special exchange agreement and shall act in collaboration with the International Monetary Fund on all questions which may arise in the working of a special exchange agreement under this article. Note on Article 23 With respect to the words in square brackets in paragraphes reference should be made to paragraphs 3 and 4 of the report covering this Article. 4. Subsidies. General Undertaking Regarding Subsidies -Elimination of Export Subsidies - Exceptions (Article 25) 1. Except as provided in paragraph 2 and 4 of this article, if any member establishes or maintains any subsidy, including any form of income or price support, to the domestic producers of any product, which operates to increase the exports of such product from, or to reduce the imports of such product into, the territory LONDON E/PC/T/30 APPENDIX Page 24 of the member, such member shall notify the Organization in writing as to the extent and nature of the subsidization, as to the antici- pated effect of the subsidization on the quantity of the product imported into and exported from the territory of the member, and as to the conditions making the subsidization necessary. In any case in which it is determined that serious prejudice to the interest of any member is caused or threatened by the operation of any such sub- sidization, the member granting such subsidization shall undertake to discuss with the other member or members concerned, or with the Organization, the possibility of limiting the subsidization. 2. Except as provided in paragraph 4 of this article, no member shall grant, directly or indirectly, any subsidy on the export- ation of any product, or establish or maintain any other system which results in the sale of such product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market, due allowance being made for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability. The preceding sentence shall not be construed to prevent any member from exempting exported products from duties or taxes imposed in respect of like products when consumed domestically or from remitting such duties or taxes which have accrued; the use of the proceeds of such duties or taxes to make payments to domestic producers would be considered as a case under paragraph 1 of this Article. Members shall give effect to the provisions of this paragraph at the earliest practicable date, but in any event not later than three years from the day on which this Charter enters LONDON E/PC/T/30 APPENDIX Page 25 into force. If any member considers itself unable to make the provisions of this paragraph effective in respect of any specified product or products upon the expiration of such period, such member shall, at least three months before the expiration of such period, give to the Organization a notice in writing to 'that effect, accompanied by a complete analysis of the practices in question and the facts justifying then and an indication as to the extension of the period desired. It shall then be determined whether such period should be extended for the member desiring an extension in respect of the product or products concerned. 3. A system for the stabilization of the domestic price of a primary product, which sometimes results in the sale of the product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market, may be deter- mined by the Organization not to be a subsidy on exportation under the term of paragraph 2 of this Article if it has at times result- ed in the sale of the product for export at a price higher than the comparable price charged for the like product to domestic buyers and if the system is so operated, either because of the effective limitation of production or othewise, as not to unduly stimulate exports or otherwise seriously prejudice the interest of other members. [....] 4. (a) In any case of subsidization of a primary commoodity, whether falling under paragraph 1 or paragraph 2 of this Article, if a member considers that its interest is seriously prejudiced by the subsidy or if the member granting the subsidy considers LONDON E/FC/T/30 APPENDIX Page 26 itself unable to comply with the provisions of paragraph 2 within the time limit laid down therein, the difficulty may be deemed to be a special difficulty of the kind referred to in Cahpter VI, and in that event, the procedure laid down in that Chapter shall be followed. (b) If it is determined that the measures provided for in sub- paragraph (a) of this-paragraph have not succeeded, or do not promise to succeed, irithin a reasonable period of time, in removing, or preventing the development of, a burdensome world surplus of the primary product concerned, the requirements of paragraplis 1 and 2 of this Article shall cease to apply in respect of such product as o? the affective date-of such deter- mination and shall not be re-applied in respect of such product until a date determined in accordance irith procedures approved by the Organization. (e) 1iotvwthatending the provisions of paragraphs 2 and 4 (b) of this Article, ne member shall grant any subsidy on the exportation of any pririary product .lhich 1as the effect of acquiring for that nieziber a share cf -rorld trade in that product in excoSs of the shares vrhich it had. during a previous représentative period, account being taean insofar as practicable of any special factors 'dhich nhay have affected or si. be affecting the trade in that product. The selection of a representative period for any product and the appraisal of any special factors affecting the trade in the product shall be made initially by the i-eàber granting the subsidy;. Provided, That such member shall, upon the request of any other member having an important interest in the trade in LONDON E/PC/T/30 APPENDIX Page 27 that product, or upon the request of the Organization, consult promptly with the other member or with the Organization regarding the nucd for an adjustmrcnt of the base period selected or for the re-appraisaJ of the special factors involved. 5. Any d'-termination required by or appropriate to the Operation of this Article shcJ.1l bc made under procedures established by the Organizatioci in accordance *,rith.Article 55: . 5.. State TredLE =Ton-discriinatci.v Administration cf Stata TradinP gntrprise (rijc26) 1.. If any Member e.stkxblishes or j intniris a state enterprise, wherever located, which ii:t.ports, ijxEorts, purchased, seus, or distributes any product, cr if any i;enfber ,rants cxclvsive or special privileges, fon.ial1y or in tf'ect, to any enterprise to import, export, rurchasc, seli, distribute, or produce7 arn pzoduct, Z/=d exercises eff'ctivc control over the trading operations of' such enterprise/ the commnercu of' the other lI4r.ibers shl.l be accordéd treatment no less f'avourable than that accorded to the commerce of any cowintry other than that in vhich the enterprise is located in respect of the purchasE; or sale by such enterprises of' any product. To this end such e. ..erprise sha1, in madkng its external purchases or sales of' any Product, be influenced solely by coinmarcial considar.atioei's, suc as price, yli.ty, market-abihity, transportation, ard other terrs -of purchase or sale, and -ase differential ctistoes treatraent.. The MeMnber maintaining such State enterprise, or granting exclusive or special privileges to an enterprise shall mace available such LONDON APPENDIX Page 28 information as may be appropriate in connection with the consultation provided for in Article 30. 2. The foregoing provisions of this Article relate to purchases by State enterprises for re-sale. With respect to purchases by State enterprises for governmental use and not for re-sale, Members agree to accord to the commerce of other Members fair and equitable treatment having full regard to all relevant circumstances. 3, For the purposesof this Article, a state enterprise shall be understood to be any enterprise over whose operations a Member government exercises effective control. : E.p3n on of Tra-de State l'onoLoliaof Individual Prodncts 1. If anry lic-nber `t;hcr thin a 1ien:b-.r subject to the provisions of Article 2@7 establishes, mraintainz or authorizes, foir.ally or in effect, a cornplete or su7bztantirZLly coinçlete rieonopply of tho importation or exportation of any product, such Me;r.ber shall, upon the request ofY any otthr 1ein.ber cr îiScbers hwain: an interest in trade .th that ier.bcr in.thz; product concerned, onter into negotiations ',ith such Âweraber or 4uMibers, in the mannerr provided. for in respect of tariffs under Articlc 18, with regard to: (2) in the case oeI !.m ipport Iaonopoly, the maxinnza .x'rgin by mhich the price for an imported product charged by the * monopoJ. in the home market nlay exceed the landed cost, before p.%ayent of any duty of -uch product puwchaaed by the monopoly from suppliers in Member States, or (b) ir. the case of an export monopoly, t1ie maximum margin by which the price for a Froduct charged by the monopoly to purchasers 'in such Member States may exceed the prioe for LONDON E/PC/T/30 APPENDIX Page 29 such product charged by the monopoly in the home market after due allowance in either case for internal taxes, transportation, distribution and other exponses incident to purchase, sale or further processing, and a reasonable martin of profit. For the purpose of applying these margins regard may be had, in respect of imports, to average landed costs and selling prices of the monopoly and, in respect of exports, to average prices charged by the monopoly for experts and sales in the home market respectively, over recent periods. Members newly establishing any such monopoly in respect of any product shall not create a margin as defined above greater than that represented by the maximum rate of import or export duty which may have been negotiated in regard to th.st product pursuant to Artiole 18. Y7ith regard to arw monopolized product in respect of %vYhich a aDdmnum margin nas bEen eastabli,-hd v-nrsuant to this Article, the monopoly slhal as far as practicable and subjEect to the other provisions oi this Charter- (i) import ffrom Lmfber countries and offer for sale at prices.chargd -7ithin such maximun xr¢zins such quantities of tne,.product as wil be suff'icient to satisfy the full dom tic d<nand l'or the ifrorbed procluct, account being takon of any rationing OI' the product to consumers .which may be in force at that tiane, ard- LrILDO,! E:/'C/T/3Ç AÂ?E\TDIX Pagc 30 (ii) in tho case of an export monopoly, oiefur for sale to, purchast;rs in i.lember :-;ourtries at prices charged '.:i.thin such maximum niargins ciuantities of the product to the fullest e-xtcnt that they can bc mnad available for euxportation. 2. In applying the provisions of this Article, due regard shal be had for the fa¢t that sone mronopolies are established and operated solely for revenue purpozcz. ïê'anion of Trade by~ Comtilote State Iv;onopolios_ of Import Trade (Aricle 28 Any h4ember est ablishing or maintaining a complete or substantially. complete monopoly of its ingport trade shall promote the eDpansion of its foreign trade ,ith the other ei*mbors in consonance with the purposes of this Charter. To this end such *Member hall negotiate vrith the other Mwrmbers an arrangement under which, in conjunotion ;ith q.he granting of tariff concessions by oucb other Members, and in consideration of the other benefits of this Chapter, it shall undertake to import in the aggregate over a period products of the other Mefbers valued, at not less. than an zjnount to be agreed upon. This purchase arrangement shall be subject to periodic adjustment.7 6. Relations vith Non-Member- Contractuaæ. Relations With Non-Members -~ Treatment of Tradae of Non-liembers Article 31) (See Section 6 of Pevicvwr of -ork). LONDON E/PC/T/30 ANNEXURE Page 1 ANNEXURE MULTILATERAL TRADE-AGREEMENT NEGOTIATIONS Procedures for Giving Effect to Certain Provisions of the Proposed ITO Charter by Means of a General Agreement on Tariffs and Trade Among the Members of the Preparatory Committee LONDON E/PC/T/30 Page 2 INTRODUCTION The Preparatory Committee has agreed to recommend to the governments concerned that the Committee sponsor tariff and preference negotiations among its members to be hold in Geneva in April of 1947. This agreement is set forth in the Committee's resolution of _ _ . Upon the completion of these negotiations the Preparatory Committee would be in a position to complete its formulation of the Draft Charter and approve and recommend it for the consideration of the general international conference on trade and employment; and the general international conference would be in a position to consider the Charter in the light of' the assurance afforded as to the implementation of the tariff provisions. 1. PROPOSED NEGOTIATIONS AMONG MEMBERS OF PREPARATORY COMMITTEE The results of the negotiations among the members of the Preparatory Committee will need to be fitted into .the framework of the International Trade Organization after the Charter has been adopted. The negotiations rust, therefore, proceed in accordance ivith the relevant provisions of' the Charter as. already provisionally formulated by the Preparatory Committee. In the light of these.pro'viiJions, the comments and explanations which follow may be useful as a guide to the negotiations. General Objectives An ultimate objective of th,, frai'ft Charter, claborated in Article 18, is to bring about the substantial reduction of tariffs and the elimination of tariff preferences. The negotiations among the members of. the Preparatory Committee should therefore be directed to this end, and every effort should be made tc achidve as much progress toward this goal as may be practicable in the circumstances, having regard to the provisions of the Dralt Charter as a whole. LONDON E/PC/T/30 ANNEXURE Page 3 2. GENERAL NATURE OP NEGOTIATIONS The Draft Charter, in Article18, provides that tariff negotiations shall be on a "reciprocal' and" mutuallyy advantageous" basis. This means tlhat no country .iould.bo expected to grant concessions unilaterally, without action by other, or to grant concessions to others which arc nct adequately counterbalanced by concessionz in return. The proposed negotiations arc also to bc conducted on a selective, product by product 'basis which wrill afford an adequate opportunity for taking into account the circumstances surrounding each product on which a concession mry bc considered. Under this selective procedure a particular product may or may not be made the subject o? a tariff concession by a particular country. If it is decided to grant a concession cn the product, the concession may either take the formn of a binding of the tariff against increase or a reduction of the tariff. If the tariff on the product is reduced, the reduction may be made in greater or lesser amount. Thus, in seeking to obtain the substantial reduction of tariffs as a general objective, there is ample flexibility undt-r the selective procedure for taking into account the needs of individual countries and individuel industries. * The same consideration and procedures would apply in the case of import tariff preferences, it being understood that, in accordance with the principles set forth in Article 8 of the Draft Charter relating to most-favoured-nation treatment, any preferences remaining'after the negotiations may not be increased. The various observations in this reptz't regarding the negotiation of tariffs and tariff preferences should not be road as applying (mutatis mutandis) to the negotiation of state trading margins under Article 27 of the Draft Charter. LONDON E/PC/T/30 ANNEXURE Page 4 3. `ENDEMAL RULES TO BE OBSERVED IN NEGOTIATIONS Paragraph 1 of itrticle 18 o?4 tilo Draft Charter as explairned in the Report of Cor-aaittee II, sets forth the rcl'loing, self-exJ.lanatory, rules to be observed durin. the negotiations: "(a) Pricr lnterational comaîit.éents shall not be pcrmnitted to stand in the *'ray of negotiations with raspcct to tariff preferences, it being understood that section resulting from suoh negotiations. shl.l not require tAhe i..odification of existing international obligations except by ag reemient between the contracting, parties or, failing that, by termination of such obligations in accoriançe vith their termus. ; (b) All negotiated reductions in rmost-favoured-nation i;aport tariffs shall oprate autoiuatically to reduce or elLainate margins o? preference" (c) The binding or consoli<lition of lovi tariffs or of tariff- free treatment shall in principle be reco- d as a concession equivs1rnt in vilue to the substantial r )n of high *-tairiffs or the elinination o? tariff pre. ._es." 4. hICSCELULNEuOUS RULES 0F GUIDaNCE There are a nuabber of additional questiorns which should be borne in mind in preparing °or the proposed t 'f-negotiationrs ùnong the members of the Preparzatory Ccûaittee: Base Date for Negotiations Article S of the Druft-Charter, as developed by the Preparatory Coamittee, would except flri tie most-favoured-nation provisions of the Charter preferences whichh do not exceed the preferences re..iaining after ... negotiations." This ineans that all jiargins cf preference remaining after. negotiations would be bound against increase. Uso, -..as we.lained above, Article i8 requires that reductions of aost-favoured- nation rates o? duties shall operate-."automaticoj.ly" to reduce or eliminate margins of preference. In order to determine what residxia1l..preferences shall be bound ainst..inereas.e under article 8, ani in order to determine vhat preferences shall be reduced or eliminate& automatically under Article 18, it is necessary to establish a date which will fix the height of LONDON E/PC/T/30 ANNEXURE page 5 the preferences in affect prior to the negotiations. It would be desirable for such purposes to fix a single date, common to all the countries participating in the negotiations. However, the discussions during the first session of the Preparatory Committee indicate that the establishment of a co..Laon date presents certain difficulties and may not be practicable. It is therefore suggested that immediately following the close of the first session of the Co.arittee each a.1a;aber oe the Cciittec concerned should inforiu the Secretariat of the United Nations as to the date which it proposes to use as the base datu for negotiations witlh respect to preferencEs. The Secretariat will pro.-iptly infor.z the other .eabers. The base date for negotiations c3tablished by any country granting preferences should hold good flor its neotiations on all products with all other countries r2embers of the Preparatory Conmittee, and should. not vary froj. country to country or fro.a product to product. Avoidance of New Tariff or other Restrictive measuress It is important that zrenbers do not effect new tariff ;aeasures prior to the negotiations which would tend to prejudice the success of the negotiations in achieving progress toward the objectives set forth in Lrticle 18, and they should not seek to improve their bargaining position by tariff or other restrictive measuress, in preparation for the negotiations. Changes in the form of tariffs, or changes in tariffs owing, to the depreciation or devaluation of the currency of the country maintaining the tariffs, which do not result in an increase of the protective incidence of the tariff, should not be considered as new tariff increases under this paragraph. LONDON E/PC/T/30 ANNEXURE Page 6 Principal Supplier .'io It is generally agreed that the negotiations should proceed on the basis'of the "principal supplier" rule, as defined in this paragraph. This means that each country would be expected to consider the granting, of tariff or preference concessions only on products of which the other countries, members of the Preparatory Committee, are, or are likely to be, principal suppliers.' In determining whether, on the basis of the "principal supplier" rule, a product is to be included in the negotiations, reorence should be had not merelyy to whether a particular .eizber of the Preparatory Committee is, or may because, a principal supplier, but to whether the tae.-abers of the Committee, taken as a whole, supply, or are likely to supply, a principal part of the product in question. In other words, if a principal part of total imports of a particular product into a particular aeaber country is supplied by the other .ie.xbers of the Preparatory Committee taken together.then the importing member should, as a general rule, be willing to include that product in the negotiations, even though no single other member of the Committee, taken by itself, supplies a principal part of the total imports of the product. In estimating the future prospects of a member, or the members taken together, to become a principal supplier of a product, consideration should be given to the probable disappearance of ex-eneay countries as suppliers of certain products and of the changes in the currents of trade created by the war. Fora of Tariff Schedules It is contemplated that the tariff negotiations among the members of the Preparatory Commiittee would be multilateral, both in scope and in legal application. LONDON E/PC/T/30 ANNEXURE Page 7' Thus,w%ere would result frm. the negotiations a total of sixteen schedules of tariff concessions, each schedule settnrg forth a description of the products and of th maxima concession) rates of duty thereon which would be applicable in respect of the iLports into a particular country. In' his my each member of the Committee would bc contractually entitled, in its own right and independently of the most-favoured-nation clause, to each of the concessions in each of the schedules of the other members. The ~.iultilateral for.a of the tariff schedules is designed to provide lore stability than has existed irn the rast under bilateral tariff? agreements, to assure certainty c.'f broad action for the reduction of tariffs,tand to give to countries a right to tariff concessions on particular products which such countries might wish to obtain, but could not obtain under bilateral agreements because of their relatively less important position as a supplier o? the product concerned. The raultilateral for.a also gives expression to the tact that cach country stands to gain when: another country grants tariff reductions on any product, even though prinarily supplied by a third country. This point can be finally settled when the negotiations have proceeded sufficiently to enable ail.the varying ?actors to be taken into account. m Ilf' ~the principles indicated. in .article 28 o? the Draft Charter should prove acceptable to thé USSR, these inay L addition, be a schedule relating to an undertaking by the USSR te purchase annually products valued at not less than an aggregate amount to be agreed upon. LONDON E/PC/T/30 ANNEXURE Page 8 Status of Preferential. Rates of Duty The formulation by each member of the Preparatory Committee of a schedule of tariff concessions which would apply to all other members raises a question as to the method of relating to such schedules preferential rates of duty which have been negotiated as well as preferential rates on products for which most-favoured-nation rates have been negotiated. There appear to be two methods which might be followed: 1. Such preferential rates might be incorporated in the multilateral schedules, qualified by the requirement that they apply onlyto the prcd.cts of the countries receiving preferred treatlernt. 2. Such preferential rates ..Light be incorporated in separate schedules vihich would apply only to the'preferrei countries. It should be left for the country concerned to duterinine which of the two methodss indicated. above dt desires to follow. *owever, a single schedule containing both most-favoured-nation and preferential rates would seem to facilitate the v.ork of both traders and governments. 5. PROCEDUES 'FOR CONDUCTING NEGCOTIATIOIMS .J&ONG THE OAVLES 0F ThE PREP-RhTORY C0.d.-iITTEE It is believed tbat the tariff negotiations raong the *uanbers of the Preparatory Comaittee can best be conducted in four stages: 1. First Stame. Each ;.ie.nbur should trans.-it to each other r.iember from which it desires to obtain tariff' concessions, as soon as possible and preferably not later thar 31 December 1946, a preliminary list of concessions which it proposes to request of such other member, This list should set forth for each product concerned LONDON E/PC/T/30 ANNEXURE Page 9 (a) an indication cf tho existing rate of duty (where known) (b) an indication of the requested rate of duty. Thirty copies of this list should be sent simultaneously to the Secretariat of the Un;ted Ntions, which will transmit one copy to each of the other members of the Preparatory Committee. In order to facilitate the negotiations, each member of the Preparatory Committee should transmit to the Secretariat of the United Nations, as soon as possible and preferably not later than 31 December 1946, thirty copies of its customs tariff showing the rates of duty currently applicable. The Secretariat wiil promptly transimit one copy to each cf the other members of the Committee. 2. Second Stage. At the opening of the second session of the Preparatory Committee, each member should submit a schedule of the proposed concessions which it would be prepared to grant to all other members in the light of the concessions it would have requested from each of them. 3. Third State. Notwithstanding the multilateral character of the negotiations, it will usually be found that only two or three countries wiil be directly and pr;lnrilJy concerned in the concession on a particular product, and that the interest of'other countries, although material, vIll be secondary. It is therefore proposed that the third stage of the negotiations il1 ordinarily consist of discussions on particular products between two, or possibly three or four countries. For the purpose of engaging in such negotiations, therefore, each country should to the extent practicable have separate groups of persons competent to negotiate with each of the other countries-with which important negotiations are likely to be conducted. LONDON E/PC/T/30 ANNEXURE Page 10 The member of negotiating groups required by each country will of course tend to vary with the soope of its trade relations In the case of large trading countries having important trade relations with most or aIl of the other members of the Coommittee, a large number of negotiating groups will be required. In the case of countries haring less extensive trade relations, a smaller number of negotiating groups irill be sufficient. In any aevnt the timing of negotiations between particular groups will. need to be scheduled, and in order that the United Nations Secretariat may have adequate notice to prepare for such scheduling, it would be desirable for each member of the Committee to notify the Secretariat, as far in advance as may be practicable, of the number of negotiating group which the member proposes to send. to the negotiating meeting, and of the country or countries to which each negotiating group relates. 4. Fourth stage. The progress of the negotiations should be subject to general review by the Committee as a whole periodically during the negotiations an also in the final stage. General review by the Committee as a whole will enable each member to assess the benefits which it is likely to receive from the series of negotiations in the light of its total contributions, and will offset the tendency toward limiting concessions vihich results fror a comparison of benefits exchanged between twi countries alone. It is claar that the general, review by the Committee as a whole cannot take the form of a detailed LONZODI .',/r(/'r/30 iiNNk;XUlik: Page Il ox=inatior, by thu Coiri.ittce of unch concussion. Rather, tho Co;:u-.dttcu -.vould rovitJv the general lovUl cf' tarirf reduction acliuvjd, as indicated in SUa,'J.^:y reports. At tho c:.' tiu oach mambor should be entitled to reccivo,, on rcmqueet, detaila- infor-natior. as to the zta.tuz oa negotiations on particulax' -pioducts bctavcr-n other i.-inbers in order that it mLy bu it a ,0oition to srssert an intercat in such negotiationz. In ordc;r that the negotiations niayr procet;d in an orderly f.-;lion, it is desirable that a Steorin , Comzmitteo be established s s;con, a-., thu vaziouz delegations have assenblAd at thu meeting. 6. '-,uLT oF 'izC rEGoTIATIo0iS If the tariff negotiations proceed successfully along -hèe linos set ?orth abovc, there should emerge from the nocotiationz a tiri±T schedule for cachi oniber coach schodulo containing concessions granted to ail of the other nes'iabrs in their ovm right. These 3chedàl"ed. might be identified as .fo"lovis: LONDON E/PC/T/30 Page 12 Name of Country Australia Belgo-Luxemburg-Netherlands Customs Union, Belgian Congo and Netherlands Overseas Territories` Brazil Canada Chile China Cuba Czechoslovakia France and French Union India New Zealand Norway Syro-Lebanese Customs Union Union of South Africa Union of Soviet Socialist Republics United Kingdom and the overseas territories for which It has international responsibility. United States Schedule Schedule I Schedule II Schedule III Schedule IV Schedule V Schedule VI Schedule VII Schedule VIII Schedule IX Schedule X Schedule XI Schedule XII Schedule XIII Schedule XIV Schedule XV + Schedule XVI Schedule XVII Note: Separate, or possibly sub-divided, schedules may be necessary in the case of certain countries in order to provide adequately for certain overseas territories. GENERAL AGREEMENT ON TARIFFS AND TRADE Once agreed upon, the tariff schedules resulting from the negotiations among the Members of the Preparatory Conmittee cannot easily be held in abeyance pending action by the general international conference on trade and employment and the adoption of the Charter by national legislatures. + If the principles-indicated Article 28 of the Draft Charter should prove acceptable to the USSR, this schedule would relate, not to tariff concessions, but to an undertaking to purchase annually products valued at not less than an aggregate amount to be agreed upon. LONDON E/PC/T/30 ANNEXURE Page 13 It is therefore proposed that the tariff schedules be incorporated in an agreement among the members of the Preparatory Committee which would also contEin, eîthtr by reiference or by reproduction, those Sencral provisions of Chnpter IV cf the Cnarter considered essential to safeguard the value of tile tariff conceosaions wnd such cther provisions as may be appropriate. The Guner.al Agreement should contain a provi'ion under vrhîch the signatoy governments could make any adjustments in the Agreement inich mnay be desirable Jr necessary in the light of the action taken by the International Conference on Trade e-,d Employmnent on thc Draft Charter. A draft outline of tnhe General Agreement on Tariff s ani Trade is attached. The Drf ting Cozmnittee provided for in the Resolution Of the Prcparatory Committee of should be instructed to consider this outline and to prepare a more complete draft for the consideration of the Preparatory Comnittee as scon as possible after its meeting in April. The General Agreenent on Tariff s and '2rade should be signed and made public at the close of the tariff negotiations. The Agreemernt should be legally independent of the Charter and. should be brought into force as soon as possible aftcr its signature and publication. Countries should bc free to vnthdravw from the agreement, at the end. of three years cr thercaftcr. on giving s x months prier notice. This will provide an oppdrtunity for a review of the a cr.ment- and'i. any adjustment bf the tariff schedules wrhach nayb be congîdered desirable. The. agreement should conform in. every -way to the priroiples laid dcwn in the Chartelr and should not contan any provision wnich would prèveht the operation of any provision of tne Charter. .The tariff concessions granted urner the agreement should be provisionally generalized to,the trade of other countries pending LONDON E/PC/T/30 Page 14~ the oinsideration by the International Conference on Traec and Employment of the qescioLnwhehterh eneniîts granted under the Charter should be extended to oeuntrecswvhich do not join the IntrinaioLnal Trade Organization and v.'hich the-efore cdo r.ot accept the obligations of Article 18. 7. CREATION C,,' FROVISIONAL âGEZOCY EIsNlh ESTABLISI-fid'rT OF INTEIRNATIOIAL TRADE ORG-ANUTATION Certain of the Provision of the General Agroement on uIr.if'fs and trade, for expunple chose incozorating Article 29 of the Charter (emergency action on imports of particular products)-and Article 30 of the Çharter (rulliîfication or îimipairmat;nt), :i11 require for their successful operation the existence of an internat:LonalJ )ody. It is proposed, therefore, that the rnemfers of the Prtparatory Ccmoittee nhich mnake effective the Gencral Agreerent on tnriffs and trade should create ; provisLonal internFtionai'agency for this purpose. Thîs provisional agency would go out of' existence upon Lhe establishment cf tne International Trade Organization. 8. RELATION O? TEZ GEZE iÀAL AGREl: NI ON TARE:FS AM TRADE TO TFE INTERNATIONAI 'RA'DE ORG.MAIZATION ArTER TIHZ ORGANIZATION IS EST.BLLISHE:D 1. Interim Tariff Cornnittee The DraIt Charter as novi f ornulated provides in .rticle 6' that the countries wlich make effective the General Agreement on Tariff's and Trade shall constitute the original members of the Interî. Tarîff Conmittee to be set up within the Interiational Trade Og+ganzation aiter the International Cor.ference on Trade and Disployment has met anl the Organiza-.ion has bcer, established. The Interinm Tariff Commiîttee would havc the f'unction f determin2.ng whether (wit.h respect to any negotiations subsequent to those culrinating in the General Agreement on Tariffs and Tràde) any Lmber of the OrganizatlonjiL_!s faaled to laîve:up to its obligations LONDON E/PC/T/30 ANNEXURE Page 15 regarding tariff negotiations and, ur.ler paragraph 3 of Article 18 of the Charter, of authorizLng complainihg Miçmbers to withhold ta-riif benefits from offending iviembers. The following points should be noted veth regard to this function: (a) A M1nmber of the Organization may be admitted to membership in the Committee vwhen the Member has completed tariff negotiationss"comparable ir. scope or eifiect" to the negotiations already completed'by the original members of "the Committee. Thus, wYhat is achieved by way of tariff action in General *Agreement on Tariffs and Trade will become the standard to which Members of thé Organization will be expected to conform in order to obtain membership on the.Interiza Tariff Commnttee. In applying this standard the Commîttee should have regard to the.provisions of thcCharter as a vrnole.. .(b) Since it is agreed that the original members of the Interim Tariff CommÎttee viill have taken adequate steps toward iulfilment of the tariff obligations of the Charter in respect of negotiations among themselves (See Article III of the drait Generil Agreement on Tariffs and Trade), the Commîttee may not authorize one , original member of the Committee to withhold tariff concessions from another original member of the Committee.' This would be . without prejudice, of course,' to any decisions reached, under the auspices of thé organization, regarding a second series of tariff negotiations among the members of.ithe Committee. * It should be pointed out that the Organization, as distinct from the Committee, couJd authorize an original member of the Committee to vw!thhold benefits from another original member of the Comrwittee under certain other provisions of the Charter. LONDON E/PC/T/30 ANNEXURE Puge 16 (c) Members of the Interim Tarif' Committee must, in negotiations with members of t he Organigation which are not members of the Committee, be prepared to consider corcessions on products of interest to the latter which were not dealt with in the original negotiations. Refusal to negotiate on such products might warrant a legitimate complant. Accordingly, the Committee could in such cases autnorizc Member of the Organization which is not a member of the Cemmittee to withhold tariff benefits from a member of' the Committee, However, the extent to which a Member of the Organization which as not a member.of the Committee might withhold tariff benefits from . member of the Committee would be listed only to tariff concessions which the former had already made pursuant to Article 18 ard general tariff penalties ceuld not be applied. (d) The r.uthority o' the Conmattc.c weL-.: in .1l cases be limited to graîttng perînîssiozî to a v ocmbci of the Organization to withhold tariff benefits frori, anoth(be ir; no cvent could the Coernnittee coeipcl a 1viMc:ibar to withhold benefits, 2, Procedure for BroedoninE_.eeabershn:i ln Interin, Tarîff Conxnittee through AdditionvAl Ta.riff Nieotiîtions Procedures *nust be developed for assuring, by eetotiàation, action for the reduction of tariffs and the eliranation of prc-ferences by Members of the OrgaonzatLon wh-îch arc- not parties to the Gencral Agreement. on Tarîffs .ari Trade and herce would r.nt be orignal irierabets of the Intern T.-arîff Coelzittee., The folloverng alternative proôedures acre suggestcd for consideration: (a) The erîgLnal cf thc Inte=1 Tarnff. Cor.aittee would negotiate sep:arutc bilater!.l agreements wîth MeDbers of' the Organization wnr^h are not members of the Corimittee, and the latter vrould negotiatc such agreeuments-betvieen the=selres. LOIDON E/FC/T/30 AICflEXtJIE Page 17 The Committee would judge as to when a particular country had completed enough such agreements to entitle it to membership in the Committee. (b) A Member of the Organization which is not an original member of the Committee might offer to negotiate with the Comittee a multilateral schedule of concessions similar in scope and legal application to the schedules appeared to the General Agreement or. Tariffs and Trade concluded among the original members of the Interimn Tariff Committee; and the original members of' the Committee would agree to amend the multilateral schedules appended to the General Agreerment on Tariffs and Trade to the extent necessary to assure appropriate concessions on products of which the country not member of the Committee was a principal supplier. Whatever-prooedure is adopted, due weight should be given in the negotiating process to concessions already r.de as a result of prior negotiations. LONDON E/AC,/r:T/30 UNNEXURE Page 18 TENTATIVE AM PARTIAL VRvl.P GUTLDTE OF GENERAL AGREEMENT ON TARIFFS AND TRADE Tho governments in respect of which this Agreement is signed: Having been named by the Economic Social Council of the United Nations to prepare, for the consideration of the United Nations Conferenrc on Trade and Employment, a Draft Charter for an International Trado Organization of the United Nations; Having, as the Preparatory Committee for the Conference, recommended to the Conference the provisions of such a Charter, the text of which is set forth in the Reporz of the Preparatory Committee dated , 1947; and Being desirous of furthering the objectives :f the Conference by providing an example of concrete achievement capable of generaliLation te all countries on equitable terms; Have, through their respective Plenipotentiaries, agreed as follows: Article 1. During the life of the Agreement each signstory Government shall make effective in respect of each other signatory- government the provisions described below of the Draft Charter for an International Trade Organization of the United Nations recommended in the report of the Preparatory Committee dated , 1947: There would follow a list of the Articles to be included in the Àgreeme nt.7 2. Functions entrusted to the propused InLernational Trade Organization under any of the provisions of the Draft Charter incorporated in this Agreement by virtue of paragraph 1 of this Article shall, pending the establishment of the Crganization, be carried out by a provisional international agency consisting of delegates appointed by the signatory governments. LONDON E/PC/T/30 ANNEXURE Page 1 .Article II With regard to Articles 18, 2, and 28 of thc Draft Charter, vhich relate to negotiations for I The reduction of tariffs and the elimination of tariff preferences and, 2. Parallel action by state-trading enterprisess. the signatory governments declare that the-y have, by virtue of Article III of this Agreen-nt, taken this step .towards fulfilment of the obligations of these Articles in respect of themselves and that they stand ready, in conformity with the spirit of these Articles, to undertake similar negotiations with such other govurn-ments as may desire to become members of the proposed. International Tràde Organization. Article III Each signatory government shall accord ta the commerce of the customs territories of the other signatory governments the treatment provided for in the appropriate Sohedule annexed to this Agreement and made an integral part thereof. Article IV (This Article would set forth the general exception provided for in Article 32 of the Draft Charter) Article V (This Article would reproduce the provisions of Article 33 of the Draft Charter relating to territorial application) Article VI (This Articlewould permit revision of the Agreement, by Agreement among the signatories, if necessary or desirable in order to take account of changes in the Draft Charter. effected by the International Conference on Trade and Employment) LONDON E/PC/T/30 ANNEXURE Page 20 Article VII (This Article would provide for the entry into force of this agreement, its duration, and its termination. The agreementt would remain initial in force for three years. If not terminated at the end of the three-year period (which would require six months prior notice), it would remain in force thereafter, subject to termination or. six months' notice. NOTE: In addition, there would be a number of purely technical or legal provisions.

GATT Library

rn582ct0060

Report of Committee III. Resrictive Business Practices

United Nations Economic and Social Council, November 19, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

19/11/1946

official documents

E/PC/T/15 and E/PC/T/W.14-E/PC/T/17

https://exhibits.stanford.edu/gatt/catalog/rn582ct0060

rn582ct0060_92290023.xml

GATT_157

United Nations ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL I . LONDON E/1/T/1 19 Nmbezuer 1946 ORIGINAL: ENGLISH PREPARATOCY OOMMITTOE 0F THNTERNATIONALONÂNFERENCEN ON TADE AND EMPLOYMENTa -A Ex ION REPORT OF C0IITTEE III RESRICTIVE BUSIlES PRACTICES Nations Unies .. 1 1 - 1 . . 1; .. 1 . LONDON E/PC/T/15 Page 2 The Preparatory Committee of the International Conference on Trade and Employment established in its Third Executive Session, on 16 October 1946, the "Working Committee on Restrictive Business Practices", known as "Committee III". In its first meeting, 18 October 1946, .Lr. Piorrc DIEZERLIN (France) was elected Chairoan, ahd Senor Don Higino GONZ.IEZ (Chile) Vice-Chairnan. The following agenda vas . adopted: 1. Policy towards restrictive business practices - (a) In relation to the objectives of the International Trade Organization; * (b) mith reference to specific practices. 2. Procedure with respect to complaints. 3. Studies and Conferences relating to restrictive business practices. ag Obligations of Members. 5. Supple-entary'enforcewent measuress. 6. Continued effectiveness of domestic .easures against restrictive business practices. ' 7. , Exceptions to provisions relating to Restrictive, business practices. General prob1éeas involved in international treatment of restrictive business'practices, and the principles which should be ;applied by the International Trade Organization-in dealing with such -,practices, vere discussed at the second and third meetings. In its fourth meeting-on 30 October, the Com&attee appointed a Sub-ca.iittee composed of Messrs. EOI S (United Kingdom), IE ERTZ (Netherlazids) ,McGREGOR (Canada), MLMUCR (India), LONDON E/PC/T/15 Page 3 THICTGES (Belgium), and WvCOX (United. States), under the chairmanship of Hr. DIETEILIN (France). This Sub-Committee -mas instructed to study Articles 35 through 40 of the United States Draft Charter, takingg irto »ocount other drafts, observations, amendments', additions and'suggestions submitted by ilembers of the-Sub-Cozmittee.and of 'the full Committee. - The Sub-C'meitt'e heli'five sessions, examined 'ith care ail1 'suissios received, prepared and discussed'numerous tentative drafts. k -tentative diaf t prepared by the Ganadian Delegate, which attempted to take into account the several drafts and suggestions, -as discussed i-i detail by the Sub-Comcittee and was further revised.. The Sub-Committee then authorized the Canadian Delegate tb submit r this tentative draft, as revised, as a basis for discussion byr Com=ittee III. It. vras based on a sub- stantial measure of agreement in the Sub-Çommittee, though there r-ere divergencies of vie.. on somç points. Articles 34 ana 35 C^ this document ;ere discussed by Committee.III it its Fifth Session on 5 November. At this meeting, Committee III appointed the Canai an Delegate as its Rapporteur, and instructed him to prepare, with the'assistance of Delegates from France, .the United States, and the United lKUigdom as his consultants, a final -draft of proviions for international. treatment of restrictive business practices within `the'framework cf the Agenda,. .Thue 'rat:oft fChapter VSubmitted by the Rapporteur of Comzittee II mand 'the Advisers Appointed by the Com=itteeu Was submitted to the Conmittéeei .its Sevent Session on 8'November. The "Rapporteur's Draft. ôf the s'ina].Rep'ort of Committee .III. (Restrictive Business Practices) -to'the Xreparatory Committee of the International] LONDON Page 4 Conference on Trade and Employment was submitted to the committee in its EighthbSession. on 11 Noevmber 1946. In this meeting, the ao=ittee, approved the .saubstisnce ofr thns Report. However, an view of the fact that the form and the arrangement of the Report did not entirely confirm to the pr2no=ples laid do£n for final clports by the Heais of Delegations, the Conrittee anrtructed the Secretariat to prepare an arrangement of the Report ï.n conformity with these principles, and appointed a Drafting sub-Committee aompoed cof Messrs. BoLOUS (Unîted XKîgdom), and iB=om (P'noe) we-.WILCoX. (United States) to present a final text. LONDON E/PC/T/15 Page 5 ~~PAI . ~ . GENAL FINCIFIES A, I'olL.cy towerdr restrictive business -'ractices The Co=ittee bas not attempted to define precisely what ie. i.eant by restrictive business practices but has taken the phrase to mean brcadly those practice ln international. trade vhich restrain co=petttion, limit, ocess to' markets, ar foster monopolietic control. and thus 3uei,;ttv-te t.he. decisions of single enterprises or -groups of enteprlaes acting in concert and exercising monopolistic Power for thc f£cce oI' the market in the determination cf price levels, volume of proCLi-, n anéi distribution of procucta. It vas foclT convenient to rfcr, to the list of such practices in Article 34 (2) of the United States Dre_ . Charter, which, though not exbaustire, includes the most co=wmon types of such pract'ice6. 2. in p'>e -'.ir'ary exchanSes 'cf views it was f oundc on the one hand .t2at s.'c dJelegates regard.edI these practice as invariable and aut=tic. barriers to a free and expanding.syvtem of international tradeo =î in con.fl it vith the obliGatIons which it vas proposed * merbars cf hoe Organization vould ass=e under other. Chapters of the Iropcse& Charter.' Qn tho Qtber hand some delegates perceived. considerable gd-vaitago3 iL thei! Vise use, pertîcularly in intrx'ducing stabIlity in -dustrlee -equiringmlarge investment snd d.epend&fng mainly on external marketss. It-vas d1so itrged& that rsotrictol agreements vere frequently * ccaipeèd by exchanges of techricai informationn wich facilitated .....t.. - - ~ . ..* , d0stablisbment of nev industrie in'the -less industrialized countrieB. ;3. "1t vae foud, bovever, tvatedespite tbls vide divergence of . - vle-Cw. tbio *siGificanoe 'of thesee practice,. thoe .was a a. anio 'a * belief tLLt they vere capable of having harmful Offect.s on the expexaicn of production and trade and the maintenance in ail countries of h4eh lovels of rea] incoe anc on the other purposes of the LONDON Page 6 Organization, whether, as some felt, by their very nature, or as others maintained, only in their wrongful use. Accordingly it was agreed that all members of the Organization should undertake to take all possible steps within their jurisdiction to prevent restrictive practicess having harmful effects on the purposes of the Organization. 4. It was clear to all that Governments would be unlikely to agree in their judgment of the effect of particular practices and that an undertaking of the kind just referred to would leave open the possibility of one member allowing or approving a monopolistic arrangement or practice, which would be felt by another member to injure the purposes of the Organization. Accordingly it ras agreed that the Organization should be empowered to receive complaints and to investigate them. It was felt that this was the most important function which the Organization could discharge in this field. 5. It was agreed that the procedure of complaint and investigation shoulda apply equally whether the practices were pursued by private or by public (i.e., government-owned or controlled) enterprises or by a ..mixture of the two, so far as agreements are concerned, but the procedure should apply to the practices of single monopolistic enterxprses only when .these are privately awned. The problem of the public enterprise acting independently should, it was thought, be dealt with-inaer the provisions governing state trading which Couinittee I-Iis:-onasiderrmg Gæe will.have to be takèn mn any ,event..that the provisions on restrictive business practices ,nd. on atate ; àréa g hare n a y. -; * B5' ^ Precèduie ..i+ith-reslpect.to CorDlannts and Conterences. i. Coaqpiaants should. be received and examineed by the Organization whether they come frornmembers or from affected persons, organizations, or busiess enterprises, provided am the latter cases-that the *LONDON E/PC/T/l5 Page 7 responsible Government approves the consideration,of the ooplaint by the Orgamzat=on. The steps whi±n the Orga.nization should take should be on the following lines:- - (a) At thr request of a member. it shcul&, at its discretion, be free to adr ange conferences between members to consider a specific practice which the member feels has or is'about to have a barmftl effort on the purpose of the Organization. (b) It should consiaar written complaints, ,btain min4ni= information both from the complanant and irom other members concerned, and then determine whether a further investigation sa necessary. (c) If it is satisfied that there 1s a prima facie case for further consideration, then it should obtain formation from all members vhc wish to submit such information, and it should afford opportunity for any member end-for the commercial enterprises alleged to have been engageclin t4e practice tA be heard by it if they so wish. * (d) The Organization should then determine whether the practice complained of bas the harmful effect feared, and if so, it : should report to all nembers- its findI.gs, requesting them to take action to prevent the continuance cr. recurrence of the practice and at its discretion recommend apecifie remedial -easures. Eaoh member would, of course, takes action in accordanoe with its own laws and procedures. -* -(o) The.Org nizatin should then prepare a report on the case. C. Studies reéati.n to restriotive business practices 1. -It was felt that it was necessary that the O organization should givo further, sudxy to the subject, a.s it uas cllear to the Coemittee that it was one of extreme difficulty on which there vas no unanimity of upi.on anong the various oountries. It was agreed therefore LONDON E/PG/T/15 Page 8 that the Organization should study types of restrictive practices, and conventions, laws and procedures relevant to these practices. It should obtain information from members to assist it in its studies, and it'should be at: liberty to make recommendations concerning conventions, laws and procedures so far as these are relevant to the obligations which members will undertake. 2. The Organization should also be empowered to arrange conferences . at the request of medrers ral geneèa. consultation on the problem. igations of Moùs oe Members It Was agremembers ineuldrmakeila tmke all possible steps to prevent,commercial enterpriin shwithn tieir jurisdiction from engaging in practices hrmfng hanTdul effects on the purposes of the Organization. Members sho ld also. conduct investiintions n order to be able to furnish information re uested.by the Organization in connection with complaints, though they should be fwee to vithhold confidential inforaation &ffecting national security or production techniques. It was felt, however, that there should be some provision mn thbs obligation of mem ers to-furnish such information whereby the legitimate business interests of particular enterprises should be saeguarded.as far ai feasLble front possible.injucy whiéh might'arise i- de aifed'attormàtion werall o foi into the hands if theïr com titors or otiher prvate persons. Members hould& also take the fullest acoount ef cnmmendaocmnn.tions made by the Organization, after igation of a parti? aar acml int, ilac,nin erosidSaing the initiation of action apptepriar- to their softem .ond law a economic oationrganiz. They sreporthould to the Organizatio n what actions have been taken. . -, r. Supplementaxy enforcement arrangements It was reCognrzed that members miy co-operate wîth each other in assisting the enforcement of any provision made b other members'in fur heranoe of the-general objectives. There should be no specific LONDON Page 9 obligation on members to take such action, but it should be made clear that they are free to adopt this course if they wish provided that they notify the Organization. F. Continued Effectiveness of Domestic Measures against Restrictive Business practicess It was recognized that the responsibilities of the Organization in this field should not affect the national laws under which some countries have made general provision for the prevention of monopoly .or restraint of trade. G.. Except ons to provisions of this Chapter ..The procedure described should not apply to inter-governmental commodity agreements mace under the arrangements which Committee IV is working out, or international agreements of the kind described in Article 49 of the United States Draft Charter, though the Organization should, at its discretion, be empowered to make recommendations to members and to appropriate international agencies concerning any features of such agreements which may have harmful effects on the purpose of the Organization. H. General Observations 1. Three delegations suggest that the provisions of the Chapter on Restrictive Business Practices be extended to cover services. One delegation has state that the Chapter will. have no meaning for it if the question of restrictive business practice relating to services such as shipping, insurance and banking is excluded. * Z. ewogdale2ations suggest that consideration s ould.be given to .the possib oit -cf -establishing some form of procedure for the registration with the International Trade Organizati on ofinternational combinations, agreements or other arrangements as define in Article A (b) (i). One delegation feels, moreover, that some degree of publicity should be given to the results ch a p, duoceaure. LONDON E/PC/T/15 Page 10 II. ACGREED TEXT The members of CncmÎittee III, without committing their respective Governments, have.estpblished general identity oe views regarding the following text of Articles A to H inclusive, and recommend. that the Dratting Committee bé.instruoted to draft provisions on restrictive business practices on the basis of the following text.. % Article A Policy Towtard Restrictive Business ?ract2.ces i. Members agree to take appropriate measures, individually and through the Organization, to prevent in international trade,. business practices which restrain competition, lirMt access to markets or foster monopolistic control whenever such practices have harmful effects on the expansion ot production and trade and the maintenance in all countries of high levels of real income, or on any of the purposes of the Organization as set forth in Article 1. 2. Without. limiting the generality of paragraph (1), members agree t.t the practices listed in paragraph (c) below, when they are en aged in or are made effective *by: - , (a) -an international combination, agreement or other arrangement a»ong..oommerial énterprises, including suqh ' ' ' . -pri a'c , .o É r : an arrangement amoig' private commercial enterprises, * ., amag c pubic commercial ente.Lrises (e.e., trading .agencieseof government.or enterprises in which there is effective gevérnmentcontroi), or between private and '.' ' ' public commercial enterprises; (b) one or more private commercial enterprises; when such comercial enterprises, indivi.ually or collectively, possess effective control of international trade, among a number of LONDON E/PC/T/15 Page 11 countries or generally . one or more products, shafl be subject to investigation, in accordance with the procedure provided by the subsequent Articles of this Chapter, if' the Organization considers;them to have or to be about to have such harmfUl effects as are described in paragraph (a) of this Article. 3. The practices referred to in paragraph (b) are as follows: (a) fixing prices or terms or conditions to be observed in dealing wLth others in the purchase, sale or lease of, any product, (b) excluding enterprises from any territ-rial market or -field of business activity, allocating or dividing any territorial markets or field of business activity, allocating customers, or fixing sales or purchase quotas; (c) boycotting or discriminating against particular- enterprises; (d) limiting production or fixing production. quotas; (e) suppressing technology or invention, whether patented or unpatented; (f) extending the use of rights under patents, trade marks or copyrights to matters not properly within the soope, or to products or conditions of production, use or sale , which are not the. immediate subjects of' the authorized * -. grant. - - - -Article B -1.,ProcéIure wit respect to Crrplaints and Conferences ` em' bers` agree that thé Crga ization shill - ---.(a) range, if' it considers such action tobe justified, for * particular members to tahe part conference requested by any member who considers that any specidic practices exist which have or are about td have the effect described in paragraph (a) of Article A. LONDON E/PC/T45 Page12 1 . (b) Consider each written complaint submitted by any mexnber or., vith the permission of a:member, submitted by any affected person, organization or business. entity within that'member' s jurisdiction claisng that specific practices exist which - have or are aboÙt to have the effectt describedd in paragraph (1) of Article A, and preacribe the minimum information to be included in such complaints. ..(o) Request each member concerned to ibt.ifnosu¢h ormation as the Organization may deem'necessary, including, for example, statements from comneroial enterprises wFthin its jurisdiction, and then determine whether further investigation is justified. (d) If.it îs considered that further rlvestigation is justified, notify afl members-of each such complaint; request the : complainant or any member to provide such information * . relevant to the complaint as it may deem necessary and conduct or arrange for hearings at which any member, and the parties alleged to have engaged in the practice, rill have opportunity * to be:heard. * (e) 'Review all information- and comee to its findings whether thé practices in question have the effect described in pargraph (i) of ArtiileA. : , ; (i') Report-to 'aillmembers the. finlings reached and the information -onwhibch8 uchfindiTiga c.re based; if ,it finds that the * . - practices have had. the effect described-.in paragraph (1) of *'-i -. .e' request each member concerned to take.every possible action to.prevent the c tinuance or recurrence ofthe practices, apd at its discretion recommend to the ,. members conoer:ied rermediai measures to be carried out in * accordance with their respective laws and procedures. (g) Request all members concerned to report fully the. action they have taken to achieve these results. LONDON E/PC/T/15 Page 13 (h) Prepare and publish, as expedctiously as possible after enquiries have been coniDletesd, reports on ail con=plaints deait with undér paragraph (a) of this Article, shoving * ' ±'fully the findings reaohed,,the information on %viaoh such findings are based, and the action which mernbers conoerned have been recommended to take; provided that. publication of suoh reports or of any portion thereof may be withheld if it deems this course justified; provided also that the Organisation shall not, if a kéreber so request, disclose to any person confidential .mforoatiorn'fWuxi .->d by that member which would materially damage the legitimate business interests of a coznuercia1'enterprise. (i) Report to ail members, and make public if it is deemed desirable, the action which has been taken by the.memrbera concerned to achieve the results described in paragraph (f) of' this Article. .* ' Article C ' Studies Relartlm to Restrictive Bisiness Practices The Organization shall be authorizeil to: (a) Conduct studies, either on its own initiative or. at the request of any member, or the United Nat.ons or any., a '. specializea agency brought into relationship with.the. Un. United KNt ons, relating to-' ' ..,.. .. - (i) tys of~ rest etive business practices in c nt, e A =AIo. ra;de; . . - (ii) conntions,.iaws and procedures such as those concerning Incorporation, company registration, .. infiestnents, securities, prices, markets, fair trade practices, trade marks, copyrights, patents and the exchange and development of technology, insofar as they LONDON Page 14 are relevant to restrictive business practicess, and to request information from. members in connection' with such studies; (b) Make reoomiendzations te znembers concerning. such conventions, -: laws and procedures .s' are relevant to their obligations under this Charter. (c) 'Arrange conferencesl when requested by members, for purposes of general consultation on any matters relating -to restrictive ibusinesa practices. Article D 'b1i2ations'of bMembers. I. In order toe iimplement the preceding Articles in this Chanter, each member undertakes to: (a) Take all possible steps by legislation or otherwise to ensure that private and pu'olic commercial enterprises within its jurisdiction do not engage in practices vhieh - - have the effect described in paragraph (a) of Article A; .and' (b) -to take the fullest account of the. Organization s findings, - requests and recommendations made under paragraph (f) ot * rtiî ''- 'e %i-2he light of its obligations under Article A, " ,cons'ier g' the initiation of action in accordance with '-. syaton et .c~ wand economic orga ation to prevent -:.t: it jn'rîisdiction'the'continunce or recurrence'of * - -:: iu -any pr h Orgènization tinds te"have lhad -cs ', ,ttfs t ;* Such ;..4predtji ' 2. Efstblish'prboedures''te dl2with complaints, conduct investigation, prepare ?ntoz!natîou and reports requested by the Organization, and generally assist in.prevent"ng practices which have the effect described. in paragraph (1) ofe rticle A, these riea.sures to be taken in accordance LOI\DON E/FC/T45 Page 15 with the partacuJa- system.-o lavw and- economic organization of the member coacerned, 3. Conduct wch irvestigations as may be necessary and practicable to secure =nformation.requested. .by the organization or to. prevent practices which have the effect descri1d inm paragraph (1) of Àrtic1c A. 4 . 4 F.rniah te the Organiz t aon, s praptly as possible and, to the * fullest extent feasible, such inoxmation as- is requested by the Ürganization under paragraphs (c, (d) ana (g) of article B and und.r paragraph (a) of Article C; vDrvided that o6nfidentïal information affecting national security or production technique "may 'bewithheld. 5. Report,:as requested by the Crganization under paragàph (g) of Article B, the action taken, independently or in concert with other members, to #plement recommendations made by the Organization under paragraph (f) of Lrticle Bi and, in. cases in which no action is taken, to explain to the Organiation the reasons therefor and discuss the matter further wvth the Organization if requested to do so. 6. Take part in conferences upon the request of the Organization m accod'ce wîth .paragràphu tc) ,ofrticle C. ` ~~ - Article- E -; Su-mlementary -Enforcement Arrangements 1, M-embers may, by;srmutual acri, co-operate with each other in prohibitive, preventive or other-msasures fr.the purpose of making more effective aiy remedial ordered by a d 'aùthbrized agency f any member' n ,theracë cf the objectives gO Jflthis5 ,Capter. 2. ,einbers .partic g in hco-operative' actions sha.1notity : h Oz, âganization. ;; . . Continued Effectiveness mf Domestib Measures against Restrictive Business Practices Any act or failure to act on the part .of the, Organization shall not preclude any member from enforcing any national statute or decree' LONDON E/PC/T/15 Page 16 directed, toward preventing monopoly or restraint of trade. Article G Exceptions to Provisions of this Chapter 1. The undertakings expressed-in thi-s Chapter shall not apply to (a5 inter-governmentaJ. commodity agreements meeting the requirements of the Chapter on inter-governmental oommodity agreements; (b) the international agreements excepted in Article 49 of the United States Draft Charter. 2. Notwithstanding the foregoing, the Organization may in its discretion make recommendations to members and te appropriate' international agencies concerning any features of the agreements referred to in paragraph (1) (b) which may have th* effect described in paragraph (1) of article A. - Co=rittee III has communicated to Cammittee V its suggestions for the manner in 'ihirh the dutiès to be laid on the Organization in the foregoing Articles should be discharged. These suggestions are set out in the following Article`which corresponds. in- soope to A rticle 65 of- the United States Draft Charter. --' - Article H , '- nations of Coa mission on Business Practices * Thé C=ommssion oon -usiness Practices shal. have the f following functions: ,- - - - ,1. - In accordance ith. irtic1e B to: - (a) rr oef at the request of a member, consultative- ` ^ ! ' r ,conferencés wîtâ other members an&cmale appropriate 'reports for communication at the discretion of the Executive Board'to AI1 members; f (b) Receive and consider ivritten complaints concerning restrictive business practicea in international trade; LONDON Page 17 (c) Prescribe minimum formation required in such ccmplaints; (d) Notify members of complaints received and request : wf orx on reelative to such qpmplaints; (e) Request u r data from membcez and conduct or arrange for hearings; (f) Repor2 to the Executive 3oard its findings and its -recmnmrendations of rerne&ial measures, (g) Request rèp6rts fro .marnbers on the action taken as a resûilt of reco:unendationhs made tO them by the Bxecutive 30ard; anâ. (h) ,evare re-crts for publication by the Executive Board. 2. In accord.&nce rvith Articlc C, and subject to the aDoroval cf the *Zxecutive Boar-, tO conduct studies relating to business practices which restrainn oeipetiticr., restri-t access to markets or foster .eonopolistic control in intcernatîcnal. trade, or relating to international conventions or national laws and procedures designed to carry out the objectives of Article B.or. to those Yihich may- effect such.ob.jecti.ves, and te maike reo>.-.iendations when appropriate to the Executi:re.0oard ?xr action by members. 3. e:-To advise.the E3xeeutivéeDoard as to notationn ad other mater1s'toebe obtained from members cr cther sources in the M schdargc of.:eh duties and responsibilities of the Cemmission. ;4.. To ?erfctzn- such other functions, pursuant ie the objectives o`. the .Chapter On Resricive business Practices as nay be , - f., assigned to it from time to time by the Executive Board. ard.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

GATT Library

qj820js9284

Report of Committee IV

United Nations Economic and Social Council, November 20, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

20/11/1946

official documents

E/PC/T/17 and E/PC/T/W.14-E/PC/T/17

https://exhibits.stanford.edu/gatt/catalog/qj820js9284

qj820js9284_92290025.xml

GATT_157

United Nations Nations Unies LONDON ECONOMIC CONSEIL 20 November 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT REPORT OF COMMITTEE IV OUTLINE; OF WORK OF THE COMMITTEE 1. Committee IV was appointed to consider general policy regarding intergovernment commodity arrangements in relation to the objectives of an International Trade Organization. The Committee has held nine meetings. 2. Seven Meetings of the Committee were devoted to a general discussion of the special difficulties in priimary commodities, the role of intergovernmental commodity arrangements in the solution cf these difficulties, the principles that should govern such arrange- ments, and the relationship between the various international agencies in the field of commodity policy. 3. After a Preliminary survey of the subject the Committee took as the basis of its discussion Chapter VI of the United States "Suggested Draft of a Charter for an International Trade Organization of the United Nations". During the course of its deliberations the Committee was provided with information on existing inter- governmental commodity arrangements by the International Sugar Council, the International Tea Committee, the Rübber Study Group, and the International Tin Committee. The Committee also had the benefit of a general statement on the work of the Food and Agriculture Organization from the latter's observer, and .was provided with copies of the "Proposals for a World Food Board and .World Food Survey". A Sub-Committee composed of the Vice-Chairman and LONDON E/PC/T/17 Page 2 delegates of Cuba, the Netherlands and the United States, met with t0e representatives of the International Chamber of Commerce, .who presented the Chmber's views on commodity arrarngements. 4. At the fifth meeting of the Committee a Sub-Committee consist- ing of the Chairman, the Vice-Chairman and delegates from Australia, Canada, Cuba, France, Netherlands, the United Kingdom and tne United States was appointed to prepare, for the consideration of the Committee, a detailed draft of objectives, principals and provisions governing international commodity arrangements. The Sub-Committee had before it Chapter VI of the United. States Suggested Charter, and papers submitted. by a number of delegations, which were considered in con- junction with the views expresses in the Committee. 5. The Sub-Committee held nine meetings. It worked out an appropriate arrngement of the commodity policy provisions and prepared draft articless coverning each item on the Commitee's agenda. The Sub-Committee was :able to reach a substantial measure of agreement, and submitted a report to the Committee. 6. The Committee was able to reach a very considerable measure of agreement on a draft text of a chapter on intergovernmentel commodity arrangements. At its final meeting the Committee adopted its report, which is now presented for the consideration of the Preparatory Committee. LONDON E/PC/T/1 7 Page 3 REVIEW OF THE DELIBERATIONS OF THE COMMITTEE ON INTER-GOVERNMENTAL COMMODITY ARRANGEMENTS 1. The Committee recognized that the conditions of production and consumption of certain primary commodities are such that international trade in these commodities is subject to special difficulties not generally associated :with manufactured goods. These difficulties arise from inelasticities of supply and demand, often involving the accumulation of surpluses, which cause serious hardship particularylyto smaIl producers. EXperience has shown that such difficulties have been greatly accentuated by booms and slumps. To the extent therefore, that a policy of high and .table employment is successfül on an international scale, the fluctuations in primary production and consumption are likely to be reduced, and the special difficulties of primary commodities correspondingly eased. On the other hand, the achievement of greater stability in the real income of primary producers will in its turn assist in the general maintenance of high and stable levels of employment. Nevertheless, in the case of particular commodities, the root causes of their difficulties will remain, and it is necessary, in the interests of producers and consumers alike, to provide methods for dealing with them in a manner consistent with the maintenance of a high level of world trade. 2. It was agreed that, in the absence of provisions for broad international action,. countries might be driven, as in the past, to resort to action restrictive of world trade and production. The Committee therefore recognized the need, in certain circumstances, for intergovernmental commodity arrangements and for agreement LONDON E/PC/T/17 Page 4 on the general princïples to govern their use. The Committee thought it unwise to deal with the great variety of special difficulties peculiar to individual commodities and with particular methods appropriate to each. The Committee's approach to the problem was rather one of developing broad general principles to cover as many types of circumstances as possible. 3. At this stage the Committee considered the scope of the provisions that should be included in an International Trade Charter regarding special commodity problems. It was agreed that, subject to certain limited exceptions, these provisions should apply solely to primary comrmodities. A primary commodity is taken to be any mineral or agricultural.product, including food stuffs and forestry products. It was suggested that the Interim Drafting Committee might examine the use of the terms, primaryry, "agricultural", "mineral", "comrnodity" and "product" throughout the Charter in order to ensure uniformity and consistency in their application, 4. It was considered that a statement covering intergovernmental commodity arrangements should include the objectives of such arrangements the procedure for initiating and establishing them, and the broad principles which should apply to them. This statement should also cover the special circumstances in which agreements might be used for regulating production trade or prices, and the special principles that should apply to the operation and administration of such regulatory agreements. 5. There was general agreement that the objectives of inter- governmental commodity arrangements should be to alleviate the difficulties which arise when adjustments in production or consumption cannot be effected, as rapidly as the circumstances E/PC/T/17 Page 5 require, by the free play of market forces alone. Such arrangements may aim to facilitate economic adjustments designed to promote the expansion of consumption or a. shift of resources and manpower out of over-expanded industries into new and productive occupations. They may elso aim to moderate pronounced fluctuations in prices; to provide for increased production to meet serious shortages; and to maintain and develop the ntural resources of the world and protect them front unnecessary exhaustion. With regard to this last objective, the attention of the Interim Drafting Committee is called to the fact that the working may require further examination. It is not intended, for instance, that th arrangements envisaged by this Chapter should apply to international fisheries conventions. 6. The Committee agreed that intergovernmental-commodity arrangements should not be made until there has been full study and discussion of the problems relating to the commodity. in question. It was therefore agreed that, where a commodity is expericcing, or is expected to experience, special difficulties, a Study Group :may be formed to examine the problem. If the Study Group concludes that an lntergovernmental commodity arrangement would be desirable, it should be followed by a Commodity Conference to discuss the appropriate measures to meet the special difficulties. There it is agreed that adequate information is already available about a commodity, a Conference may be convened by the Organization without the prior formation of a Study Group. 7. The general procedure envisaged by the-Committee was that the first step in the development of a commodity arrangement would be the calling of a Study Group, the second: the convening of an International Commodity Conference, and finally the formation of a governing body to administer the arrangement agreed upon. LONDON E/PC/T/17 Page 6 The Study Group from the outset should consist of countries substantially interested in the production, consumption or trade of the commodity concerned. After this stage, there would be increasing participation by interested countries. Finally, when the commodity arrangement. has been agreed upon, it should be open initially to participation by any Member. It should also be open to such non-Members as may be invited by the Organization, since, if the arrangement is to be both comprehensive and effective, it must, of necessity, include substantially interested non-Member countries. Attention was drawn to Article 31, paragraph 2 of the United States Draft Charter, which appears to be inconsistent with the participation of non-Member countries in the benefits of commodity arrangements. It was recommended that the interim Drafting Committee should specify arrangements under Chapter VI as an exception to the operation of Article 31, paragraph 2. 8. The Committee discussed. the question of the relationships between the Organization and specialized agencies interested in particular commodities. It was agreed that the competent specialized agencies, such as the Food and Agriculture Organization, should be entitled to submit, commodity studies to the Organization or ask that a study of a primary commodity be made. They may also be requested by the Organization to attend or take part in the work of a Study Group or a Commodity Conference. The Committee further agreed that when a commodity arrangement is 'eventually agreed upon, any competent specialized agency may be invited by the Organization to nominate a non-voting Member to the governing body. 9. There was agreement on certain general principles which should apply to all intergovernmental commodity arrangements in order that LONDON E/PC/T/17 Page 7 they may conference with the purposes cf the Organization. In particular, it was agreed that there should be adequate representation of importing and consuming countries as well as of exporting and producing. countries. It was agreed, however, to ask the Interim Drafting Committee to give further consideration to the text cf this provision in the light of the Committee's desire to provide appropriate voice to (a) countries substantially interested in the production and consumption of a commodity but not in its import or export and (b) countries which are an large exporters and importers of the. commodity. In regard to voting on substantive matters, the Committee reached almost unanimous agreement that without prejudice to the right of the countries referred to in the preceding sentence to an appropriate voice, the voice of importers and exporters should be equal. It was felt that this was the only way in which the interests of bath importers and exporters could be adequately protected. One delegation was strongly of the opinion, however, that equality of voice between importers and exporters should not be required, but that importers should have "a number of votes equitably proportionate to the number of votes of the exporting countries, in order that the interests of exporters and importers shall be duly protected." 10. The Committee stressed that commodity arrangements should provide, where practicable, for measures designed to expand, world consumption. This is particularly desirable when the need for a commodity arrangement arises from the existence of a burdensome surplus, or where increased consumption would result in an improvement in general well-being, as, for example in higher standards of nutrition. LONDON E/PC/T/1 7 Page 8 11. It was agreed that all intergovernmental commodity arrangements, proposed or concluded, should be giveen full publicity, so that all interested parties may be fully informed of the measures taken and of the progress achieved. in the correction of the underlying difficulties. 12. A distinction was drawn between those intergovernmental commodity arrangements which involve the regulation of export and-import produc- tion prices, and those which.do not. The former are-referred to as regulatory agreements. It was felt that regulatory agreements should be used only in certain defined circumstances arising out of difficulties which would not be corrected by normal market forces alone, when a burdensome surplus exists or is expected to develop, causing hardship to producers, many of whom. are small producers; or where special difficulties have gven rise, or are expected to give rise, to widespread unemployment. In this connection it is desired that unemployment " be taken in a wide sense to include "under.employment". It was agreed that in exceptional circumstances regulatory agreements might also.be applied to manufactured goods. The Committee intended that. one effect of this provision should be to permit the inclusion of appropriate synnthetic products within the scope of particular commodity agreements. 13. The Committee discussed whether regulatory agreements might be used to deal with shortages. It was generally agreed that such agreements which were made in those cases in which a burdensome surplus was "expected to develop" could appropriately take into account shortage difficulties. The history of some commodities shows that there may be recurring periods of burdensome surplus and shortage which need to be considered. Some delegations would have preferred to mention this specifically in tihe circumstances governing the use of regulatory agreements. but it was generally felt that this LONDON E/PC/T/17 Page 9 was unnecessary, It was furthermore agreed that arrangements relating exclusively to the distribution of commodities in short supply should be exempted from the provisions governing commodity arrangemnts, and therefore could be concluded outside their framework. In this connection, it was agreed, however, to drawn the attention of the Interim Drafting Committee to the discussion of the Committee on this matter. 14. The Committee agreed that in addition to the general principles applicable to ail intergovernmenta1 commodity arrangements, regulatory agreements should be subject to certain additional principles. The Committee wished to ensure that restrictive measures in regulatory agreements are used only when essential to prevent or remedy serious dislocation or hardship that they do not lead to unreasonable prices, and that they do not afford permanent shelter to the less effective and economic sources of supply. The additional principles for regulatory agreements concern such matters as procedure, relations between countries participating in agreements and countries not participating, the assurance of adequate supplies to meet work demand at reasonable prices, and the provision of increasing opportunities to meet world needs from the most effective and econornic sources of supply. In relation to the phrase reasonablee prices" it was felt that this term should not be rigidly defined for all agreements, as the individual Commodity Councils would wish to decide this matter according to the conditions relating to the particular commodity. Certain delegations passed for further clarification of the term, and it was suggested that the Interim. Drafting Committee should consider this matter. LONDON E/PC/T/17 Page 10 One delegation suggested that the question of the attainment of a reasonablee" or " just" prise should be included among the objectives of intergovernmental commodity arrangements. Another delegation thought that, in determining the "most effective and economic sources of supply', due consideration, should be given "to the historical position of the supply areas which are Members of the Organization". 15. Every regulatory agreement should provide for a governing body (Commodity, Council). Each participating country should be entitled to be represented and to vote. Subject to the principles referred to in paragraph 9, voting power may be distributed among countries according to the nature and extent of their individual interests. It was understood that regulatory agreements right if desired provide for quaified majorities on specific matters. Each Commodity Council should work within the framework of the International Trade Organization, which .may appoint non-voting Members , and, if so requested, . non- voting chairman. The rules and regulations of the Councils should be subject to the aprroval of the Organization. 16. It was agreed that regulatory agreements should be subject to periodic review. They should be effective for not more than five years subject to renewal. Where the operation of an agreement has failed to conform to the agreed principles it should be revised accordingly. If this is not possible it should be terminated. 17. It was agreed that there should be provision for the settlement of disputes and it was thought desirable that this should be uniforrm throughout the Charter. The Committee therfore agreed that disputes .arising out of intergovernmental commomdity agreements and not settled in the Commodity Council should be subject to Article 76 of United States Draft Charter as revised. LONDON E/PC/T/17 page 11 18. In order to bring existing arrangements as far as possible into line with the general provisions, the Committee agreed that Members should inform the Organization about their participation in commodity arrangements existing at the time the Charter comes into force, and that they should accept the decision of the Organization on whether their continued participation is consistent with their obligations under the Charter. A similar principle should apply to commodity arrangements which are in process of negotiation at the time the Charter comes into force. One Delegation proposed that any Member should be free to withdraw from the Organization if it considers it impossible to be guided by the decision adopted by the Organization in these matters and if, on appeal, the Organization does not modify the decision in question. 19. It was agreed that all Members of the Organization, whether party to a particular agreement of not, should undertake to give the most favourable possible consideration to any recommendation by a Commodity Council for expanding the consumption of the primary commodity concerned. 20 Agreement was reached on certain categories of intergovernmental commodity arrangements which would not be subject to the provisions agreed for general application. In particulary this applies to intergovernmental commodity arrangements previously mentioned which relate solely to the equitable distribution of commodities in short supply. This would not, of course, preclude other intergovernmental arrangements from dealing with shortagesaas part of their operations. 21 The Committee discussed the general question of escape clauses. It was agreed that, where there is unreasonable delay in the proceedings of a Study Group or Commodity Conference, Members may proceed by direct LONDON E/PC/T/17 Page 12 negotiations to the conclusion of an agreement provided that it otherwise conforms to the agreed provisions. One Delegation wished to go further and felt that there should be specific permission for.vitally interested Members to proceed where the Commodity Conference fails to make a recommendation in favour of an agreement. 22. The Committee also discussed the way in which the various functions outlined. in the previous paragraphs should be allocated to the various organs of the proposed International Trade Organization, and agreed on suggestions for the consideration of the Interim Drafting Committee, which is requested to prepare the appropriate text. 23, The Cormittee considered, and agreed to forward to the preparatory Committee, a resolution on intergovernmental ccnsultation and action on commodity problems before the Organization is established. One Delegation was not prepared to support this resolution in view of its reservations on the test of the Chapter. 24. Appended are: (a) Draft Resolution to Preparatory Committee relating to intergovernmental consultation and action on commodity problems prior to establishment of the International Trade organization. (b) Draft Chapter on Intergovernmental Commodity Arrangements. (c) Suggestions for the assignment of functions and organizational relationships. LONDON E/PC/T/17 page 13 DRAFT RESOLUTION TO PREPATORY COMMITTEE RELATING TO INTERGOVERNMENTAL CONSULTATION AND ACTION ON COMMODITY PROBLEMS PRIOR TO ESTBLISHMENT OF THE INTERNATIONAL TRADE ORGANIZATION WHEREAS certain difficulties of the kind referred to in the draft Chapter on intergovernmental Commodity Arrangements appended to the Report of the Preparatory Committee have already occurred in respect of certain primary commodities and the governments concerned are already taking action on the general lines proposed in the Draft and WHERAS similar difficulties may occur in respect of other primary commodities and WHERAS the Preparatory Committee is agreed that it is desirable that action taken in respect of such commodities should proceed on the general lines proposed in that Draft THE PREPARATORY COMMITTEE 1. Recommends that insofar as intergovernmental consultation or action in respect of particular commodities is necessary before the International Trade Organization is established, the governments concerned should adopt as a guide the Draft Chapter on intergovernmental commodity arrangements appended .to the Report of that Committee.. 2. Requests the Executive Secretary to keep in touch with such consultation and to take such action as may be appropriate to facilitate it. E/PC/T/17 DRAFT OF CHAPTER VI INTER-GOVERNMENTAL COMMODITY ARRANGEMENTS SECTION A. GENERAL CONSIDERATIONS Article 1. General Statement on Difficulties Relating to Primary Commodities The Members recognize that the relationship between production and consumption of some primary commodities may present special difficulties. These special. difficulties are different in character from those which manufactured goods present generally. They arise out of such conditions as the disequilibriuzm between production and consumption, the accumulation of burdensome stocks, and pronounced fluctuations irn prices. They may have a seriously adverse effect on the interests of both producers and consumers. Moreover, they may have widespread repercussions which would jeopardize the general policy of economic expansion. Article 2. Objectives & Intergovernmental Commodity Arrangements The Members agree that intergovernmental commodity arrangements may be employed to achicve the following objectives: 1. To enable countries to find solutions to the special commodity difficulties referred . to in Article 1 without resorting to action incon- sistent with the purposes of the Charter. 2. To prevent or alleviate the serious economic problems which may arise when production. adjustments cannot be effected by the free play of market forces as rapidly as the circumstances require. 3. To provide, during the period which may be necessary, a framework for the consideration and development of measures which will have as their purpose economic adjustments designed to promote the expansion of consurmption or shift of resources and manpower out of over-expanded industries into new and productive occupations. 4. To moderate pronounced fluctuations in the price of a primary commodity above and below the level which expresses the long term equilibrium. between the forces of supply and demand. LONDON E/PC/T/17 Page 15 5. To maintain and develop the natural resources of the world and protect then from unnecessary exhaustion. 6. To provide for expansion in the production of a primary commodity which is in such short supply as seriously to prejudice the interests of consumers. SECTION 3. INTERGOVERNMENTAL COMMODITY ARRANGEMENTS IN GENERAL Article 3. Special Commodity Studies 1. A Member or Members substantially interested in the production, consumption or trade of a particular primary commodity shall be entitled, if the consider that special difficulties exist or are expected to arise regarding the commodity, to ask that a study of that commodity be made. 2. Unless it resolves that a prima facie case has not been established, the Organîzation shall promptly invite the members substantially interested in the production, consumption or trade of the commodity to appoint representatives to a Study Group to make a study of the commodity. Non-members having a similar interest may aIso be invited. 3. The Study Group shall, in the light of an investigation of the root causes of the problem, promptly report its findings regarding the production, consumption and trade situation for the commodity. If the Study Group finds that special difficulties exist or are expected to arse, it shall make recommendations to the Organization as to how best to deal with such difficulties. The Organization shall transmit promptly to members any such findings and recommendations. Article 4. Commodity Conferences 1. On the basis of the recommendations of the Study Group, or on the basis of information about the root causes of the probelm agreed to be adequate by the embers substantially interested in the production, consumption or trade of a particular primary commodity, the Organization shall promptly at the request of a member having a substantial interest, or may, on its own initiative, convene an intergovernmental Conference for the purpose of discussing measures designed to meet the special LONDON E/FC/T/17 Page 16 difficulties which have been found to exist or are expected to arise. 2. Anyj Member having a substantial interest in the production, consumption or trade of the commodilty shall be entitled to participate in the Conference, and non-Members having a similar interest may be invited by the Organization. 3. If the Conference recommends to Mebers the adoption of any type of intergovernmental commodity arrangement, such arrangement shall conform to tne principles stated an Article 6. Article 5. Relations with Specialized Agencies 1. Competent specialized agencies, such as the Food and Agriculture Organization, shall be entitled: (a) to submit to the Organization any relevant study of a primary commodity; (b) to ask that a study of a primary commodity be made. 2. The Organization may request any specialized agency, which it deems to be competent, to attend or take part in the work of a Study Group or of a Commodity Conference. Article 6. General Principles of Intergovernmental Commodity Arrangements Members undertake to adhere to the following principles governing the operation of all types of intergovernmental commodity arrangements: 1. Such arrangements shall be open initially to participation by any Memiber on terms no less favourable than those accorded to any other country party thereto and thereafter upon such terms as may be approved by the Organization. 2. Non-Members may be invited by tne Organization to participate in such arrangements, and the provisions of paragraph 1 shall apply to any non-Members so invited. 3. Such arrangements shall include provision for adequate participation of countries substantially interested an the importation or consumptaon of the commodity as well as those substantially interested in its exportation or production. LONDON E/PC/T/17 Page 17 4. In such arrangements, participating countries which are largely dependent for consumption on imports of the commodity involved shall, in determinations made relating to substantive matters, have together a voice equal to that of those largely interested in obtaining export markets for the commodity, provided that those countries which are largely interested in the commodity but which do not fall precisely under either of the above classes shall have an appropriate voice. 5. Such arrangements shall provide, where practicable, for measures designed to expand world consumption of the commodity. 6. Members agree that full publicity shall be given to any inter- governental commodity arrangement proposed -or concluded, to the statements of considerations and objectives advanced by the proposing Members, to the operation of the arrangements, and to the nature and development of measures adopted to correct the underlying situation which gave rise to tne arrangement. LONDON E/PC/T/17 Page 18 SECTION C. INTERGOVERNMENTAL COMMODITY AGREEMENTS INVOLVING THE REGULATION OF PRODUCTION, TRADE OR PRICE Article 7. Circumstances Governing Use of Regulatory Agreements Members agree that regulatory agreements may be employed only when: 1. A burdensome surplus or a primary commodity has developed or is expected to develop which, because a substantial reduction in prime does. not readilylead to a significant increase in consumption nor to a significant decrease in the production of that commodity, would not, in the. absence of specific governmental action, be corrected by normal, marketing forces alone in time to prevent serious hardship to producers among whom are small producers whc account for a substantial portion or the total output; . or 2, . Widespread unemployment in connection with a particular primary commodity, arising out of difficulties of the kind referred to in article 1, has developed or is expected to develop, which,. in the absence of specific governmental action, would. not be corrected by normal marketing forces alone in time to prevent widespread and undue hardship to workers because, in the case of the industry concerned, a substantial reduction of price does not lead to a significant-increase in consumption but to the reduction of employment and because areas in which the commodity is produced in substantial quantity do not afford alternative employment opportunities for the workers involved; or. 3. The Organization finds .that, for a commodity other than a primary commodity, exceptional circumstances justiy such action. Such .agreements shall be subject not only to the principles set forth in this Chapter but also to any other. requireents which the Organization may establish. LONDON Page 19 Article 8. Additioal Principles Governing Regulatory Agreements Members undertake to adhere to the following principles governing regulatory agreements in addition to those stated in Article 6: 1. Members agree not to enter into any never regulatory agreement unless it has been recommended by a Conference called in accordance with Article 4.. Nevertheless, members substantially interested in the production, consumption or trade of a particular primary commodity may proceed by direct negotiation to the conclusion of an agreement, provided that it confirms te the other provisions of this Chapter, if there has been unreasonable delay in the proceedings of the Study Group or of the Commodity Conference. 2. Under such agreements participating countries shall afford equitable treatment as between non-participating Members and participating countries giving equitable advantages in return for the observance of equitable obligations. 3. Participating countries shall, in matters the subject of such agreements, afford non-participating member countries treatment no less favourable than that accrded.to any non-Member country which does not participate in the agreement. 4. Such agreements shall be designed to assure the availability of supplies adequate at all times for world demand at reasonable prices, 5. Such agreements shall, with due regard to the need during a period of change for preventing serious economic and social dislocation and to the position of producing areas which may be suffering from abnormal and temporary disabilities, make appropriate provision to afford increasing opportunities for satisfying world requirements from sources from which such requirements can be supplied most effectively and economically. 6. Participating countries shall formulate and adopt a programme of LONDON E/PC/T/17 Page 20 economic adjustment believed to be adequate to ensure substantial progress toward solution of the problem within the time limits of the agreement. Article 9. Administration of Regulatory Agreements 1. Each regulatory agreement shall provide for a governing body, hereinafter referred to as a Commodity Council. 2. Each of the countries participating in an agreement shall be entitled to be represented by a member on the Commodity Council. These members alone shall have the right to vote. Their voting power shall.be determined. in such a way as to conform with the provisions cf Article 6, paragraph 4. 3, The Organization.shall be entitled to appoint a non-voting member to each Commodity Council, and may invite any competent specialized agency to nominate a non-voting, member for appointment to a Commodity Council. 4. Each Commodity Council shall have a non-voting chairman who, if the Council so requests, shall be nominated by the Organization. 5. The Secretariat of each Commodity Council shall be appointed by the Council after consultation with the Organization 6. Each Commodity Council shall adopt appropriate rules of procedure and regulations regarding its activities. These rules and regulations shall be subject to the approvaI of the Organization. 7. Each Commodity Council shall make periodic reports to the Organization cn the operation of the agreement which it administers. In addition, it shall make such. special reports as the Organization may specify or as the Council itself considers to be of vvalue to the Organization. 8. The expenses of a Commodity Council shall be borne by the participating. countries. Article 10. Provision for Initial Terms. Review, and Renewal of Regulatory .Agreements Regulatory agreements shall be in effect for not more than five LONDON E/PC/T/17 Page 21 years. Their renewal shall be subject to the principles stated elsewhere in this Chapter. Periodically, at intervals no greater than three years, the Organization shall prepare and publish a review of the operation of each agreement in the light of the principles set forth in this Chapter. Moreover, each commodity agreement shall provide that if its operations have failed substantially to conform to the principles laid down in this Chapter, participating countries shall revise the agreement to conform to the principles or shall terminate it. When an agreement is terminated, the Organization shall take charge over archives, statistical material and other possessions of the Commodity Council. Article 11. Settlement of Disputes Any question or difference concerning the interpretation of the provisions of a regulatory agreement or arising out of its operation shall be discussed originally by the Commodity Council. In the absence of agreement, the question shall be referred to the Commodity Commission for examination and recommendation to the Executive Board. The Executive Board shall then issue a ruling subject to the provisions of Article 76. SECTION D. MISCELLANEOUS PROVISIONS Article 12, Obligations of Members regarding Existing and proposed Commodity Arrangements 1. Members undertake to transmit to the Organization the full text of each intergovernmental commodity arrangement in which they are participating at the time of the coming into force of their obligations under this Charter. Members also agree. to transmit to the Organization appropriate information regarding the formulation, provisions and operation of such arrangements. Members agree to conform with the decisions made by the Organization regarding their continued participation in any such intergovernmental commodity arrangement LONDON E/PC/T/17 Page 22 which, after review by the Organization, shall have been found to be inconsistent with the intentions of this Chapter.. 2.. Members undertake to transmit to the Organization appropriate infomation regarding any negotiations, looking to the conclusion of an intergovernmental commodity arrangement, in which they are participating at the time of the coming into force of their obligations under this Charter. Members also agree to conform with decisions made by the Organization regarding their continued participating in any such negotiations; and the Organization may declare that such negotiations conform to the requirements for a Study Group or a Commodity Conference as the case may be. Article 13, General Undertaking by Members Members not parties to a particular commodity arrangement undertake to give the most favourable possible consideration to any recommendation by a Commodity Council for expanding consumption of the commodity in question. Article 14..Exceptions to Provisions Relating to Intergovernmental. Commodity Arrangements 1. The provisions of Chapter VI are not designed to cover inter- governmental commodity arrangements which relate solely to the equitable distribution of commodities .in short supply or to cover those provisions of intergovernmental commodity arrangements which appropriately relate to the protection of public morals or the protection of human, animal or plant life or health; provided, that such arrangements are not used to accomplish results inconsistent with the objectives of Chapter V or Chapter VI. Members agree not to participate in such arrangements if they involve the regulation of production, trade or prices unless they are authorized or provided for by a multilateral convention subscribed to by a majority of the nations affected, or unless operated under the .Organization. LONDON E/PC/T/17 Page 23 2. None of the foregoing provisions of Chapter VI is.to be interpreted as applying to arrangements relating to fissionable materials; to the traffic in arms , ammunition and implements of war and to such traffic in other goods and materials as is carried on for the purpose of supplying a military establishment; or, in time of war or other emergency in international relations, to the protection of the essential security interests of a Member. Article 15. Definitions 1. For the purposes of this Chapter, a primary commodity is any agricultural product or mineral which h enters world trade in substantial volume in a form custormarily called primary. The term "primary commodity" may include a primary commodity on which minor processing has been performed in preparation for export. It may also include a group of primary commodities which are so closely related to one another that they can conveniently. be dealt with in a single arrangement. Such a group may, subject to Article 7, paragraph 3, include appropriate non-primary commodities. 2. For the purposes of this Chapter, the tern Member" or non- Member" shall, there it is appropriate, be taken to mean a . Member or non-Memiber with its dependent territories. If a Member or non- Member and its dependent territories form a group, of which one or more units are mainly interested in the export of a commodity and one or more in the import of the commodity, there may be either. joint representation for ail the associated territories or, where it is so desired, separate representation for the territories mainly interested in export and separate representation for the territories mainly interested in import. 3. An intergovernmental commodity arrangement is any accord between two or more governments relating to a commodity other than LONDON E/PC/T/17 Page 24 an accord relating to the purchase and sale of a commodity falling under Secticn F of Chapter IV of this Charter. 4. A regulatory agreement is an inter-governmental commodity arrangement involving regulation of the production, .expert or import of a commodity or regulation of prices. LONDON E/PC/T/17 Page 25 SUGGESTIONS FOR THE ASSIGNMENT OF FUNCTIONS AND ORGNIZATIONAL RELATIONSHIPS Throughout the above draft Chapter, though not in one instance, the term "Organization" has been used without specify- ing a particular part of the Organization. However, the ideas of the Committee on Intergovernnental Commodity arrangements as to the allocation of functions in connection with such arrange- ments to various parts of the Organization were forwarded to the Committee dealing with administration and Organization. These suggestions are set out in the following table. LONDON E/PC/T/17 Page 26 REFERENCE TO CHAPTER VI AS REDRAFTED Article 3 Paragraph 2 Article 3 Paragraph 3 Article 4 Paragraph 1 Article 4 Paragraph 2 Article 5 Paragraph 1 Article 5 Paragraph 2 Article 6 Paragraph 1 Article 6 Paragraph 2 Article 7 Paragraph 3 FUNCTION Invitation to certain Members and. non-Members to appoint representa- tives to a Study Group. The Study Group makes recommendations to the Organization as to how best to deal with difficulties. Convening of Commodity Conference. Invitation to non-Members to parti- cipate in Commodity Conference. Receipt of studies, or of request for studies, from specialized. agencies. Requests to specialized agencies to take part in the work of the commodity. Conference. Determination of whether terms are "no less favourable". Approval of terms of subsequent participation. Invitation to non-Members to participate in arrangements. Decision whether exceptional circumstances exist which would justify a regulatory agreement for a non-primary commodity. SUGGESTED AUTHORITY WITHIN ORGANIZATION Executive Board on the recommendation of the Commodity Commission; the latter will carry out actual administrative arrangements for the Study Group. Recommendations received by Commodity Commission an transmitted to Members of ITO through Executive Board. Executive Board. ditto. Commodity Commission. Executive Board or. the recommendation of the Commodity Commission. Executive Board on the recommendation of the Commodity Commission. ditto. Executive Board advised by the Comrmodity Commission, subject to procedures established by the Conference. (NOTE: with reference to paragraphs 1 and 2 of Article 7, it would appear that the determination whether the circumstances in fact exist in which a regulatory agreement may be used will be made "by consultation among the Members having an important interest in the trade in the product concerned". See Draft Charter, Article 55, paragraph 6, read together with Article 66, paragraph 3, and Article 45, paragraph 2 (b)). Page 27 REFERENCE TO CHAPTER VI AS REDRAFTED Article 9 Paragraph 3 Article 9 Paragraph 4 Article 9 Paragraph 5 Article 9 Paragraph 6 Article 9 Pragraph7 Article 10 FUNCTION Appointment of non-voting Members to Commodity Council. Nomination of non-voting Chairman at request of Commodity Council. Consultation re Secretariat. Approval of rules of procedure. Receipt of reports from Comrnodity Council, and requests to latter for special reports. Preparation and publication of a review of operation of an agreement. ORGANIZATION Exeeutive Board on the recommendation of the Commodity Commission. Commodity Commission (Ref.Article 66 paragraph 8 of Draft Charter.) ditto. Commodity Commission (Ref. Article 66 paragraph 7 of Draft Charter). Commodity Commission (Ref. Article 66 paragraph 9 cf DRaft Charter.) Commodity Commission; publication by authority of the Executive Board. Disposal of archives, etc. on territion of an agreement. Receipt of information regarding existing commodity arrangements; review and decision rewarding continued participation. Similar function in connection vith negotiations. Documents in charge of Director.-General. Executive Board subject to approval of the Conference).upon recommendation of the Commodity Commission. Executive Board. (subject to approval of than Conference) upon recommendation of the Commodity Commission. NOTE: General matters not specifically referred to in the Draft Charter which involve the Organization will normally fall within the province of the Commodity Commission in its advisory capacity to the Executive Board. Article 12 Paragraph 1 Article 12 Paragraph 2

GATT Library

tb521kh9421

Report of Committee V. (Administration and Organization) to the Preparatory Committee of the International Conference on Trade and Employment : Prepared by the Joint Rapporteurs in consultation with the Secretariat

United Nations Economic and Social Council, November 21, 1946

United Nations. Economic and Social Council

21/11/1946

official documents

E/PC/T/18 and E/PC/T/17-29

https://exhibits.stanford.edu/gatt/catalog/tb521kh9421

tb521kh9421_92290026.xml

GATT_157

United Nations ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL LONDON E/FC/T/16 21 November 1946 ORIGINAL: ENGLISH REPORT OF COMMITTEE V (Administration and Organization) to the PREPARATORY COMMITTES OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT (Prepared by the Joint Rapporteurs in consultation with the Secretariat) Nations Unies LONDON E/PC/T/18 Page 2 PART I OUTLINE OF THE WORK OF THE COMMITTEE 1. Committee V was established to consider the setting up of the proposed International Trade Organization from the organizational standpoint. Its duty was to discuss the ideas of the various Delegations, to elaborate the principles upon which an efficient organization can be established, and to draft so much of a constitution for the Organization as could be agreed upon at this initial stage of the proceedings. It was understood that final agreement could not be implied even as to such provisions as were generally accepted by all the Delegations. 2. The Committee elected Mr. LYNN R. EDMINSTER (United States) as its Chairman and Senhor HELIO de BURGOS CABAL (Brazil) as its Vice- Chairman. Mr. LESLIE BURY (Australia) and Dr. D.Y. DAO (China) were elected Rapporteurs. The Committee held fifteen meetings. 3. The Committee found it useful at the outset to adopt as the basis for discussion the United States Draft Charter. Appreciation was expressed of its value for this purpose. An agenda was drawn up accordingly designed to deal first with the Articles which were not dependent upon the decisions of the other Committees, and then, to take up the other Articles in the light of the action taken by those Committees. It was understood that Delegations could treat the subject matter on a wider footing whenever they chose and many of the Delegations introduced papers on specific matters during the discussions which proved to be of great value to the Committee in its work. The Committee also had the benefit of a statement by Mr. TAIT of the International Labour Organization as to the operation of the permanent seat system in the executive organ of that body. LONDON E/PC/T/l8 Page 3 4. The Committee's plan of action was to discuss two or three Articles of the United States Draft Charter, to gather the suggestions, ideas and proposals of the various Delegations as to those Articles, and then to refer the raterial to special 'ad hoc' Sub-Committees composed of those members who had taken the most active part in the discussion of' these Articles. Fortunately, these Sub-Committees were always able to reach unanimous agreement as to the matters assigned to them and their recommendations were usually accepted by the full Committee without substantial change. 5. Committee V has been able to recommend to the Plenary Session agreed texts covering all the ratters assigned to it with the exception of an Article on. the purposess of the Organization, detailed discussion of which the Committee felt would be premature at this tire, and of the Articles relating to Voting and Membership of the Executive Board on which many Delegations made comments and proposals. These the Committee recommends should be referred to the Interim Drafting Committee for the drafting of alternative texts. The Committee left to the other Committees whose interest was more direct and substantial the Articles dealing with the specific functions of the Commissions. LONDON E/PC/T/18 Page 4 PART II It will be appreciated that the work of Committee V depended very largely on the outcome of the proceedings of other Committees. For this reason, it was impossible to carry many matters concerning administration and organization to an advanced stage of discussion. In drafting this repórt, the narrative form has been adopted, largely because it seems more suited to the basic purpose of this. First Session of the Preparatory Committee, namely that it should aim at an exchange of views rather than at any attempt to reach final concìusions. On some issues, particularly those of a potentially controversial nature, many ideas and views were exchanged between Delegates which, though not leading to agreement now, should be helpful to-all concerned at the next meeting of the Preparatory Committee. An endeavour has been made in this report to deal more fully with such issues than with those on which agreement was general or with respect to which the discussion was abortive. An alternate draft of Article I covering Purposes was circulated by one of the Delegations but it was agreed that any discussion on this subject should, be' postponed until the structure of the Organization could be seen as a whole. - B. MEMBERSHIP AND FUNCTIONS 1. The provisions of the United States Draft Charter relating to membership of the Organization were generally approved. It was agreed that the original Members of the Organization should be those countries represented at the Conference which accept the Charter by a given date or, in the event of the Charter not being brought into force by that date, the countriés which agree to bring the Charter into force among themselves. LONDON E/PC/T/18 Page 5 With reference to the admission of new Members, however, it was decided that the authority of the Conference to act in this matter on its own initiative should be made :-- -and that while such admission might be sponsored by the Executive Board, the prior recommendation of the Board should not, as in the case of the Security Council, be a pre-requisite to Conference approval. 2. In considering the functíons of the Organization, the point was made that it might provide necessary to amplify or expand the provisions of this Article to correspond with possible new chapters of the Chart dealing respectively with Employment Policy and Industrial Development. One Delegation considered that the implications of the provision concerning technical advice and _ ;_ce to Members and to other international organisations were not sufficiently clear and entered a reservation that at the appropriate time the responsibilities to be undertaken by the international Trade Organization in this respect would need to be more precisely determined. It would have to be decided, for example, whether the intention was that the International Trade Órganization should employ, a large staff of technical experts or whether it should act merely as a clearing house to which governments could turn for assistance and advice. There was general agreement to a proposal that the International Trade Organization should not only endeavour to bring about international agreements on matters within its competence, but should actively promote their acceptance by Members. LONDON E/PC/T/18 Page 6 It was explained that the tern "arts" in the Charter was intended to be interpreted broadly, and to include copyright for designs of many kinds. Bilateral agreements under this provision would certainly not be barred but for the most part the widest possible application was desirable. It was emphasized that the provision concerning co-operation with the United Nations in the restoration and maintenance of international peace and security was specifically intended to ensure that the Organization would possess all the constitutional authority necessary to enable it to assist the Security Council if called upon to do so. Emphasis given also to the desirability of co-operating closely with the Unitcd Nations and other specialized agencies in achieving an economy of effort in the carrying out of the functions of the Organization. C. THE CONFERENCE 1. The provisions of the United States Draft Charter relating to Conference membership, sessions, procedure and officers were approved without change. Consideration was given to the question of whether the President of the Conference should be elected annuaIly or for each session, the majority opinion favouring the former arrangement on the grounds that procedural delays would therebybe avoided in the event of special sessions being convened. It was also agreed to recommend that when the rules of procedure of the Conference are being drafted, consideration should be given to the possibility of including some appropriate provision which would enable a special session to be called at the request of less than a majority of the Members. Such a provision might apply, for exampIe, in connection with appeals against decisions of the Executive Board. LONDON E/PC/T/18 Page 7 2. In discussing the powers of the Conference to suspend, in exceptional circumstances, obligations undertaken by Members under the general commercial policy provisions of the Charter, it was suggested that this power might be extended to cover all Charter obligations. It was stressed that the waiving of such obligations was intended to apply only in cases of an exceptional nature, involving hardship to a particular Member, which were not covered by specific escape clauses. It was finally agreed that all the obligations undertaken by Members, pursuant to the Charter, should come within the purview of this general provision. 3. As regards the apportionment of expenses, some delegates urged the adoption of the same relative scale of contributions as used in the case of the United Nations, on the grounds that difficulties attendant upon the working out of a new scale would thus be avoided. However, as the decision on the United nations scale of contributions had not yet been made known and the question of voting in the Organization and of member- ship of the Executive Board had still to be decided, it was considerced impossible to do more at this stage than recommend that, in the absence of any other agreed arrangement, apportionment of expenses should follow the general principles adopted by the United Nations. 4. In discussing the powers of the Conference to establish procedures required for making the determinations and recommendations as provided elsewhere in the Charter, one delegate desired that a two-thirds majority should be required in important matters. There was a difference of opinion as to whether Committe V was exclusively competent to decide on questions of voting arrangements in respect of matters under discussion by the other Committees. LONDON E/PC/T/18 Page 8 However, it was agreed that, in the absence of any proposals for alterations by the other committees, it would be best to adhere to the broad principle that all decisions, except possibly those of a very important nature, should 'be voted by a simple majority. 5. Since it was agreed that one of the functions of the Organization should be to make recommendations for international conventions and Agreements on matters within its competence, it seemed desirable that a provision to this effect should be included among the powers and duties expressly conferred upon the Conference. To this end, agreement was reached on a Provision (based on the corresponding Article of the Constitution of the World Health Organisation) authorizing the Conference to develop and recommend conventions and agreements for Members' acceptance and requiring Members to give such recommendations due consideration and to decide, within a reasonable time, either to accept or to reject them. D. VOTING AND EXECUTIVE BOARD MEMBERSHIP 1. In the discussion on voting divergent schools of thought emerged as to whether some formal provision should be made in the Charter whereby differences in importance in international trade of individual Members would be reflected in the measure of control they would exercise over the affairs of the International Trade Organization. One school maintained that the democratic approach to the problem was to allow an equal voice and vote to all Members and that the successful functioning of the Conference would depend in large measure upon a feeling of equality. Certain delegates, however, contended that because the International Trade Organization will be a functional rather than a political.body, it would not be democratic to permit those with a smaller proportionate share of international trade to overrule those whose share was much larger, merely by virture of their larger number of separate votes. LONDON E/PC/T/18 Page 9 It was also suggested that it would be anomalous to have only one vote for countries having responsibility for dependent territories, the economies of which differed radically from their own and some of which had an effective measure of autonomy in matters covered. by the Organization. The majority of delegations favoured in principle the system of one country one vote, but several who did so expressed willingness to consider alternatives. In the course of discussion, many shades of opinion were discernible, but it was generally greed that at this stage a full, exchange of views was more -desirable than any attempt to reach final agreement. Two broad alternatives to the United States Draft Charter were advanced: a system of weighted voting in the Conference, and permanent seats on the Executive Board. The interdependence of these two possibilities was recognised by discussing them in conjunction. 2. Weighted Voting Several delegates declared their difficulty in expressing any definite views on this subject without considering concrete schemes. A paper was subsequently circulated suggesting that consideration should be given to a weighted system of voting both in the Conference and Executive Board; based on a formula which provided for: (a) a basic number of votes for each country, and (b) a number of votes based on total external trade, plus perhaps (c) a number of votes based on national income. LONDON E/PC/T/18 Page 10 It was also suggested that the incidence of voting should be revised periodically to take account of the changing relative position of Member countries - a factor which some de1egates thought might be provided for by criteria measuring potential development. A ceiling for the number of votes which any one country might have was subsequtently proposed. In advancing these proposals the arrangements made in connection with the International Labour Organization, the International. Mountary Fund, the International. Bank for Reconstruction and Development and the Provisional International Civil Aviation Organization were quoted as precedents for a differential system in connection with membership of the Governing Body. ILO arrangements were explained by a representative of that Organization. Certain delegates thought that some of these precedent, were irrelevant and stressed the difficulty of reaching any kind of formalae which would be acceptable to all potential Members, together with the protection afforded. to Members by the requirement of an affirmative vote of two-thirds of the Conference for decisions on crucial issues. Others only discussed the proposals on the hypothesis of a weighted system being adopted, without prejudice to their preferençe for the one nation one vote principle. The criteria put forward were criticized on the following gronds. (i) Undue weight would be given to small countries with a large external trade at the expense of countries with a large popu1ation whose externa1, as compared with-internal, trade is relatively small. (ii) From the democratic point of view population should be LONDON E/PC/T/18 Page 11 (iii) National wealth would be a preferable criterion to national income. (iv) Countries, relatively more dependent on international trade than others should have extra voting strength accordingly. (v) National Income would weight voting in favour of Members whose international trade was relatively less important to themselves. (vi) The interests of less developed countries would be insufficiently safeguarded. (vii) The methods of estimating the figures on which the criteria depended differed considerable from country to country. (viii) The proposals were not clear as far as voting on the Executive Board was concerned. It was suggested that the question should be referred to the Interim Drafting Committee for the formúlation and expostion of alternative schemes of weighted voting which governments might consider although doubt was expressed as to whether this function would be within its terms of reference. 3. Executive Board - Membership Many of the Committee, including among their number-.both the sponsors and opponents of weighted voting, felt that there should be provision for permanent seats on the Executive Board for Members of chief economic importance. Several delegates,though favouring equality of voting in the Conference, were ready to support the principle of permanent seats on the Board, largely on the grounds that the continuous support and participation of these countries was essential to the successs of the International Trade Organization. It was suggested on the other hand that any special provision was superfluous because the re-election of these countries was always virtually certain. LONDON E/PC/T/I8 Page 1 2 A variation of the idea of permanent si Lt; was proposed by which membership of the Executive Board would rotate, but with a certain number of countries eligible for immediate re-election. This would avoid any necessity for formaI mention of perminent seats in the Charter. It was suggested that it would be better to establish criteria for selecting permanent members rather than to name them in the Charter though the latter procedure was mentioned as a possibility Various alternatives were advanced. While some delegates thought that tests of economic importance such as externa l trade and population should be applied, others maintained that wider considerations than purely economic ones should be taken into account. Some delegates thought that geographical ir.iL, should be applied in conjunction with economic. A scheme was submitted by which the seats would be allotted for five year terms with eligibility for immediate re-election, to the most important trading countries within the geographical areas of Europe (2), North America (2), Latin America (2), Asia (2), Oceania (1) and Africa (I). This was opposed on the grounds that the only justification for permanent seats was the difference in importance of Members in international trade, a factor which was independent of location. It was suggested, however, that geographicaí considerations might be applied to non-permanent seats. The number of permanent and non-permanent seats was also considered. An. increase of the total from fifteen, as proposed in the United States Draft, to twenty was advocated by some delegates, though others thought a membership of twenty too large for the smooth working of an executive organ. LONDON E/PC/T/18 Page 13 The opinion was also expressed, however, that the Board would need to wcrk largely through sub-committees in any case. Importance was attached to the need for relating the number of seats on the Board to the number of Members of the Organization. Some thought that the position should be left elastic until this was known, Various proportions of permanent to non-permanent seats were tentatively mentioned without any particular proposition receiving detailed consideration cr wide acceptance. 4. The conclusions which emerged from the Committee's deliberations on the subject of Voting and Executive Board Membershíp máy be briefly stated as foIlows: (a) The majority of delegates fávoured the principle of one country one vote in the Conference and in the Executive Board. (b) A minority desired detailed examination of possible schemes for weighted voting, but not necessarily at this stage. (c) The principle of permanent seats cn the Executive Board in some form is acceptable to most delegates. (d) The three-year period of membership of the Board set out in the Unitcd States Draft Charter was largely unquestioned. (e) No useful purpose would be served by attempting to produce a definitive draft covering these particular provisions, until such time as the substantive issues involved have been more completèly resolved. No firm conclúsions were reached on the following matters:- (i) Number of seats on the Executive Board. (ii) The relative number of permanent seats (if any) and non-permanent. (iii) Rotational membership of Executive Board. (iv) The criteria for electing members of the Executive Board, either for permanent or non-permanent seats. LONDON E/PC/T/18 Page 14 E THE EXECUTIVE BOARD - PROCEDURE, POWERS AND DUTIES 1. The text of the United States Draft Charter insofar as it concerned the powers and duties cf the Executive Board was accepted with only two amendments both of which, however, were indicative of two basic concepts, shared by the majority of delegates, as to the general status and authority of the Executive Board vis-a-vis the Conference on the one hand, and the Commissions, on tne other. The first amendment was to make permissive rather than mandatory, the power of the Board to recommend to the Conference the admission of new Mem bers, thus emphasizing what most delegates felt should be the clearly subordinate position of the former. Similarly it was thought that the Commissions, in turn, should be definitely, subordinate to the Board and to give added emphasis to this principle it was decided that the latter should "supervise" and not merely "review" the activities of the former. 2. There was a disposition, however, to allow a maximum of latitude to the Board in drawing up its own rules of procedure and electing its officers, though certain specific suggestions were made in this regard to which it was hoped due consideration would be given. These included proposals that in certain circumstances it should be possible for a minority of Board members or for a specified number of Members of the Organization not represented on the Board, to convene a session, In discussing the term of office of the Chairman, the desirability of providing for a reasonable measure of continuity was stressed by LONDON E/PC/T/18 Page 15 several delegtes. Whilst, on the whole, the advantages of annual election were deemed to outweigh the disadvantages, a satisfactory compromise was found by specifically providing that the Chairman and other officers should be eligible for immediate re-election. A reservation concerning the reference to "other officers" was withdrawn on the understanding that the term referred only to Board members themselves and not to Secretariat officials. A proposal that the Chairman of the Boárd should be able to participate in the deliberations of the Conference, in his capacity of Chairman, though without the right to vote, found general acceptance. It was, of course, recognized that the Chairman of the Executive Board would probably attend thé Conference as a representative of his government. Nevertheless, it was thought desirable to cover the contingency of his not attending in such representative capacity and that in any car-, he should be entitled, under the Charter, to at least. the same rights with respect to Conference participation as are accorded Chairmen of Commissions. 3. Agreement was reached also on the desirability of including in the. Charter a provision under which any Member of the Organization would have the right to appear and effectively present its case before the Executive Board when a matter of particular and substantial concern to that Member was under consideration. The provision, as accepted, is based on Article 31 of the United Nations Charter but is somewhat more precisely drawn in that it grants to the Member concerned, all the rights of Board members except the right to vote. LONDON E/PC/T/18 Page 16 At least one delegation, however, expressed serious misgivings lest this arrangement should hamper and embarrass the Board, by precluding it from holding confidential discussions on any subject or from dealing effectively with matters of general application. Another delegate suggested that the Board should not be under any firm obligation to invite Members to attend its sessions but should do so at its discretion. F. THE COMMISSIONS 1. The Commissions were discussed in general terms, particular attention being paid to their composition and procedure. The desirability of establishing Commissions as an essential part of the structure of an International Trade Organization to perform certain specialized tasks was in no way questioned. There was a tendency to treat the natter rather tentatively, largely bccause most delegates felt that the structure, functions and status of the Commissions and the manner in which they would operate, could not at present be foreseen in much detail. Various views were expressed. however, as to the more important considerations to be borne in mind. 2. It was agreed that the Commissions should be subordinate to the Executive Board. The extent to which they should operate other than in a strictly advisory capacity was, however, a question which no one felt could be fully resolved at present. Some delegates Expressed the opinion that the Commissions should not be called upon to undertake responsibilities of a semi-judicial nature and considered that, in this respect, the wording of Articles 64, 65 and 66 of the United States Draft Charter raised certain doubts as to the functions it is intended the Commissions should perform. LONDON E/PC/T/18 Page 17 It was argued in support of this view that only representatives of governments, not experts in their own right, should be directly responsible for important executive and judicial decisions. 3. There was general agreement with the proposal that the Commissions should consist of outstanding exports of high prestige in their own fields who would operate independently of their governments. One delegation, though agreeing in principle with this proposal, was of the opinion that the governments concerned should in all cases be consulted regarding Commission appointments and that it should be expressly provided that not more than one national from any country should serve on any one Commission. The majority of delegates, however, felt that in general these conditions would, in fact, be complied with and that it was unnecessary and undesirable therefore to write them into the Charter itself. 4. There was no dissent from the proposal that in appointing members of Commissions, due regard should be paid to the importance of selecting personnel on as wide a geographic basis as possible. In this connection, it was agreed, too, that the desirability of having different types of economies represented, particularly in the case of thé less developed countries, should also be borne in mind. Various opinions were expressed as to whether some or all the members of Commissions should serve on a part tire or full time basis. While certain delegates anticipated that the work of some of the Commission at least, would be so heavy and continuous that full timé service might LONDON E/PC/T/I8 Page 18 be essential, others thought that by becoming permanent international officials, the individuals concerned would tend to lose much of their intimate contact with current affairs in their own countries r'-s that this would greatly lessen their value to the Organization. In this respect, no need was felt for changing, the text of the United States Draft Charter which did, in fact, leave the matter to be decided by the Conference. There was considerable support for the idea that the Chairman of each Commission right serve on a full aime basis, and it was thereforé recommended that provision be made accordingly in the rules of procedure to be drawn up by each Commission. 5. The question of relationship between the personnel of Commissions on the one hand, and the Director-General and the staff of the Secretariat on the other, gave rise to a certain amount of concern. While it was acknowledged that the Secretariat should serve the Commissions, it was suggested by a number of Delegates that the respective functions, responsibilities and status of the Director-General and of Commission members would reed to be more carefully defined particularly in cases where the latter were to become permanent officials of the Organization. The desirability of the Commissions having access to the Executive Board directly rather than through the Director-General was particularly stressed. At the same time, however, serious misgiving was expressed lest two separate bodies of officials, of differing status, should be created within the one Organisation thus opening up the possibility of divided authortiy with attendant friction and confusion. The difficulty of attracting, on à pérmanent basis, persons of the calibre required and the possible expense which this wouId involve, were also pointed out. LONDON E/PC/T/18 Page 19 6. It was the concensus of opinion that these questions could not profitably be pursued further until the structure of the Organization as a whole began to take shape. Moreover, the number and nature of the Commissions that might ultimately be required could not now be foreseen. Agreement was reached, however, on certain minor amendments to the relevant provisions of the United States Draft Charter, the general purpose of which was to give to those provisions a somewhat greater measure of elasticity having regard to the uncertain require- ments of the future. Subject to the views expressed being given proper consideration when appropriate action is taken, the amended provisions as incorporated in the agreed text were regarded as satisfactory. 7. The provisions of the United States Draft Charter dealing with the functions of the Commissions on Commercial Policy. Business Practices and Commodities, respectively, were díscussed in general terms. It was agreed that the substantive provisions of these articles really depended on the work of other Committees. Until this was finished, amendments and drafting alterations required to bring them into line with the commission structure of the Organization would be premature. In the circumstances, it was decided that these particular provisions should be examined more fully at the next meeting of the Preparatory Committee, in the light of such drafts as the Drafting Committee may in the meantime prepare. A proposal was submitted calling for the establishment of an additional Commission to deal with the "Expansion of Production, Industralization and Employment." In view of the fact that the Joint Committee of Commíttees I and II were referring one question of machinery to the Economic and Social Council for advice, it was agreed, that the matter would have to be left open for the present, to be considered later by the Interim Drafting Committee and the next meeting of the Preparatory Committee. E/PC/T/18 Page 20 G. THE SECRETARIAT 1. It was unanimously felt that the structure of the International Trade Organization including the Secretariat, should be brought into the closest possible relationship with the United Nations, for reasons which included economy, the shortage of skilled personnel, co-ordination of policy, prevention of overlapping, and the avoidance of any possible separatist tendency. The necessity of ensuring proper co-ordination with the Economic and Social Council itself, in order to avoid needless duplication of work on identical or closely related problems, was particularly stressed. Common services and staff conditions for the various international economic secretariats now being built up or in contemplation were advocated wherever possible. Some delegates thought that with respect to certain phases of its work, the International Trade Organization might make appropriate use of the economic Secretariat of the United Nations, and that it would be an advantage from this viewpoint if the International Trade Organization were located in the same place. Most delegates, however, wore not prepared to offer any definite views on the site question at this stage. In general, it was agreed that detailed consideration of this question of interlocking staff arrangements would be premature and that the United Nations Secretariat should be asked to furnish relevant information and suggestions for consideration at the appropriate time., Certain preliminary observations and proposals concerning the co-ordination and integration of secretariat services and activities were subsequently circulated in response to this request. Several delegates indicated that LONDON E/PC/T/18 Page 21 the cost of maintaining a multiplicity of separate international organizations was already showing signs of assuming considerable proportions and that the expenses of the International Trade Organization should, therefore, be kept to the minimum consistent with efficiency. 2. The principle was generally accepted that provisions relating to the organization of the Secretariat, should be as flexible as possible, particularly with reference to the number, status and powers of Deputy Directors-General, and that, as a corollary, the Director- General should be given all the authority and freedom of action necessary for carrying out his responsibilities. Most delegates agreed that the position of the Director-General should be made as strong as possible in relation to that of other Secretariat officials, and that any specific reference in the Charter to either the number or functions of Deputy-Directors-General should consequently be omitted. This decision was felt to be justified on the grounds, firstly, that if their status and powers were to be derived directly from the Charter,, the relative authority of the Director-.General would bè lessened, and secondly, that it should be left to the Director-General to appoint only such number of deputies as are in fact, needed. Appointments should in any case be in accordance with regulations approved by the Conference. A proposal that the Director-General be ex-officio non-voting Chairman of the Executive Board did not win favour. 3. While delegates, agreed that efficiency, competence and integrity should be the paramount considerations in recruiting Secretariat personnel, many thought that adequate geographical representation and familiarity with different kinds of economic conditions and interests, should also be taken substantially into account. LONDON E/PC/T/18 Page 22 Agreement was reached on a draft which is intended to give effect to this principle and to conform to the corresponding provision in the Charter of the United Nations. Some delegates suggested that Secretariat and Commission personnel should be recruited only from member countries of the International Trade Organization. Others considered that such a provision would be unduly restrictive, and that employment should be open to all United Nations nationals subject, perhaps, to some measure of preference being given to nationals of member countries. Finally, there was no dissent from the view that specific provisions regarding nationality should not be included in the Charter, thus leaving the way open for the occasional recruitment of exceptionally qualified persons who otherwise would not be eligible, if in the Director-General's opinion and subject to such consultation as he may deem advisable, the services of such persons would be of special value to the Organization. H. MISCELLANEOUS PROVISIONS 1. Relations with other Organizations Those provisions of the United States Draft Charter which dealt with questions of relationship between the International Trade Organization and other international organizations found ready acceptance. The useful part which these organizations, bath inter- governmental and non-governmental, might play in helping to promote the objectives of the International Trade Organization was generally recognize. Although many delegates were willing to leave to the Director-General the negotiation of a formal agreement with the United Nations, according to the precedent set by other specialized agencies, the opinion was also expressed that the provisions of such an agreement should be worked out in detail beforehand,with a view to their becoming operative as soon as the International Trade Organization comes legally into existence. All delegates agreed,however, with the general LONDON E/PC/T/18 Page 23 proposition that in the interests of economical and efficient administration, and for the purpose of avoiding inconsistent and even conflicting policies, it was of the greatest importance that the closest relationship with the United Nations, and particularly with the Economic and Social Council, should be specially developed. There was general agreement, too, with the view that it would be undesirable to refer specifically to any particular organization, in the Charter provision dealing with relations with other inter-governmental-agencies, in view of the fact that the activities and responsibilities of a number of these agencies will be of special importance from the point of view of the International Trade Organization. The importance of the Food and agricultural Organization, of the International Monetary Fund, of the International Bank and of the International Labour Organization in relation to the work of the International Trade Organization was particularly stressed. 2. Legal Capacity, Privileges and Immunities The provisions of the United States Draft Charter dealing with the legal capacity, privileges and immunities of the Organization were approved without change. The Committee was informed that the Secretary- General of the United Nations was under instructions from the General Assemably to consult with specialized agencies on the subject of privileges and immunities with a view to ensuring a reasonable degree of uniformity in the arrangements made for all inter-governmental organizations. In the circumstances, it was felt that the Charter provisions relating to these matters should be expressed in general rather than specific terms leaving the formulation of their detailed application to the Conference. LONDON E/FC/T/18 Page 24. 3. Payment of Contributions There was no dissent from the vie-w that a penalty clause with refer- once to non-payment of contributions should be incorporated in the Charter. some discussion took place, however, as to the appropriate place in the Charter for a provision of this nature, the matter being finally left to the decision of the Interim Drafting Committee. In order to bring ITO procedure into line with that adopted by the United Nations a suggestion that the wording of this particular provision should conform to that used i: the United Nations Charter met with general support. 4. Amendments While it was generally recognized that the Organization should be so constituted as to allow it to meet constitutional changes of a minor kind without undue difficulty, several delegates thought that a Member not accepting amendments which involve new obligations would be in an anomalous position in its relationship to the Organization, if it were not permissible for the Member to withdraw. It was, therefore, felt that provision should be made whereby the Conference might decide that a non-accepting Member would be compelled to withdraw or, in the absence of such a decision, whereby such a Member might be enabled voluntarily to withdraw notwithstand- ing any general provisions contained elsewhere in the Charter limiting the right of withdrawaI. 5. withdrawal In considering withdrawal and termination, account was taken of the necessity of giving the Organization a fair chance at its inception to before firmly established. It was felt, nevertheless, in view of the fact that United States trade agreements legislation would not permit that country to enter into tariff commitments of more than three years' duration, that the period immediately following the adoption of the Charter, within which no withdrawals should take place, should likewise be three years, instead of five as proposed in the United States Draft Charter.' It was also felt that six months' notice cf intention to withdraw, rather than one year (âs in the United States Draft), would be adequate. Thus, LONDON E/PC/T/18 Page, 25 a Member would be able to withdraw at the end of three years, by giving notice at the end of two and a half years. Special provision was also made to cover certain overseas territories. 6. Interpretation and Settlement of Disputes (i) It was agreed to make the Chinese and Spanish texts of the Charter equally as authoritative as the French and English. The question of providing also a Russian text did not present itself at this Conference. (ii) Attention was called to the possibility of a special chamber for commercial cases being established under Article 26 of the Statutes of the International Court of Justice. There was some doubt, however, as to whether its existence might not detract from the prestige of the International Trade Organization. Several delegates thought that the jurisdiction of the Organization should be final in administrative matters coming within its province, and that only legal issues should be referred to independent courts. Politico-economic decisions should be recognized as its own responsibility. Although it was generally agreed that the Executive Board, where appropriate, could refer disputes to the Commissions for preliminary report, some disapproval was voiced at the idea of Commissions being formally regarded as courts of first instance. Corsiderable discussion took place on whether appeals to the International Court of Justice from rulings of the Conference on justici- able issues should be subject to the consent of the Conference. It was argue d that some limitation was necessary both to keep the prestige of the International Trade Organization high and te avoid overloading the Inter- national Court. The contrary view was that only justiciable matters were involved in which the International Trade Organization was not expert, and that in practice, countries would only appeal on issues which they regarded as really important. Some compulsory delay was also suggested. It was eventually agreed that the right of appeal should be subject to procedures established by the Conference. LONDON E/PC/T/18 Page 26 It was agreed that in deter mining these procedures, consideration should be given to incorporating as a pre-requisite an affirmative vote of at least one third of the Members of the Conference. The absolute right of appeal to the Court in security matters, as set out in the United States Draft Charter, was not called into question. (iii) Delegates all thought that authority for the International Trade organization to seek advisory opinions from the International Court should be continuing and not subject to reference. to the United Nations on each occasion. The Article concerned was re-drafted to accord with the language of the United Nations Charter. Although the interpretation of this wording was open to question, it was thought that.the matter could safely be left to the Agreement to be concluded with the United Nations. It was agreed to refer to the Registrar of the International Court the question as to whether complications would be likely to arise from asking the Court for an advisory opinion on a matter which might subsequently become the subject of a case before it. It was agreed also that under Article 34 (2) of the Statutes of the International Court of Justice, Rules could be approved by the Conference to enable the Director-General to represent the Organization before the Court. (iv) The introduction of detailed discussion on arbitration raised considerable difficulty because delegates were by no means clear as to what kind of issues were appropriate for arbitration. A lengthy discussion took place as to whether administrative as well as legal questions should be referred to arbitration; whether the Executive Board should wait on the consent of the parties concerned; and whether the arbitrators' decision should be final (most delegates .agreed it should). An amendment was agreed upon' which would permit LONDON E/PC/T/18 Page 27 the Executive Board, with the consent of parties concerned, to refer to arbitration for final decision any matter arising out of the operation of the Charter. Certain delegations wished the provisions in regard to arbitration and the International Court of Justice to be expanded and made more specific. They undertook to prepare a memorandum setting out their views and it was agreed that the Drafting Committee should be asked to consider these views in conjunction with the report of the Fifth Committee's discussion of this subject. 7. ' Entry into Force (i) One delegation suggested that, instead of requiring a membership of twenty to bring the Charter into force, an alternative method right be to provide for its taking effect when a certain proportion of world trade was covered by countries accepting its provisions, so that the entry of the Charter into force should not be delayed after its acceptance by the most important trading countries. Various i objections to this procedure were voiced by other delegates. In general the procedures suggested in the United States Draft Charter for bringing the Charter into force were regarded as satisfactory subject to a drafting amendment whereby any instrument of acceptance deposited with the Secretary-General of the United Nations is to be taken as covering both procedures, unless it expressly provides to the contrary or is withdrawn. This was intended to cover the situation that might arise when one or more governments, having deposited their acceptance before a given date (pursuant to paragraph 2 of Article Z) might not feel inclined to join. LONDON E/PC/T/18 Page 28 The Organization should it. subsequently come into existence as a result of agreement on the part of a relatively limited number of governments (pursuant to the proviso to paragraph 3 of Article Z), but might nevertheless wish their acceptance to take effect when the membership reacrws twenty or more. (ii) With reference to the suggested provision under which each government accepting the Charter would do so in respect of all dependent territories, attention was drawn. to the fact that cortain..overseas territories were in varying degrees of development and, in some cases, were self-governing in matters provided for in the Charter. To meet this situation, a less rigid provision was agreed upon, the purpose of which was to permit a measure of discretion to the governments concerned with respect to their acceptance of the Charter on behalf of territories for which they have international responsibility. Reservations regarding this provision were entered by three delegations. 8. Interim Tariff Committee At the meeting next year, for the negotiation of tariff concessions, it is hoped that certain reductions or other concessions will be agreed upon. If so, it might be desirable to bring them into effect as soon as possible, without ncessarily waiting upon the entry into force of the Charter. It would be for the negotiating countries themselves to decide the time. When the Organization is set up it is hoped that the countries which have reduced their tariffs will join. it. These countries would then become the nucleus of the Interim Tariff Committee which would be supplemented by other countries joininig the Organization, and which themselves have made equivalent tariff corc3ssicns to the satisfaction of the Committee. When two-thirds of the Members of the Organization become members of the Committee, the functions of the latter will vest LONDON E/PC/T/18 Page 29 in the Conference. It was agreed. that for countries making reductions, membership of the Interim Tariff Committee should be compulsory. A reservation was made as to the. position of Member countries which did not desire to join the Committee. A suggestion was also made that if weighted voting was introduced, it might be applied in the case of the Interim Tariff Committee. Another provisional view was that the implementation of tariff and Charter agreements should, be inter-dependent. LONDON E/PC/T/1 8 Page 30 APPENDIX REVISED TEXT OF CHAPTER VII OF THE UNITED STATES DRAFT CHARTER (including Article 2 on Membership) The following is the revised text, as agreed by Committee V, of the -ection of the United States Draft Charter which fell within its term of reference, except for Article 1 (Purposes) and Articles 64, 65 and 66, (Functions of th. Commercial Policy, Business Practices and Commodities Commissions, respectively.) Citations referring to other sections of the United-States Draft Charter which may need to be brought into conformity with the content and arrangement, adopted by the other Committees, are shown in square brackets. Article A. Membership 1. The original Members of the Organization shall be those countries represented at the United Nations, Confercnce on Trade and Employment which accept the provisions of this Charter by 31 December 194.... or, in the event that this Charter has not entered into force by that date, the countries which argree to bring this Charter into force pursuant to the provizo to paragraph 3 of Article Z. 2. Membership in .the Organization shall be open to such other countries as accept the provisions of this Charter, subject to the approval of the Conference. 3. The Conference shall establish procedures that will open a memberehip. in the Organization to the United nations on behalf of the trust territories for which the United Nations is the administering authority. Article B. Functions of the Orizanization It shall be the function of the Organization: LONDON E/PC/T/18 Page 31 1. To collect, analyse and publish information. relating to international trade, including information relating to commercial policy, business practices and commodity problems and to industrial and general economic development. 2. To provide technical assistance and advice to Members and to the United Nations and other international Organizations, including such assistance and advice as may be appropriate in connection with specific projects of industrialization or other economic development. 3. To consult with, and to make recommendations and reports to Members regarding any matter relating to the purposes of the Organization or the operation of this Charter, including the following: (a) Recommendations or determinations relating to the discharge of 'the responsibilities of the Organization, or of the Members, under [Chapter IV]. (b) Recommendations as to measures for implementing the objectives with regard to restrictive business practices, set forth in [Chapter V]. (c) Recommendations regarding the application to commodity arrange- ments under consideration by Members of the principles governing commodity arrangements set forth in [Chapter VI] and recommendations initiating proposals for new commodity arrangements, or.proposing ;< such modifications, including termination of commodity arrangement ,''*" already concluded, as may be deemed appropriate under the commodity principles and in the general interest. (a) Recommendatioons as t measurieplemms for entingjec the obtives of the Organization in encouraging and assisting tshe indutrial and. general economic development of Member countries. . .~~~~~~~~~~~~~~~~~~~~~~~~~~~- LONDON E/PC/T/18 Page 32 4. To consult with Members regarding disputes growing out of the provisions of this Charter and to provide for the settlement of such disputes. 5. To make recommendations for, and promote the acceptance by Members of, international agreements designed to improve the bases of trade. and to assure just and equitable treatment for the enter- prises, skills, capital, arts and technology brought from one country to another, including agreements on the treatment of foreign nationals and enterprises, on the treatment of commercial travellers, on com- mercial arbitration, and on the avoidance of double taxation. - . 6. To achieve an economy of effort in the performance of the functions set out in this Article and to co-operate with the United Nations and with other inter-governmental organizations, generally, in the attainment of the economic and social objectives of the United Nations and in the restoration and maintenance of international peace and security. 7, Generally to advise and to mike recomendations to Members and .other international organizations, and to perform any other function appropriate to the purposes of the Organization. Article C. Structure of the Organizaticn. The Organization shall have as its principle organs: a Conference, an Executive Board, Cormmissions as established under Article M, and a Secretariat. Article D. Conference - Membership 1. The Conference shall consist of the representatives of the Members of the Organization. 2, Each Member shall have one representative and may appoint alternates and advisers to its representative on the Conference. 3. No representative on the Conference may represent more than one Member. E/PC/T/18 Page 33 Article E. Conference - Voting 1. Each Member.shall have one vote in the Conforence. 2. Except as may be otherwise provided for in this Charter, decisions of the Conference shall be taken by a majority of the Members present and voting. (N.B. The majority of delegations have approved the draft of this Article as hereunder. Some delegations, however, desire to have drafted an alternative text (or texts) embodying the principle of weighted voting.) Article F. Conference - Sessions, Procedure and Officers 1'. The Conference shall meet in regular annual sessions and in such special sessions as occasion may require. Special sessions shall be convoked by the Director-General of the Organization at the request ot the Executive Board or of a majority of the members. 2. The Conference shall adopt its own rules of procedure. It shall annually elect its President and other officers ' , Article G. Conference - Powers and Duties 1. 'The Conference shall have final authority to, determine the policies of the Organiaation. It may make recommendations to Members'of the Organization and to other international organizations regarding any matter pertaining to the purposes of the Organization. 2.. The Conference may, by the affirmative votes of two-thirds of its Members, determine criteria and setup procedures, for waiving, in exceptional circumstances, obligations of Members undertaken' pursuant to this Charter. 3. The Conference may delegate to, the Executive Board authority to exercise or perform any of the powers and duties of the Conference, except such specific powers and, duties' as 'are expressly conferred or imposed upon the Conference. LONDON E/PC/T/1 8 Page 34. 4. The Conferonce shall approve tho budget of the Organization and shall apportion the expenses of the Organization among the Members. 5. Tho Conference may develop and, by the affirmative votes of two- thirds of its Members, recommend for their acceptance, conventions and agreements with respect to any matter within the competence of the Organization. Each Member undertakes that it will, within eighteen months after such recommendation by the Conference, make a decision upon it. Each Member shall notify the Director-General of the action taken and, in the event of rejection of such recommendation, shall furnish a Statement of the reasons therefore. 6. The Conference shall establish procedures for making the determin- ations provided for in [Article 25 and in paragraph 2(b) of Arti9le 45] whereby any such determinations shall be made through the Organization by consultation among the Members having an important interest in the trade in the product concerned. 7. The Conference shall establish procedures for making the determin- ations and recommendations provided for in [paragraph 3(c) of Article 20; paragraph 2 of Article 29; and Article 30.] 8. .The Conference may, by the affirmative votes of two-thirds of its Members present and voting, adopt the standards, nomenclature, terms and forms described in [paragraph 7 of Article 16.] 9. The Conference shall determine the site of the Organization and shall establish such branch offices as it may consider desirable, Article H. Interim Tariff Committee 1. There shall be an lnterim Tariff Committee which shall act temporarily on behalf of the Organization in the making of recommend- ations and determinations pursuant to [paragraph 3 of Article 18.] LONDON E/PC/T/1 8 Page 35. 2. The Committee shall consist originally of those Members of the Organization which shall have made affective the General Agreement on Tariffs and Trade dated ......... 194 ..+ Any other Member of the Organization shall be a member of the Committee when, in the judgement of the Committee, that Member shall have completed negotiations. pursuant to [paragraph 1 of Article 18] comparable in scope or effect to those completed by the original members of the Committee. When the number of Members of the Organization which are members of the Committee shall constitute two-thirds of the total number of Members of the Organization, the Committee shall terminate and its functions shall be transferred to the Conference. 3. Each member of the Committee shall have one vote. 4. Decisions of the Committee shall be taken by a majority of the members present and voting. 5. The Committee shall adopt its own rules of procedure, including provision for the election of its officers. (N.B. Reservations regarding paragraph 3 above .were entered by those delegations favouring weighted voting.) Article 1, Executive Board -. Membership (N.B. No agreement was reached on this Article, 'The following alternative drafts round support from one or more delegations. :Many points were raised in the course of discussion, however, which would involve modification, in one way or another, of each of these alternatives, or the formulation of new ones.) + This agreement refers te the proposed arrangement for the concerted reduction of tariffs and trade barriers among tho countries invited by the United States to enter into negotiations for this purpose. It is contemplated that the aggreement would contain schedules of tariff concessions and would incorporate certain of the provisions of Chapter IV of the Charter (e.g., the provisions relating to most-favoured-nation treatment, to national treatment on internal taxes and regulations, to quantitative restrictions, etc.). LONDON E/PC/T/18 Page 36 Alternative (i):- 1. The Executive Board shall consist of fifteen Members of the Organization elected by the Conference. 2. Subject to the provisions of paragraph.3 of this Article, one-third of the membership of the Executive Board shill be elected each year for a term of three years. . retiring Member shall be eligible for immediate re-election. 3. At the first election, fifteen Members of the Executive Board shall be chosen. The term of office of five Members shall expire at the end of one year, and of five other members at the end of two years, in accordance with arrangements made by the Conference. 4. Each Member of the Executive Board shall. have one representative and may appoint alternates and advisers to its representative. (N.B.: Some delegations, whale in general. supporting the above text, expressed the view that the number of Members of the Executive Board should be increased to eighteen or twenty). Alternative (il):- 1. The Executive Board shall consist of fifteen Members of the Organization elected by the Conference, five of whome shall be eligible for immediate re-election. 2. Subject to the provisions of paragraph 3 of this Article, one-third of the membership of the Executive Board shall be elected, each year for a term of three years. 3. .Same as for (l) above. 4. .Same as for (1) above. Alternative (iii):- . 1. The Executive Board shall consist of fifteen Members of the Organization elected by the Conference. By virtue of their economic importance, six memberss shall be appointed as permanent LONDON Page 37 Members; nine other Members shall be granted non-permanent seats. The total number of seats may be increased by a decision of the Conference taken with a two-thirds majority of its Members. 2. The non-permanent Members of the Executive Board shall be chosen for a period of three years. At the first election of the non-permanent Members, three Members. shall be elected for. a term of one year and three others for a term of two years. A retiring Member shall not be eligible for immediate re-election. 3. These elections shall take place in accordance with arrangements to be approved by thc Conference with a two-thirds majority of its Members. 4. Each Member of the Execcutive Board shall. have one representative who may appoint alternates .nd advisers. Alternative (iv) 1. The Executive Board shall consist of twenty Members of the Organization. 2. Subject to the provisions of paragraph 3 of this Article one-half of the membership of the Executive Board shall serve for a, term of five years and shall be appointed by the Members of the Organization having the largest share in the world trade and belonging to the following trade groups: Europe (two Directors), North America (two Directors), Latin America (two Directors), Asia (two Directors), 'Oceania (one Director) and Africa (one Director), Any change in the relative position in world trade of Member .countries shall be taken into consideration at the end of each term of five years. LONDON E/PC/T/1 8 Page 3 3. One half of the membership of the Executive Board shall be elected annually by Members of the Conference other than those entitled to appoint a member of the Board in accordance with the provisions of paragraph 2 of this Article. A retiring member shall be eligible for immediate re-election. 4. The conference, upon the recommendation of the Executive Board, shall establish procedures for the purpose of carrying out the provisions of this Article. 5. Each member of the Executive Board'shall have one representative and may appoint alternates and advisers to its representatives. Article J. Executive Board - Voting 1. Each member of the executive Board shall have one vote. 2. Decisions of the Executive Board shall be made by a majority of members present and voting. (N.B. The majority of delegations approved the draft of this ArticIe as hereunder. Some delegations, however, desire to have drafted an alternative text (or texts) in: conformity with the weighted voting procedure suggested for Article E). Article K. Executive Board - Sessions, Procedures and Officers 1. The Executive Board.Shall adopt its own rules of procedure, including rules concerning the convening of its sessions. 2. The Executive Board shall annually elect its Chairman and other officers who shall be eligible for re-election. 3. The Chairman of the Executive Board, as such, shall be entitled to participate, without the right to vote, in the-deliberations of the Conference. 4. Any Member of the Organization which is not a member of the Executive Board shall be invited to send a representative to an LONDON E/PC/T/18 Page 39 . .e discussion by the Board if matter of particular and substantial concern to th Member. .Such representative shall, for the purpose of such. discussion, have all the rights of Board members, except the right to vote. Article L. Exj cutive Board - Powers and Duties 1. The Executive Board shall be responsible for the execution of the policies of the Organization and shall exercise the powers delegated to it by the Conference. It shall supervise the activities of t be Commission provided for in this Charter, and shall take such action upon their recommendations as it may deem appropriate. h shall provide adequate machinery to review the work of the Organization as at relates to industrialization and general econord|4 development 2. The Executive Board may make recommendations to the Conference, to Members of Organization, or to other international organizations, on any subject falling within the scope of the Organization, and shall Approve the preliminary agenda of the Conference. 3. The Executive Board may recommend to the Conference the admission of riei Members of the Organization. 4 The Executive Board may . refer to the Commissions such questions as it may deem appropriate. Article M. Establishment of Commissionsi.Ofl5 nThe nCoferece shaall estblismmh a Coissionmm on Coercial PoaiC,mmnssio . O on Buasin :sPracticesd, anim Cormditmmisy Cno!iorL LONDON E/PC/T/18 Page 40 and may establish such other Commissions as may be required. These commissions shall be responsible to the Executive Board. Article N Composition and Procedure of Commissions 1. The Comissions shall be composed of persons invited by the Executive Board and qualified by training or experience to carry out the functions of the Commissions in accordance with the purposes of the Orgarization. 2. The number of members of each Commission and the conditions of service of the members of each Commission shall be determined in accordance with regulations prescribed by the Conference. 3. Each Commission shall elect its Chairman and adopt its own rules of procedure, subject to approval by the Executive Board. 4. The .Chairman of the Commissions shall be entitled to participate, without the right to vote, in the deliberations of the Executive Board and of the Conference. 5. As set forth more fully in paragraph 2 of Article S, the Organization may make arrangements for representatives of other inter-governmental organizations having a special interest in the activities of any of the Commissions to participate in the work of such Commissions, pursuant to agreements with these organizations. Article O General Functions of Commissions The Commissions shall have the functions set forth in Articles _,and ___, and shall perform such other functions as the Conference or the Executive Board may assign to them, including such functions as the Executive Board may deem appropriate in connection with the settlement of disputes. (N..B. The Articles referred to above are those which appear as 64, 65 and 66 in the United States Suggested Charter.) LONDON E/PC/T/18 Page 41 Article P Composition of Secretariat 1. The Secretariat shall consist of a Director-General and such staff as may be required. 2. The Director-General shall have authority to appoint such Deputy Directors-General as he deems necessary. Such appointments shall be made in accordance with regulations approved by the Conference. Article Q Director-General 1. The Director-General shall be appointed by the Conference upon the recomendation of the Executive Board. His powers, duties, terms and conditions of office shall be in accordance with regulations approved by the Conference. He shall be the chief administrative officer of the Organization, subject to the general supervision of the Executive Board. 2. The Director-General or a deputy designated by him shall participate, without the right to vote, in all meetings of the Conference, of the Executive Board, of the Commissions, and of committees of the Organization. The Director-General shall have authority to initiate proposals for the consideration of any organ of the Organization. He shall make an annual report to the Conference and to the Executive Board on the work of the Organization and shall prepare the annual budget for submission to the Conference. Article R Secretariat Staff 1. The Director-General shall appoint the staff of the Secretariat and fix its duties and terms and conditions of service in accordance with regulations approved by the Conference. The paramount consider- ation in the employment of the staff and in the determination of its conditions of service shall be the necessity of securing. LONDON E/PC/T/18. Page 42 the highest standards of efficiency, competence and integrity, due regard being paid to the importance of recruiting the staff on as wide a geographical basis as possible. 2. The conditions of service, such as the provisions governing qualifications. salary, tenure and retirement of members of the staff of the Secretariat shall be fixed, so far es practicable, in conformity with those for members of the Secretariat of the United Nations and of other specialized agencies which may he brought into relationship with the United Nations, as provided in Article 57 of the Charter of the United Nations. Article S. Relations with Other Organizations. ..J 1. The Organization shall be brought into relationship with the United Nations, as soon as practicable, as one of the specialized agencies referred to in Article 57 of the Charter of the United. Nations. This- relationship shall be effected through an agreement with the United Nations under Article 63 of the Charter of the United Nations, which agreement shall be concluded by the Director- General and approved by the Conference. The agreement shall provide for effective co-operation between the two Organizations in the pursuit of :their common purposes, and at the same time shall recognize the competence of the Organization within its jurisdiction as defined in this Charter. Notwithstanding the provisions of Article W, any changes in this Charter required under the agreement which do not involve new obligations by Members shall be etfective on approval of the agreement by the Conference. 2. The Organization shall co-operate with other inter-governmental organizations whose interests and activities are related to its purposes. Effective working relationships with such organizations, which may include the establishment of joint committees or provision for reciprocal representation at meetings, or such other measures as may be necessary LONDON E/PC/T/18. Page 43. to assure effective cc-operation, may be established by the Director- General. Formal arrangements for co-operation with such organizations may be entered into by,the Executive Board. 3. The Organization may make, suitable arrangements for consultation and co-operation with non-governmental Organizations concerned with matters within its competence, and may invite them to undertake specific tasks, 4. Whenever the Conference of this Organization and the competent authorities of any other international organization whose purposes and functions lie within the competence of this Organization, deem it desirable to effect a transfer of its resources and functions to this Organzzation, to incorperate it into this Organization, or to bring it under the supervision cr authori p of this Organization, the Directcr-General, subject te the approval of the Conference, may enter into mutually acceptable arrangements for-this purpose. This organization may acquire such resources and assume such functions of, or incorporate or exercise such control over, the other organization as may be provided by any convention or agreement appropriate to the purpose. In accordance with their respective constitutional procedures, the Members shall take such steps as the Conference may determine to integrate such other international organizations into the structure of this Organization. Article T. International Responsibilities of Personnel of Organization The responsibilities of the members of the Commissions provided fcr in Article M of this Charter, of the Director-General, of the Deputy Directors-General and of the staff shall be exclusively international in charter. In the discharge of their duties, they shall not seek or receive instructions from any government of from any authority external to the Organization. They shall refrain from any action which might prejudice their position as international officials. Each Member of the Organization LONDON E/PC/T/18 Page 44 undertakes to respect the international character of the responsibilities of these persons, and not to seck to influence them in the discharge of their duties. Article U. Legal Capacity of Organization The Organization shall enjoy in the territory of each of its Members such legal capacity as may be necessary for ti exercise of its functions and the fulfilment of its purposes. Articlee V. Privileges and Immunitices of Organization 1. The Organization shall enjoy in the territory of each of its. Members such privileges and immunities as are necessary for the fulfilment of its purposes. 2. Representatives of the Members of the Organization and its officials shall similarly enjoy such privileges and immunities as are necessary for the independent exercise of their functions in connection with the Organization. 3. The Conference may make recommendations with a view to determining the details of the application of paragraphs 1 and 2 of this article and may proposal conventions to the Members for this purpose. Article W. Amendments to Charter 1. Amendments to this Charter shall become effective upon receiving the approval of the Confeeence by the affirmative votes of two-thirds of its Members. 2. Notwithstanding the provisions of paragraph 1 of this Article those amendments which involve new obligations on the part of the Members of the Organization shall take effect upon acceptance on the part of two-thirds of the Members for each Member accepting the amendments and thereafter for each remaining Member on acceptance by it. In such cases, the Conference may determine that any Member which has not accepted the amendment, within a period specified by the Conference, shall thereupon be obliged, to withdraw from the Organization. LONDON /, page 45 In the absr4 a? a determination that a Member shall be oblirod to withdraw/ âmber s'.11, notwithstanding the provisions of paragraph 1 cr. ,e e . have the right to vfithdraw, on due notice, as pydid in paragraph 2 of ArticIe 4. SJ The Conference sha&, by the affirmative votes of two-thirds of llembers, adopt rules of 2:rocedure for carrying out the provisions et c this iErt-.cle. àrtice X. Interpretation and Settlement of Disputes 1. The Chinese, Enlish, French and Spanish texts of this Charter shall bu regaxUed as equally authoritative. 2. i&ny question or difference concerning the interpretation of this Charter or arisin,5 out of its operation shall be referred to the Executive Boare. ?or a ruling thereon. The Excoutive Board may decide either to give o ruling on the matter itself or to rofer it, with the consent of the parties, ta arbitrationupon such terms as may be ag;red by the parties, --.aiy rulin_ of theExecutive Board shall, upon the requoast of any Member direotly affected or, if the ruling is of general ayl,,ication, uipon the request of any M,.mber, be referred ta the Conference. 3. . lr; justiciable issue arising out of a ruling o? the Conference with respect to the interpretation of sLu b-paragraphs (c), (d), (e), or (k) or article 32 or of Paragraph 2 of article 497 may bo submitted by azy party te the dispute ta the International Court of Justioe, and any Justiciable issue arising; out of any other ruling of the Conference may, in accordancu with such procedures as the Conferenoe shal2 establish, bc submitted by any party to th; dispute to the International Court of Justice. The Members accept the'jursdiction of the Court in respect of ary dispute submitted ta the Court under this ,4rticlu.' LONDON E/PC/T/18 Pace 46 4. The Organization may, in accordance with paragraph 2 of Article 96 of the Charter of the United Nations, request from the International Court of Justice advisory opinions on legal questions arising within the scope of its activities. Article Y. Payroent of Contribution Each lnember undertakes to contribute prorlntly to the Orgnization its share Of the Organization's exrpezes as apportioned by the Conference. A MeAnber of the Organization which is in arre:ars in the payment of its financial contributions tothe Organization shall *have no- vote in the Conference if the cwnount of its arrears equals or exceedathe amount of the contributions due fro.m it for the preceding two full years.. The Conférence ray, nevertheless, permit such a Member fo vote if it is satisfied that the failure to pay is duq tc conditions beyond the control of the Member. Article Z. Entry into Force le The original of this Charter, as set forth in the Final l.ct of the Unitod Xations Conference on Trade and Employment, shall be deposited with the Secretary-Ceneral of the United Nations, who will furnish certified copies thereof to ail interested governments. 2, Each government accepting this Chartcr, shill deposit an instrument of acceptance with the Secretary-General.of the United Nations, who will inform all governments represented at the United Nations Conference on Trade and Employment and ail Members of the United Nations of the date of deposit of each instrument of acceptance and of the date on which this Charter enters into force. under pàrrnraph 3 of this Article.- 3, This Charter shah1 enter into force of the sixtieth day follov- ing the day on which the nuznber of governments represented at the United Nations Conference on Trade and EMqoy..entt which have deposited acceptance pursuant to paragraph 2 of this Article shall reach LONDON E/PC/T/18 Pate 47 twenty, and the acceptancec of each othur acccptinU Loverwient sI.ll take effect on the sixtieth day follovwing the day on vrhich the instrument of such acceptance is dept'sited: PROVIDED, That if this Charter shall not have entered into force by 31 Deceriber 194 _, any of.the ;ovewraents which have made effective the General aecement on Tariff s and 'Trade dated 194.__, together -vth any other Sovernr.e nts represented at the tUnited Nations Confermnce on Trade and EItqloyr.ent rm.y agree to brinc this Charter into force einonr themselves in accordance ;ith arrangements which they may agLJe upon. cny instrument of acceptance deposited with the Secretary- General of the United Nations shall be ti>.en ns covering both procedures for bringing this Charter intc force unless it expressly providesto the contrary or is Jiit.hdrvm. - 4. Each government accepting this Charter doos so in respect of its metroplitan territory and the oversea territories for which it 'has international responsibility with the exception of those territories *which are self-governint in respect of matters provided for by;the Charter. Each Member shall notify the Secretary-General of the United Nations of its acceptance of the Charter on behalf of any such self-governing territory willinç- toundertake the obl1i&tions of the Charter, and upon such notification the provisions of the Charter shn-l become applicable to that territory., (N.B. Three delegLtions entered reservations rerarding paraLxaph 4.) Article Ar.. :'ithrw.rcl Ir.d Tenaination 1. Any Momber of the Or,,nizartic-n j-LOy withdraw from'the Organïzation, either on its o..n belh.lf or on beh of an oversea territory which is self-governinU in the respect inentioned in par-r'rtph I. of .'ticle Z,at any time atter the expiration of'three years front the dclte of theoity intofb£- of this Charter under the provision of Article Z by vmitten notification addressed to the Secretary-General of the United. Nations in accordance vwi.t *the provisions of parajraph 2 of'this ià-ticle, wvho r411 inuruadiately + See footnote to the reference to this Àgreeenit in paraLraph 2 of Article H. 1 LONDON E/PC/T/18 Page 48 inform all other Members of the Organization. 2. The withdrawal shall take effect six months from the date of the receipt of the notification by the Secratary-General: PROVIDED, That the notification may be withdrawn at any time during that period. 3. This Charter may be terminated at any time by agreement of three-fourths of the Members of the Organization.

GATT Library

yz343ms8413

Report of Joint Committee on Industrial Development

United Nations Economic and Social Council, November 23, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

23/11/1946

official documents

E/PC/T/23 and E/PC/T/17-29

https://exhibits.stanford.edu/gatt/catalog/yz343ms8413

yz343ms8413_92290027.xml

GATT_157

United Nations Nations Unies LONDON ECONOMIC CONSEIL E/PC/T/23 23 November 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT REPORT OF JOINT COMMITTEE ON INDUSTRIAL DEVELOPMENT Introduction 1. The Preparatory Committee at its Third Executive Session decided to include in its revised Agenda the item "International Agreement relating to Industrial Development." At early executive sessions various delegates suggested that the question of industrial development, though intimately related to the work of Committées I and II, was of sufficient importance to merit separate consideration. By common agreement Committees I and II met in joint session on 18 October and established a Joint Committee on Industrial Development, consisting of delegates from the eighteen countries represented on the Preparatory Committee. Mr. MALIK (India) was elected Chairman, and it was agreed that Dr. H.C. COOMES (Australia), Chairman of Committee II, and Mr. WUNSZ KING (China), Chairman of Committee I, should act asVice- Chairmen. The Joint Committee met four times, finishing its work on 18 November. 2. At its third meeting the Joint Committee appointed a Drafting Sub-Committee consisting of Delegates from Australia, Brazil, China, France, India, United Kingdom and the United States. The Sub-Committee, during the course of its seven meetings, followed an Agenda based on the following main points: (a) General principles and objects of industrial and economic development. LONDON E/PC/T/23 Page 2 (b) Ways and means for achieving industrial development, including determination of criteria for industries deserving protection. (i) Capital and investments. (ii) Technology and related matters. (iii) Materials, manufactured goods and equipment. (iv) Commercial policies. (c) Allocation of functions. In addition to statements made by delegates at Joint Committe meetings, particularly the Australian, Indian and United Kingdom Delegates, the Sub-Committee had the benefit of papers presented by Australia, Brazil, Chile, China, India, Lçbanon; United States, the.Colombian Observer and tho Secretariat. 3. The Sub-Committee's Report was considered and adopted as amended by the Joint Committee at its fourth and final meeting on 18 November. The Joint Committee's final Report, to which is appended a draft Chapter on Economic Development, a draft Resolution to the Economic. and.Social Council and a Message to Committee. II, is now presented for consideration by the Preparatory Committee. Recommendations 4. The Joint Committee recommends to the Preparatory Committee as follows: (a) that to provide for the International Agreement on Industrial Development in the Agenda of the International Conference on Trade and Employment, a chapter should be inserted in the Charter for an International Trade Organization providing for an under- taking by all Members to promote industrial and general economic LONDON E/PC/T/23 Page 3 development and providing for agreed action which may be necessary by Members in order to promote such development; (b) that in view of the plans being made by the Economic and Social Council to promote economic. development and the interests of other specialized international. agencies in the subject, a communication should be sent immediately from this session of the Preparatory Committee to the Economic and Social Council inviting the Council, in its consideration of how the responsibility for the promotion of industrial development should be shared between the various international bodies including the International Trade Organization, to take into account the views of the Joint Committee, and to state whether Article B (3): included provisionally in the Draft chapter on Economic Development, is in accordance with the Council's views on the appropriate allocation of functions relating to economic development. LONDON E/PC/T/23 Page 4 PART Il A. Development of Economic Resources 1. The Joint Commi ttee feels that there should be a clear recognisation in the Charter of the International Trade Organization that the progressive development of economic resources in all parts of the world is not only desirable in itself as a means of raising living standards in particular countries, but is also desirable as a means of expanding the volume of world trade, thus benefitting all countries interested in international commerce. Improvements in standards of production and real income in a country contribute to the achievement and maintenance by that country of high and rising levels of effective demand for goods and services in general thus enhancing the capacity of that country to participate in world trade. The development of economic resources will also have desirable social consequencies by expanding the range of useful employment opportunities. It is the refore desirable that there should be progressive development especially in those countries whose industries at present are inade- quately developed relative to their potential. 2. In the view of the Joint Committee one of the chief gains from development is found in the resulting greater diversification within and between primary, manufacturing and service industries. Such diversifigation can contribute to increased stability in the economy of a country and confer upon it great social and cultural benefits. The development of manufacturing industries will be of particular importance as it is through such development that the greatest measure of diversification of production and employment opportunities. can be achieved. 3. The Joint Committee wishes also to draw attention to a matter of interest to all countries, namely, the early economic re-establishment and industrial restoration of those countries whose economies have LONDON E/PC/T/23 Page 5 suffered from the direct impact of war. These countries have resources so real and important to the rest of the world that their temporary disappearance of decline has been fo1lowed by difficulties in parts of the world far removed from the theatres of war. Their economies are in many cases those of already well developed countries and are ready for relatively rapid re-establishment which will put them in a position to make available to other countries materials, equipment and other manufactured products which will be needed for economic deveIopment. In these countries there are qualified tech- nicians and experienced artisans already accustomed to modern industrial technology and ready to undertake the great diversity of occupations involved . *nce restored, these war devastated countries will be in a position to contribute to technical progress and to the raising of productivity and living standards. The Joint Committee believes there- fore that measures should be taken to facilitate a rapid return in the devastated countries to the development interrupted by the war and that this wil1 be helpfu1 to the rapid and sound development of other countries. B. Adaptation of Economies 1. AS the less developed countries progressively undertake the production of a wider range of commodities for their domestic markets, it is likely that the more highly developed economies, which formerly supplies the markets of the less developed countries, will be faced with problems of adapting their economies to the changed circumstances. These problems will be minimised both in degree and duration if countries are careful to ensure that their development programmes are soundly based and carried out. The Joint Committee suggests that only in this way will the developing country make its most effective contribution to its own economic welfare and to international trade, and only thus will the more highly developed countries be able to adapt their economies with reasonable prospect of success. LONDON E/PC/T/23 Page 6 2. On the other hand there will also be problems of adjustment facing the developing countries. These problems will be mainly associated with the transfer of workers from agriculture and other primary industries, as the productivity of labour in such industries increases, to manufacturing and other branches of expanding economic activity. This transfer may involve a geographical re-distribution of population with all its attendant problems, as well as problems of occupational training and re-training. C. Conditions of Industrial Development In any country the conditions of the industrial development of economic resources include capital, capital goods and materials, markets, and adequate technology, managerial skill, and technicians and trained artisans in sufficient numbers. When any of these conditions are unsuitable, international and domestic action may be taken to modify the situation. Thus international action taken may be such as to facilitate the supply of capital; capital goods and materials, to provide skilled management, trained technicans and artisans and to improve technology. Individual countries may take action to plan and carry out development projects, to raise standards of industrial management, and to provide for the training of their own nationals as technicians and artisans, and subject to international obligations, they may aim by the use of protective measures at providing a reasonable share of the home markets to the commodities being- produced in their own territories. D. Provision of Capital Capital may be needed by a country to modernize and improve the technology of existing industries, to expand existing industries or to establish new ones. It may also be needed to improve cr increase the supply of public utilities such as transport and communication services, water and power supplies. While projects LONDON E/PC/T/23 Page 7 of the latter character are essential to progressive development, they may not be immediately or directly remunerative, and international action may be all the more necessary, if the supply of capital is to be adequate. 2. The Joint Committee feels that the international supply of capital will be particularly necessary to the less developed countries and to the countries which have suffered from war. The channel for this supply may be through private investors, through government agencies, or through the International Bank for Reconstruction and Development. In view of the importance of industrial development to expansion of world trade it is felt that all Members of the International Trade Organization should recognize that they have a responsibility to co-operate within the limits of their power to do so with appropriate international agencies in ensuring that there is a regular flow of capital to those countries in particular which have limited capital resources. The International Trade Organization might well participàte in discussions with its own members and with other International bodies regarding proposals to this end. In addition the Joint Committee feels that members should undertake not to place any unreasonable impediments in the way of other members having access to capital. 3. A- country embarking on a programme of development involving substantial imports of capital goods, may be faced with the possibility of balance of payments difficulties. The Joint Committee is of the opinion that, if at any time a country anticipates that such difficulties are iaunent, at should be permitted to impose qualitative regulation of its imports so that the appropriate balance may be kept between its imports of capital and consumer goods. Naturally, such a regulation of import will only- remain necessary while the prospect of balance of payments difficulties remains. A message has been sent to Committee II about this matter. LONDON E/PC/T/23 Page 8 E. Supplies In all countries there will be a demand for capital equipment and materials of all kinds arising from programmes of production and development. For most countries, including those which are actively promoting their industrial and general economic development, this demand can only be satisfied by obtaining supplies of one kind or another from other countries. The Joint Committee is therefore of opinion that Members of the Organization should recognize that they have an obligation to other Members to refrain from playing unreasonable obstacles in the way of supply of capital goods and materials of all kinds needed by other Members. This obligation of course would be undertaken subject to the other provisions of the Charter. For example, where special shortages occur in the supplying country, particularly in the early post-war transitional period, such countries would be free to apply restrictións in the manner provided for in Article 19 of the United States Draft Charter. In such circumstances, however, it is hoped that they would take into account the needs of other countries, and hold such restrictions to a minimum. F. Technology and Training. One of the most important ways in' which industrial development can be promoted throughout the world is through the dissemination of knowledge concerning techniques of production, particularly in, countries at present inadequately developed relative to their potential, This can be achieved in part by national and international action to make available as widely as possible (subject to considerations of national security) knowledge of new developments in all countries resulting from changing technology and scientific research, and in part by individual action by business entities in the less industrialized countries gaining access to LONDON E/PC/T/23 Page 9 patents, specifications and technological developments. This may be accomplished, for example, by such business entities becoming associated with more experienced ones in the more highly industrialized countries, Technology can be improved also if technicians and skilled artisans in the more developed countries are encouraged to go, permanently or temporarily, to the less deve1oped countries. On the other hand the less developed countries should provide for raising the standard of technical and technological training, of their own nationals and should have opportunities of sending their own nationals to the more developed countries for instruction and training. G. Mutual Responsibilities In the carrying out of programmes of industrial and general 'economic development, therefore, there will be an interdependence between the less developed and the more highly developed countries. In relation to the international supply of facilities for economic development including capital funds, capital goods and materials, equipment, advanced technology and trained personnel, thé Joint Committee is of the opinion that all countries should recognize that they have mutual responsibilities. It has already been noted that countries in a position to supply these facilities should impose no unreasonable impediments that would prevent other countries from obtaining access to such facilities. It is equally important, however, that countries receiving such facilities should treat the supplying countries, including their business firms and citizens, in conformity with the provisions of any of their relevant international obligations and in general that they should take no unreasonable action injurious to the interests of the supplying country. LONDON E/PC/T/23 Page 10 H. Markets and Protection 1. As a general rule newly established industries depend, initially at least, upon domestic markets for the sale of their products. The Joint Committee is of the opinion, theréfore, that where necessary *Member countries desiring to promote industrial development should have or should be afforded reasonable freedom to employ protective measures so that an adequate portion of their local markets may be assured to the commodities concerned. However, since an unwise use of protective measures by any country for the purpose of promoting industrial development places an undue burden on the economy of that country and imposes unwarranted restrictions on international trade, it is desirable that countries promoting development should not make immoderate use of such protective measures. 2. The use of dumping policies by other countries might be particularly harmful to countries wishing to carry out a programme of development or reconstruction. The Joint Committee, however, has not recommended any special action to provide against this contingency as it is understood that appropriate provision is being made by Committee Il. 3. Since the comparative development of Member countries is uneven, and since the levels of existing tariffs are unequal, the Joint Committee is of the opinion that account should be taken of these factors by Members generally in any tarif negotiations and by the Organization should it be called upon to determine whether a country has fulfilled its obligations with respect to such negotiations. A message has been forwarded to Committee II about this matter. I. Nature of Protection 1. The Joint Committee has devoted considerable attention to the question of the kind of protective measures which might be used for promoting development. It was generally recognized that the Draft Charter already, provides a substantial LONDON E/PC/T/23 Page 11 measure of freedom to use subsidies and that it also permits the use of tariffs in those cases where tariff rates are not bound against increase as a result of agreements voluntarily negotiated by prospective Members as contemplated in connection with the Charter. The Joint Committee's discussion of this problem, therefore, related principally to the means whereby a Member might obtain a limited release from obligations assumed in the course of such negotiations with other Members and from regulations contained in the Charter governing the use: of forms of protection other than subsidies and unbound tariffs. 2. The Joint Committee came to the conclusion that such releases should be granted in appropriate circumstances and arrived at agreement on the procedure which is described in Article D (3) of the appended draft chapter. Sub-paragraph (b) of that paragraph covers a situation in which permission is sought to raise a tariff that had been bound as a result of negotiations with other Members, or in which it is desired to impose some other form of protection that is otherwise not permitted by the Charter and that would impair the value to other Members of an agreement negotiated. with respect to tariff. The somewhat simpler procedure indicated under sub-paragraph (c) provides for cases in which release is sought from obligations assumed by ratification of the Charter and such release would not impair the result of prior tariff negotiations. The Joint Committee gave particular attention to the possible use of quantitative regulation of imports as a means of protection. It is of the opinion that, subject to the suggested procedure, this means should be employed only/where it would place a lighter burden on the country giving the protection and where it would be less restrictive of international trade than would, be the case with other forms of protection. (One Delegate felt that quantitative restrictions should be recognized as a means of giving protection which could be used at any time in the early stage of industrial development by a Member deeming it absolutely necessary, subject LONDON E/PC/T/23 Page 12 only to the right of any other Member to complain to the Organization if such .Member felt that in any instance quantitative restrictions were being used unjustifiably. This Delegate specifically reserved his position with regard to Article D (3) of the draft ohapter.) (A second Delegate expressed concern at what he consideréd to be the complicated and lengthy character of the procedure for obtaining release provided in Article D (3) of the draft chapter. He felt the suggested procedure might make it difficult for under-developed countries to obtain a release, particularly to use quantitative restrictions. In those cases in which quantitative restrictions are no more restrictive then alternative forms of protection, he would urge that the procedure adopted by the Organization should be less cumbersome; providing for release on the basis of criteria established by the Organization, without requiring prior consultation with other Members. Although realizing the evils of quantitative restrictions, he believed their use for protection should. be provided specifically in the Charter. However, he did appreciate the compromise this Commiittee had been able to reach in this matter and would propose no amendments at this stage, but made the above reservation.) 3. The Joint Committee also heard the views of a Delegate concerning the use of regional preferential arrangements, but as it was understood that detailed consideration of such arrangements was being given by Committee II, it was decided that no further action need be taken by this Committee. (Despite the Joint Committee's proposal, as set out in Article D (3), that the Organization should be empowered to give a release in appropriate circumstances to a Member in respect of any obligation under the Charter, one Delegate felt that there should be more specific provision for the use of regional preferential arrangements as a means of giving protection. `This Delegate therefore reserved his position on this point.) LONDON E/PC/T/23 Page 13 J. Allocation of Functions 1. The Joint Committee has given careful consideration to the question of how the international functions relating to industrial development can best be carried out and to the part which the International Trade Organization should play in their performance. It is clear that the International Trade Organization must exercise functions relating to industrial development at least insofar as measures of commercial policy arc employéd to foster such development. From the point of view of the purposes of the Charter and the effective working of the International Trade Organization, there are strong arguments for empowering the Organization to perform certain positive functions in relation to industrial development, particularly in the provision of technical aid to Members in the formulation and execution of plans for development. Accordingly the Joint Committee has included in the draft chapter appended to this report a tentative provision which if adopted would enable the International Trade Organization within its competence and resources to provide such aid. 2. This task, because of its essentially administrative character, would be appropriate to a specialized agency, and its performance by the International Trade Organization. might provide a useful means of positive co-operation with anbers. Furthermore, it would provide the-personnel of the Organization with continuous experience of the positive as well as the protective aspects of national development policies and so assist them in maintaining the balanced point of view which will be essential to the wise exercise of the discretions which the Charter entrusts to the Organization. 3. The Joint Committee is aware, however, that this problem cannot be looked at solely from the point of view of the purposes of the Charter. There are a number of inter-governmental organizations concerned with various. aspects of industrial development. These include the LONDON E/PC/T/23 Page 14 Sub-Commission on Economic Development of the Economic and Social Council, the International Bank for Reconstruction and Development, the International Labour Organization, the Food and agriculturall Organization and the United Nations Educational, Scientific and Cultural Organization. The Joint Committee assuies also that the Economic and Social Council will shortly be giving consideration to the question of the appropriate division among various agencies of responsibilities not yet allocated in the field of economic development and to the means whereby their activities can be adequately co-ordinated, and that the decisions of the Council on these questions must be based on other and possibly wider considerations in addition to those which fall within the competence of this Committee. Accordingly, paragraph 3 of Article B in which the Organization is empowered to provide technical aid to Members has been placed in square brackets as an indication that its inclusion should be regarded as provisional until the views of the Economic and Social Council on this question have been formulated. 4 It is suggested, therefore, that the Economic and Social Council should be invited. when examining the allocation of functions in relation to industrial development to give due weight to the considerations set forth above, and, in particular to advise whether the inclusion of paragraph 3 of Article B is consistent with the Council's views. A draft resolution tó this effect is submitted for the consideration of the Preparatory Committee. 5. In view of the fact that there are many factors, other than those directly relating to the International Trade Organization, which require to be taken into consideration in this matter, the Joint Committee expresses the hope that the Governments represented on the Preparatory Committee who are not also Members of the Economic and Social Council may be invited to submit their views at the time the Council is considering these matters. LONDON E/PC/T/23 Page 15 APPENDIX I CHAPTER ECONOMIC DEVELOPMENT Article Importance of Economic Development Members recognize that the industrial and general economic development of all countries and in particular of those countries whose resources are as yet relatively undeveloped will improve opportunities for employment, enhance the productivity of labour, increase the demand for goods and services, contribute to economic stability, expand international trade, and raise levels, of real income, thus strengthening the tics of international understanding and accord. Plans for Economic Development 1. Members undertake to promote the continuing industrial and general economic development of their respective countries and territories in order to assist in realizing the purposes of the Organization. 2. Members agree that they will co-operate through. the Ecònomic and Social Council of the United Nations and the appropriate inter- governmental Organizations in promoting industrial and general economic development. 3. The Organization, at the request of any Member, shall advise such Member concerning its plans for economic development and, within its competence and resources, shall provide such. Member with technical assistance in completing its plans and carrying out its programmes. Article C I The Means of Economic Development- 1. Members recognize that progressive economic development is dependent upon the availability of adequate supplies of; (a) capital funds; and LONDON E/PC/T/23 Page 16 (b) materials, equipment, advanced technology, trained workers and managerial skill. 2. Members agree to impose no unreasonable impediments that would prevent other Members from obtaining access to facilities required for their economic development. 3. Members agree to co-operate within the limits of their power to do so, with the appropriate inter-governmental Organizations of which they are Members in the provision of such facilities. 4. Members agree that, in their treatment of other Members, business entities or persons supplying them with facilities for their industrial and general economic development, not only will they confirm to the provisions of their relevant international obligations, now in affect, -or which they may undertake pursuant to Article 50 (5) of the United States Draft Charter or otherwise, but also that in general they will take no unreasonable action injurious to the interests of such other Members, business entities or persons. 5. The Organization shall receive from any affected Member, or with the permission of that Member from business entities or persons within its Jurisdiction, complaints that action by another Member is inconsistent with its obligations under paragraphs 2, 3 or 4 of this Article. In the event of such complaint, the Organization may, at its discretion, request the Members concerned to enter into consultation with a view to reaching a mutually satisfactory settlement and lend its good offices to this end. Article D Governmental assistance to Economic Development 1. Members recognize that special governmental assistance may be required in order to promote the establishment or reconstruction of particular industries, and that such assistance may take the form of protective measures. 2. Members recognize that an unwise use of such protection would impose undue burdens on their own economies and unwarranted restrictions LONDON E/PC/T/23 Page 17 on international trade, and might increase unnecessarily the difficulties of adjustment for the economies of other countries. 3. (a) If a Member, in the interest of its programme of development, proposes to employ any protective measures which would conflict with any of its obligations under or pursuant to the Charter, it shall inform the Organization and shall transmit to the Organization any finding in support of this proposal. The Organization shall promptly inform those Members whose trade would be substantially affected by the proposal and afford them an opportunity to present their views. The Organization shall then promptly examine the proposal in the light of the provisions of this Chapter, the findings presented by the applicant Member, the views presented by Members substantially affected, and such criteria as to productivity and other factors as it may establish, taking into account the stage of economic development or reconstruction of the Member. (b) If, as a result of its investigations pursuant to sub-paragraph (a), the Organization concurs in any measure which would be inconsistent with any obligation that the applicant Member has assumed through negotiaticn with other Members pursuant to Chapter IV of the United States Draft Charter or would reduce the benefit to such other Members of any such obligation, the Organization shall sponser and assist in negotiations between the applicant Member and other Members substantially affected, with a view to obtaining substantial agreement, whereupon the Organization may release the applicant Member from the obligation in question or from any other relevant obligation under the Charter, subject to such limitations as the Organization may impose. LONDON E/PC/T/83 Page 18 (c) If, as a result of its investigations pursuant to sub-paragraph (a), the Organization concurs in any measure other than those covered in sub-paragraph (b), which would be "Enconsistent with any obligation assumed under this Chapter the Organization may, in its discretion, release the applicant Member from the obligation in question subject to such. Limitations as the Organization may impose. LONDON Page 19 APPENDIX II RESOLUTION REGARDlNG INDUSTRIAL DEVELOPMENT (To be Conveyed to the Economic and Social Council) WHEREAS it is anticipated that the Economic and Social Council will shortly consider the questions of dividing responsibilities not yet allocated in the field of economic development among the various agencies concerned and of co-ordinating these activities AND WHEREAS the Preparatory Committee at its First Session has discussed the positive functions in relation to industrial development which might be exercised by the International Trade Organization, particularly the furnishing of advice to Members concerning their plans and, within its competence and resources, the provision of technical aid in the formulation and execution of such plans AND WHEREAS so that the Preparatory Committee may further carry out its terms of reference as regards industrial development, it is desirable for it to have the guidance of' the Economic and Social Council upon the views which were exchanged at the Fïrst Session THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT HEREBY REQUESTS the Executive Secretary to draw the attention of the Economic and Social Council to those portions of the Report of the Preparatory Committee which are concerned with the possible performance by the International Trade Organization of functions in relation to industrial development and to ask the Economic and Social Council to state, before the commencement of the Second Session of the Committee, whether Article B (3) included provisionally in the draft Chapter on Economic Development, is in accordance with the Council 's views on the appropriate allocation, of functions relating to economic development. LONDON E/PC/T/23 Page 20 APPENDIX III MESSAGE TO COMMITTEE II In the light of recommendations regarding industrial and general economic development which the Joint Còmmittee is making to the Preparatory Committee, the Joint-Committee requests Committee Il to make a provision in Article 18 of the chapter dealing with Commercial Policy, so that the Organization and other Members should, when considering the contribution which a Member can make to a reduction in tariffs, take into aocount the height of the tariff of that Member, and the need, if any, of that Member to use protective measures in order to promote industrial and general economic development. The Joint Committee also requests that in Article 20 provision should be made to cover the position of a Member who, as á result of its plans for industrial development or reconstruction, anticipates that its accruing international monetary resources will be inadequate to finance the needed imports of goods, for example, capital goods, for the carrying out of such plans unless it imposes regulations restricting. the import of certain classes of goods, for example, consumer goods.

GATT Library

zs789wm3026

Report of the Chairman and First Vice-Chairman on the Credentials of Representatives

United Nations Economic and Social Council, November 7, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

07/11/1946

official documents

E/PC/T/8 and E/PC/T/W.14-E/PC/T/17

https://exhibits.stanford.edu/gatt/catalog/zs789wm3026

zs789wm3026_92290016.xml

GATT_157

United Nations Nations Unies LONDON ECONOMIC CONSEIL E/PC/T/8 7 November 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE lNTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT . . KT REPORT OF THE CHAIRMAN AND FIRST VICE-CHAIRMAN ON THE CREDENTIALS OF REPRESENTATIVES 1. Pursuant to Rule 6 of the Rules of Procedure of the Preparatory Committee, an examination has been made by the Chairman and the First Vice-Chairman of the credentials .presented by representatives. Unfortunately the Second Vice-Chairman was unable to participate in this task as he was absent from London when the examination was made. The Annexure to this Report contains brief particulars of the documents submitted. 2. Bearing in mind the preliminary character of the work to be done by the Preparatory Committee, in all cases the credentials, which have been submitted, have been found to be in order and to be adequate. It is recommended that the Preparatory Committee accept them as such. (Signed) M. SUETENS Chairman (Signed) A. AUGENTHALER First Vice-Chairman LONDON E/PC/T/8 Page 2 Australia 'Letters from the Counsellor of the Australian Mission to the United nations to the Secretary-General dated 11, 16 and 27 September 1946. . Belgium- Letter from the Belgian Ambassador, London, to the Secretary- Luxembourg General dated 8 October 1946. Brazil Letter from the Brazilian Ambassador, London, to the Chairman of the Preparatory Committee dated 15 October 1946. Canada Letter from the Office of the High Commission for Canada, London, to the Executive Secretary of the Preparatory Committee dated 15 October 1946. Chile Letter from the Chilian Ambassador, London, to the London office of the United Nations dated 3 October 1946. China Letter of Crudential signed by the Chinese Minister of Foreign Affairs dated 4 October 1946. Cuba Note from the Cuban Minister, London, dated 10 Octobor 1946. Czecho- Full Power signed by the Deputy Prime Minister of Czechoslovakia slovakia dated 17 October 1946. France. Letter from the French Ambassador, London, dated 4 October 1946. India Letter from the Secretary to the Government of India in the External Affairs Department to the Secretary-General dated Lebanon Letter from the Lebanese Minister, London to the Secretary- General dated 14 October 1946. Netherlands Letter from the Netherlands Ambassador to the London Office of the United Nations dated 3 October 1946. LONDON E/PC/T/8 Page 3 New Zealand Letter from the Official Secretary of the office of the High Commissioner for New Zealand, London to the Secretary of the Preparatory. Committee dated 25 September 1946. Norway Letter from the Commercial Counsellor of the Norwegian Embassy to the London Office of the United Nations dated 7 October 1946. South Africa Letter from the High Commissioner for South Africa, London, to the Secretary-General. dated. 5 October 1946. United Letter from the Foreign office to the London Office of the Kingdom.t ..it. United Nations dated 1 November 1946. United States Letter from the Charge D'affaires of the United States Embassy, London, to the London Office of the United Nations dated 31 October 1946.

GATT Library

qt590gj5788

Report of the First Session of the Preparatory Committee of the International Conference on Trade and Employment and form that the Subsequent work of the Preparatory Committee may take

United Nations Economic and Social Council, October 30, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

30/10/1946

official documents

E/PC/T/DEL/3 and E/PC/T/DEL/1-17

https://exhibits.stanford.edu/gatt/catalog/qt590gj5788

qt590gj5788_90210079.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL RESTRICTED LONDON. AND ECONOMIQUE E/PC/T/DEL/ 3 SOCIAL COUNCIL ET SOCIAL 30 Octobor 1946 ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT REPORT OF THE FIRST SESSION OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT AND FORM THAT THE SUBSEQUENT WORK OF THE PREPARATORY COMMITTEE MAY TAKE The following note, incorporating suggestions made at the Second Meeting of the Heads of delegations, is submiittes for further consideration: - The present meeting is of a preparatory nature and it is therefore fully recognized that the Report would not in any way commit the member Governments. It is nevertheless considered that a Report which contained a draft charter or agreement might be embarrasing to some Governments as appearing to indicate a degree of finality in the work of the Preparatory committee. It is recognized that the questions being dealt with by the Preparatory Committee at this early stage are interdependent and it will be difficult to envisage the exact nature of the final report until the subject can be seen as a whole. In particular, the negotiations in respect of tariff reductions will exert very considerable influence on the result of the work of the Preparatory Committee. It is therefore proposed that the Report of the Preparatory Committee should consist of a First Part, a Second Part, an Appendix. Part one would be drafted under the headings of the Draft Charter submitted by the United States, which has furnished the heading of the Agenda adopted by the Preparatory Committee. Under each of these LONDON E/PC//T/DEL/3 Page 2 headings there would be a report in continuous form, reviewing the main principles agreed upon at the meeting and drawing attention in the second place to any conflicting views. This would provide a general narrative statement of the discussions of the Preparatory Committee. Part Two would take the form of instructions to a Drafting Committee for the preparation of a Draft Charter. It would specify the points on which agreement had been reached and offer alternative suggestions where there. had been no agreement Irrespective of the order in which they appeared, it is expected that the items to be included in Part Two would fall roughly under two categories: 1. Provisions of a routine character which it is expected would be easily agreed upon;- 2. Controversial matters on which differences of view still existed in the Preparatory Committee. The various viewpoints would be set out in detail with suggestions to the Drafting Committee as to possible alternative draft clauses to cover the different points of view. The Appendix would be in the form of a Draft Charter, including those parts of the United States Charter on which there was general agreement, any amendments or additions which were proposed or agreed upon, and any alternative draft clauses. These amendments, additions, and alternative clauses would reflect the suggestions in Part Two of the Report. The object of the Appendix, which would not be an integral part of the Report itself, would be to serve as a guide or basis for the work of the Drafting Committee in its consideration of Parts One and Two of the Report. LONDON E/PC/T/DEL/3 Page 3 It is felt that the foregoing sets out what was generally agreed at the second meeting of Heads of Delegations. It will be seen that these proposals envisage the establishment of a Drafting Committee.. Consequent upon this decision, the following questions arise for consideration:- (a) The composition of the Drafting Committee; (b) When and where it should meet.; (c) WIhat arrangements should be made for the Drafting Committee to report to the Preparatory Committee. As regards (a), it is suggested that any Government represonted on the Preparatory Committee should have the right to be represented on the Drafting Committee. Member Governments who desire to be represented on the Drafting Committee should inform the Executive Secretary prior to the conclusion of the present Session of the Preparatory Committee.. As regards (b), it is suggested that Heads of Delegations should give careful consideration to the advantages of the Drafting Committee meeting at New York. This would assist the economic Department in providing adequate Secretariat facilities, and would also mean that the Drafting Committee would be in close and easy touch with the representatives of the Bank, the Fund, FAO, and the Secretariats of the Comissions of the Economic and Social Council which are directly conoerned with matters within the scope of the Preparatory Committee. On the question of the time of the meeting, it is suggested that the Drafting Committee should meet not later than the middle of January, in order that its work may be completed. either before or during the second Session of the Preparetory Committee (as to which see below). LONDON E/PC/T/DEL/3 Page 4 As regards (e), Heads of Delegations will no doubt wish to consider this question in relation to the suggestion made by the United States Delegate that the tariff negotiations envisaged in the Draft Chàrter should be sponsored by the Preparatory Committee, which should Meet for this purpose not later than 31 March 1947, at Geneva. If the Preparatory Committee is prepared to accept this proposal, then the meeting in the spring of 1947 would appear to be the appropriate occasion for the presentation of the Drafting Committee's Report to the Preparatory Committee. This arrangement would have the advantage of enabling the Preporatory Committee, at the conclusion of the spring meeting, to present a complete reportto the Economic and Social Council and for consideration by the International Conference on Trade and Employment in the autumn of 1947. Finally, it is. suggested that if it is agreed hold a further session of the Preparatory Committee in the spring of 1947, iems ii, 12, 13, and 15 of the Agenda of the Preparatory Committee.(Document E/PC/T/4) should be referred to that, meeting

GATT Library

bb935sx5562

Resolution Concerning the Second Session of the Preparatory Committee

United Nations Economic and Social Council, November 23, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

23/11/1946

official documents

E/PC/T/25 and E/PC/T/17-29

https://exhibits.stanford.edu/gatt/catalog/bb935sx5562

bb935sx5562_92290029.xml

GATT_157

GATT Library

td717rn3591

Resolution Concerning the Second Session of the Preparatory Committee

United Nations Economic and Social Council, November 23, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

23/11/1946

official documents

E/PC/T/25 and E/PC/T/17-29

https://exhibits.stanford.edu/gatt/catalog/td717rn3591

td717rn3591_92290029.xml

GATT_157

United Nations Nations Unies LONDON ECONOMIC CONSEIL 23 November 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET. SOCIAL PRER.RiPTORY C004LLTTEE OF THE INTERATION..L CONFERENCË ON TRADE AND EMP LOYMENT RESOLUTION CONCERNING THE SECOND SESSION 0F THE PRERUTO1RY COIMITTT.E WHEREAS the Econo.-ic and Social Council on 18 February 1946 decided to call an Intemational Conference on Trade and Employment and constituted a Preparatory Conaittee to dravi up an annotated draft agenda including a draft convention for consideration by the Conference AND WHEREAS it has not been found practicable to complete the work of the Preparatory Committee a't its First Sescion THE PR1PARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE .AND EMPLOYMENT HEREBY RESOLVES to convene a Second Session at Geneva or. 8 .pril 1947, .Which shall consider, inter alia, Item.is 11, 12, 13 and 15 of the .-jenda of the Preparatory Couà.Littce LJN -INSTRUCTS the Executive Secretary to cuaaunicate with the *ueaber Gover-vaents to.aake the necessary arrangements for such Second Session to commence on 8 April 1947. -

GATT Library

hn540jj3832

Resolution concerning the Second Session of the Preparatory Committee

United Nations Economic and Social Council, November 21, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

21/11/1946

official documents

E/PC/T/DEL/8/Rev.2 and E/PC/T/DEL/1-17

https://exhibits.stanford.edu/gatt/catalog/hn540jj3832

hn540jj3832_90210087.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON E/PC/T/DEL/8/Rev .2 21 November 1946 ECONOMIC CONSEIL ORIGINAL: ENGLISH AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT RESOLUTION CONCERNING THE SECOND SESSION OF THE PREPARATORY COMMITTEE WHEREAS the Economic and Social Council on 18 February 1946 decided to call an International Conference on Trade and Employment and constituted a Preparatory Committee to draw up an annotated draft agenda including a draft convention for consideration by the Conference AND WHEREAS it has not been found practicable to complete the work of the Preparatory Committee at its First Session The Preparatory Committee of the International Conference on Trade and Employment HEREBY RESOLVES to convene a Second Session at Geneva on 8 April 1947, which shall consider, inter alia, Items 11, 12, 13 and 15 of the Agenda of the Preparatory Committee AND INSTRUCTS the Executive Secretary to communicate with the member governments to make the necessary arrangements for such Second Session to commence on 8 April 1947. LONDON E/PC/T/DEL/8/Rev.2 Page 2 INSTRUCTIONS TO THE EXECUTIVE SECRETARY REGARDING THE REPORT OF THE FIRST SESSION OF THE PREPARATORY COMMITTEE The Preparatory Committee of the International Conference on Trade and Employment: HEREBY INSTRUCTS the Executive Secretary: 1. To prepare and publish forthwith a Report of the First Session of the Preparatory Committee for consideration by the Committee at its Second Session. 2. To draft the Report in two parts. Part I should provide a general narrative statement of the discussions of the Preparatory Committee. Part II should be drafted under the headings of Item 10 of the Agenda adopted by the Preparatory Committee at its Third Executive Session on 17 October 1946, and such additional headings as may be appropriate in the light of the discussions of the Preparatory Committee. Under each of these headings there should be a report in continuous form, reviewing the main principles upon which a general identity of view was established and reporting other suggestions and conflicting views. Any texts completed at this meeting should be appended to the Report together with alternative texts giving expression to different points of view and reservations. LONDON E/PC/T/DEL/8/Rev.2 Page 3 RESOLUTION REGARDING THE APPOINTMENT OF A DRAFTING COMMITTEE WHEREAS the Preparatory Committee has decided to convene a Second Session at Genava on 8 April 1947 AND WHEREAS it is desirable that further drafting be done on the basis of the work carried out at the First Session before the commencement of the Second Session. The Preparatory Committee of the International Conference on Trade and Employment HEREBY APPOINTS a Drafting Committee consisting of representatives of members of the Preparatory Committee to meet in New York beginning 20 January 1947 for the purpose of preparing a Draft Charter based upon the Report and other documents of the First Session of the Preparatory Committee, IT IS RESOLVED THAT 1. It will not be the function of the Drafting Committee to endeavour to reconcile differences of opinion revealed in the work of the Preparatory Committee. The Drafting Committee will confine itself to preparing a Draft Charter, including such alternative draft clauses as may be appropriate to take account of different views expressed at the First Session, together with such explanatory notes and commentaries as the Drafting Committee may consider desirable and useful. 2. The Drafting Committee should prepare a Report for consideration by the Preparatory Committee at its Second Session. 3. The Drafting Committee should complete its work with all possible despatch and in any case not later than 28 February 1947 in order that its Report be forwarded to Governments for consideration in advance of the Second Session of the Preparatory Committee. LONDON E/PC/T/DEL/8/Rev.2 Page 4 IT IS SUGGESTED that members appoint to the Drafting Committee not more than two or three technical experts drawn as far as possible from the delegations which have participated in the work of the First Session of the Preparatory Committee. LONDON E/PC/T/DEL/8/Rev.2 Page 5 RESOLUTION REGARDING THE NEGOTIATION OF A MULTILATERAL TRADE AGREEMENT EMBODYING TARIFF CONCESSIONS WHEREAS the Resolution of the Economic and Social Council on 18 February 1946 decided to call an International Conference on Trade and Employment for the purpose of promoting the expansion of production, exchange and consumption of goods, constituted this Committee to elaborate an annotated draft agenda, including a draft convention, for consideration by the Conference, and suggested that the Agenda of this Committee include among its topics "International Agreement relating to regulations, restrictions and discriminations affecting international trade", and "Establishment of an international trade organization;" and WHEREAS the United States Government had invited the governments appointed by the Economic and Social Council as members of this Committee to meet to negotiate concrete arrangements for the relaxation of tariffs and trade barriers of all kinds and the invitation has been accepted by the Governments attending the present session of the Preparatory Committee; and WHEREAS the task of the Conference will be facilitated if concrete action is taken by the principal trading nations, to enter into reciprocal and mutually advantageous negotiations directed to the substantial reduction of tariffs and to the elimination of preferences the Preparatory Committee of the International Conference on Trade and Employment HEREBY RECOMMENDS TO THE GOVERNMENTS CONCERNED that the meeting of members of the Preparatory Committee envisaged by the invitations sent out by the United States Government should be held under the sponsorship of the Preparatory Committee in connection with, and as a part of, the Second Session of the Committee, conducted in accordance with the LONDON E/PC/T/DEL/8/Rev.2 Page 6 procedures recommended in the Memorandum on Procedures approved by the Preparatory Committee at its current session AND INVITES the member Governments to communicate to the Executive Secretary their views on this recommendation.

GATT Library

yc511bm5417

Resolution Regarding Industrial Development : To be proposed by the Chairman of the Joint Committee of Committees I and II

United Nations Economic and Social Council, November 23, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

23/11/1946

official documents

E/PC/T/26 and E/PC/T/17-29

https://exhibits.stanford.edu/gatt/catalog/yc511bm5417

yc511bm5417_92290030.xml

GATT_157

United Nations Nations Unies LONDON E/PC/T/26 ECONOMIC CONSEIL 23 November 1946 AND ECONOMIQUE SOCIAL COUNCIL ET SOCLAL PREPARATORY COMMI TTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT RESOLUTION REGARDING INDUSTRIAL DEVELOPMENT TO BE PROPOSED BY THE CHAIRMAN OF THE JOINT COMMITTEE OF COMMITTEES I AND II WHEREAS it is anticipated that the Economic and Social Council will shortly consider the question of dividing responsibilities not yet allocated in the field of cconoPic developrcnt among the various agencies concerned and of co-ordinating these activities. AND WHEREAS the Preparatory Comittce at its First Session has discussed the positive functions in relhtion to industrial development which .light bu exercised bv the Inturnational Trade Organization, particularly thc furnishing or advice to rmimbers concerning thoir plans and, withinn its coi;petence and resources, the provision of technical aid in tho forrulation and execution .of such plans, AND WHEREAS so that the Preparatory Corrittee r.ay further carry out its tcrrs of reference as regards industrial .developrint, it is desirable for it to have tho guidance of the Economic and Social Cou icil upon the viens which were exchanged at the First Session. THE PREPARAORY COMMITTEE OF TIHE INTMNATIONAL CONFSRENCE ON TRADE HEREBY RECiUESTS the Executive Secretary to draw the attention of the Econorzc and Social Council to those portions of the report of the Preparatory Committee which are concerned with the possible er 0;. N"+;^" e LONDON E/PC/T/26 Page 2 performance by tha Internnational Trade Organization of functions ïn relation to'industrial development and to ask the. Economic and Social Council to state, before the commencement of the Second Session of the Committee, whether paragraph 3 of Article B included provisionally in.the draft Chapter on Economic Development is in accordance with the Council's views on the appropriate allocation of functions- relating to economic davelopment.

GATT Library

wr746wv6185

Resolution Regarding the Appointment of a Drafting Committee

United Nations Economic and Social Council, November 23, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

23/11/1946

official documents

E/PC/T/29 and E/PC/T/17-29

https://exhibits.stanford.edu/gatt/catalog/wr746wv6185

wr746wv6185_92290033.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL AND. .E C O N OM QUE E/PC/T1N/29 23 November 1946 COUNCIL ET SOCIAL ORIGINAL:.ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT RESOLUTION 'REGARDING THE APPOINTMENT OF A AWATING COMMITTEE WHEREAS the Preparatory Committee has decided to convene a Second Session at Geneva on 8 April 1947 AND WHERAS it is desirable that further drfting be done on the basis of the work carried out at the First Session before the commencement of the Second Session THE PREPARATORY COOIETTEE OF TtUE INTIERN.,MION.AL CONFEREINCE ON TRADE AND EMPLOYMENT HEREBY APPOINTS a Drafting Committee consisting of representatives of members of the Preparatory Committee to meet in New York beginning 20 January 194.7 for the purpose of preparing a Draft Charter based upon the report and other documents.of the First Sess-on of -hhe Preparatory Cormittee, IT IS RESOLVED THAT 1. It w.ill be thé function of, the Drafting Comnittec to prepare a Draft Charter or Articles of Agreement, editing f or clarity and consistency the portions of the text on ;which the Preparatory Committee has ccme to a substantial identity of views, preparing alternative drafts of those portions on which there remains a division of general views, and preparing suggested drafts covering such uncompleted portions as are referred to it by the Preparatory Committee, together, with such explanatory notes and commentaries as the Drafting Committee may consider desirable and useful. LONDON. E/PC/T/29 Page 2 2. The Drafting Commitee should prepare a report for consideration by the Preparatory'Committee at its Second Session. 3. The Drafting Committ:e should complete its work with all possible despatch and in any case not later than 28 February 1947 in order that its report mnay be forwarded to governments for consideration in advance of the Second Session of the Preparatory Committee. IT IS SUGGESTED that members appoint t.o the Drafting Committee not more than two or three technical experts drawn as far as' possible from the delegation which have participated in tho work of the First Session of the Preparatory Committee.

GATT Library

gr031yr0864

Resolution Regarding the Negotiation of a Multilateral Trade Agreement Embodying Tariff Concessions : Submitted by the United States Delegation

United Nations Economic and Social Council, November 23, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

23/11/1946

official documents

E/PC/T/27 and E/PC/T/17-29

https://exhibits.stanford.edu/gatt/catalog/gr031yr0864

gr031yr0864_92290031.xml

GATT_157

United Nations Nations Unies. LONDON ECONOMIC CONSEIL E/i`1C/T/27 .AND ECONOMIQUE ORIGINAL: 1946 SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONA.L CONFERECE: ON TRADE AND EMPLOYMENT RESOLUTION REGARDING THE NEGOTIA TION 0F A.MULTILE.TERAL TRDE AGREEMENT EMBODYING TARIFF CONCESSIONS .(Submittcd by the Unitud States Delegation) WEREAS the Resolution of thc Economic and Social Courcil on 18 February 194.6 decided tc call an.International Conference on Trade and Employment for the purpose of promoting the expansion of production, exchange and consumption of goods, constituted this Committee to elJaborate an annotated draft agenda, including a draft convention, for consideration by the Conference, and suggested that the "genda of this Committec include among its topics "International Agreement relating to regulations, restrictions and discriminations affecting international trade", and "Establishment of an International Trade Organizatiori"; and WHEREAS the United States Government had invited the- governments appointed by the Econonic and Social Council as members of this Committue to moet to negotiate concrete arrangements for the relaxation of tariffs and trade barriers of all kinds and the invitation has been accepted by the governments attending the.present session of the Preparatory Czmmittee; and WHEREAS the task of the Confurence will be facilitated if concrete action is taken by the principal trading nations to enter into.reciprocal and mutually advantageous negotiations directed to the substantially reduction of tariffs and to the elimination of praferences THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT HEREBY RECOMMENDS TO THE GOVERNMENTS CONCERNED that the meeting of members of the Preparatory Committee envisaged by the ., 1. LONDON E/FC/r/27 page 2 invitations sent cut by the United States Gove'rnment should be held under the sponsorship of the Preparatory Committee in conneotion with, and as a Part of, the Second Session of the Committee, conducted in accordaiice With- th- 'procedures recommended in the Memorardum on Procedures approved by the Preparatory Committee at its current Session AND INVITES the member governments t o communicate to the Executive Secretary their views on this recommendation.,

GATT Library

jg650bv5493

Reunion Commune de la Ire et de la Iième Commission : Tenue le 18 Octobre 1946 à 16 heures 30

United Nations Economic and Social Council, October 25, 1946

United Nations. Economic and Social Council, Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, and Preparatory Commission of the International Conference on Trade and Employment

25/10/1946

official documents

E/PC/T/C.I II/3 and E/PC/T/C.I/15-18-E/PC/T/C.I/1-12

https://exhibits.stanford.edu/gatt/catalog/jg650bv5493

jg650bv5493_92290366.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON ECONOMIC CONSEIL E/PC/T/C.I & II/3 AND SOCIAL COUNCIL ECONOMIQUE ET SOCIAL 25 October 1946 FRENCH COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE ORIGINAL: ENGLISH DU COMMERCE ET DE L'EMPLOI REUNION COMMUNE DE LA Ire ET DE LA IIème COMMISSION Tenue le 18 Octobre 1946 à 16 heures 30 PRESIDENT: M.WUNSZ-KING (Président de la Ire Commission) M. WUNSZ-KING Président de la lère Commission, prend place au fau- teuil présidentiel. Il déclare que les Ière et 2ème commissions ont proposé la creation d'une Commission mixte chargée des questions de développement industriel. Il invite les membres à présenter des candidatures pour le siège de Président de la Commission mixte. M. BRENNAN (Union Sud-Africaine), appuyé par M. MARQUAND (Royaume- Uni) propose M. MALIK (Inde) comme Président. M. MALIK est élu à l'urianimité et il prend place au fauteuil pré- sidentiel. Le Président remercie les membres de l'honneur qui est fait à son pays et à lui-même. Il invite les membres à présenter des propositions en ce qui concerne les méthodes de travail de la Commission. M. MARQUAND (Royaume-Uni) estime qu'il serait bon d'attendre que la E/PC/T/C.I & II/3 Page lere et la IIème Commissions aient ou le temps d'examiner plus avant la question du développement industriel. CCC ES (Australie) pense que le Président ne manquera pas de se tonir en contnet avec le President de la Ire Commission et celui de la IIme Commission pour qu'il soit ainsi possible de décider, en tenant compte des débats de cos deur Commissions, la date à laquelle la Commission mixte devra commencer-ses travaux.~~~~~~~~~~~ . .. . Lcoi.l vis. Il estime qu'il n'y a J.e.0 - ,U>il n'y a pas licu e 6iairr un Vpcj -Pompter sur ca.- iel -ent ccOl.)tè cu le Prsidj3t de 1a lare Coèriss.;mmissioc`poudopren2ree Comp3cce nuand ce,rndpu sa alamc qard < peé).noeessU r ( ALozt6 X a c.n1çes.rt1 ;est: ;. 17 heurcS

GATT Library

pf521hv7026

Reunion Commune de la Ire et de la Iième Commission : Tenue le 18 Octobre 1946 à 16 heures 30

United Nations Economic and Social Council, October 25, 1946

United Nations. Economic and Social Council and Commission Preparatoire de la Conference Internationale du Commerce et de l'Emploi

25/10/1946

official documents

E/PC/T/C.I II/3 and E/PC/T/C.I/15-18-E/PC/T/C.I/1-12

https://exhibits.stanford.edu/gatt/catalog/pf521hv7026

pf521hv7026_92290366.xml

GATT_157

GATT Library

ct946dw7969

Revised Draft of Article 65 : (Submitted by United Kingdom Delegation)

United Nations Economic and Social Council, November 9, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

09/11/1946

official documents

E/PC/T/C.V/22 and E/PC/T/C.V/19-31

https://exhibits.stanford.edu/gatt/catalog/ct946dw7969

ct946dw7969_90220118.xml

GATT_157

United Nations Nations Unies RESTRICTED ECONOMIC CONSEIL LONDON E/PC/T/C.V/22 -- IQUE 9UE 9 November 1946 SOI[CL COUNIL C ET SOIAL iU5ITMTPREPARATORY COMMITERNATIONAL CONFERENCETEE OF THE INT MPLOYMENTZD E: LOY'T COi1-TTEE V REVOISAED CDRFT F RTILE 65 (Submitted by gUnited Kindoom Delegatin) The Coz;ission on Business Practicemmshall have the following :-nctions 1. orn accz;dancA with ar3ticoe ec tc roreive and consider written comploints ccgcerninS restrictive susinesocpractiges in international trade, to prescribe and call for information relativehto sucn complainto and ts netify mhmbers of ctmplainos rece-ved; to rdquest latac conduit hearingsrt repodt on its investigations to the Executive Board andnyake ayr recommendations which it may think fi ;e to-rvquest reports from monbers oe the action taken as a result mf reco=mendations made to them by the Executive Board prndato repzre reports for pubnicatiop Eby tr.Executive Board. To arrange special consultative conferences between particular membeand d. to assist in arrangingsu conltations s requested by members relveias to particular complaints, as provided An articles 35 and 3andn to fdi orward reports or recommendations by such conferences to the Executive Board. 3. Subject to the approval of the Executive Board and pursuant Article 3ie-6, to conduct studi and to make m krecommendations when appropriate to the Executive Board for action by members. 4. To advise the Executive Board as to information and other materials to be obtained from members or other sources in the LONDON E/PC/T/C.V/22 Page 2 discharge of the duties and responsibilities of the Commission. 5. To facilitate inter-governmnental arrangements for the international exchange, on a nondiscriminatory basis, of technological information not involving national security.

GATT Library

wt767hn3799

Rules of Procedure of the Preparatory Committee of the International Conference on Trade and Employment : Adopted by the Preparatory Committee on 15, 16 and 18 October, 1946

United Nations Economic and Social Council, October 16, 1946

United Nations. Economic and Social Council

16/10/1946

official documents

E/PC/T/2/Rev.1, E/PC/T/1-4, and E/PC/T/W/13,14

https://exhibits.stanford.edu/gatt/catalog/wt767hn3799

wt767hn3799_92290004.xml

GATT_157

LONDON United Nations Nations Unies E/PC/T/2Rev1946 ORIGINAL: ENGLISH ECONOMIC CONSEIL AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL RULES OF PROCEDURE OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Adopted by the Preparatory Committee on 15, 16 and 18 October, 1946 CHAPTER I -AGENDA Rule 1 The provisional agenda for each meeting shall be drawn up by the Executive Secretary in consultation with the Chairman and shall be communicated to the representatives as soon as possible after its preparation. Rule 2 The first item upon the provisional agenda of any meeting shall be the adoption of the agenda. Rule 3 The Preparatory Committee may decide to review, add to or delete from the agenda. CHAPTER II - REPRESENTATION AND CREDENTIALS Rule 4 Each member of the Preparatory Committee shall be represonted by an accredited representative. Rule 5 Each representative may be accompanied by such alternate representatives and advisers as he may required. Rule 6 The credentiais of representatives and the names of alternate representatives and advisers shill be submitted to the Executive Secretary within one week of the opening meeting of the Preparatory Committee. The Chairman and the Vice-Chairman shall examine the credentials of representatives without delay and submit a report there- on to the Preparatory Committee for approval. LONDON E/PC/T/2.Rev- 1 Page 2 CHAPTER III - CHAIRMAN AND VICE-CHAIRMEN Rule 7 The Preparatory Committee shall elect from its representatives a .Chairman, a First Vicec-Chairman and a Second Vice-Chairman, who shall all hold office for the duration of the present session of the Preparatory Committe. Rule 8 If the Chairman is absent from a meeting, or any part thereof, the Pirst Vice-Chairman, or in the latter's absence, the Second Vice-Chairman, shall preside. Rule 9 If the Chairman ceases to represent a member of the.Preparatory Committee, or is so incapacitated that he can no longer hold office, the First Vice-Chairman shall. become Chairman. If the First Vice-Chairman ceases to represent a member of the Preparatory Committee, or is so incapacitated that he can no longer hold office, the Second Vice-Chairman shall take his place. Rule 10 A Vice-Chairman acting as Chairran shall have the same powers and duties as the Chairman. Rule 11 The Chairman or a Vice-Chairman acting as Chairman shall participate in the Meetings of the Preparatory Committeé as such and not as the representative of the member by whom he was accredited. The Preparatory Committee shall permit an alternate .representative to represent that member in the meetings of the Preparatory Committee and to exercise its right to vote. CHAPTER IV -SECRETARIAT Rule 12 The Executive Secretary shall act in that capacity at all meetings of the Preparatory Committee and its committees. He may appoint another member of the staff to take his place at any meeting of the Preparatory Committee or of its committees. E/PO/T/2/Rev.1 Page 3 Rule 13 The Executive Secretary shall provide and direct such staff as is required by the Preparatory Committee or by any of its committees or sub-committees. Rule 14 The Executive Secretary, or his deputy acting on his behalf may v. b. at any time upon the invitation of the Chairman of the Preparatory Committee or of the chairman of a committee or sub-committee, make either oral or written statements concerning any question under consider- ation. Rule 15 The Executive Secretary shall be responsible for making all necessary arrangements for meetings of the Preparatory Committee and of its committees and sub-committees. CHAPTER V - CONDUCT OF BUSINESS. Rule 16 A majority of the members of the Preparatory Committee shall constitute a quorum. Rule 17 In addition to exercising the powers conferred upon him elsewhere by these rules, the Chairman shall deciare the opening and closing of each meeting of the Preparatory Committee, shall direct the discussion, ensure the observance of these Rules, and shall accord the right to speak, put questions to the vote and announce decisions. The Chairman may also call a speaker to order if his remarks are not relevant to the subject under discussion. Rule 18 The chairman of a committee or a rapporteur appointed by a committee to present its report may be accorded precedence for the purpose of explaining the report. -Rule 19 During the discussion of any matter representative may raise a point of order. In this case the chairman shall immediately state his ruling. If it is challenged, the chairman shall forthwith submit his LONDON E/PC/T/2.Rev.l Page 4. ruling to the Preparatory Committee for decision and it shall stand unless overruled. Rule 20 During the discussion of any matter a respresentative may move the adjournment of the debate. Any such notion shall have priority. In addition to the proposer of the motion, one representative may be allowed to speak in favour of, and one representatives against the motion. Rule 21 ; A representamtimveeray at any tie ova the closure of the debate whether or not any other representative was signified his dish to speak. Not moee thanetwm represontativos may be ranted periission'to speak against thc closure. Rule 22 The Chairean shall take the sense of mmi Preparatory Coii.ttee on a motion for closure. If mme Preparatory Corrittec is in faveur of the. closure, the Chairan shall declare the debate closed. Rule 23 mmo Preparatorm Cornittem maly wed rit the tine alo-dto each speaker. Rule 24 Propomed resolutions, anendments and substantive notions shall be introduced in writing and handed to the Executive Secretary who shall circulate copies to the representatives. Unless tme Preparatory Com=ittee decides otherwise, halsuce proposal sli.l bc discussed or put to the vote at any meetinr of mhe Preparatoxy Conmittee unless copies of it have been distributed-to thc represenwatives at least tventy-four hours before the meeting concerned. Rule 25 Proposed principal motions and draft resolutions shall have precedence in the order of their submission. Rule 26. Parts of a proposed motion or of a draft resolution shah be voted on separately at the request of-anynrepresentmtive, ulless the nover of the motion or resolution objects. LONDON E/PC/T/2/Rev.1 Page 5 Rule 27 When an amendment revises, adds to or deletes from a proposal, the amendment shall be put to the vote first, and if it is adopted, the amended proposal shall then be put to the vote. Rule 28 If two or more amendments are moved to a proposal, the Preparatory Committee shall vote first on the amendment furthest removed in substance from the original proposal, then on the amendment next furthest removed and so on, until all the amendments have been put to the vote. Rule 29 It shall not be ncessary for any proposed motion or dralt resolution submitted by a representative on the Preparatory Committee to be seconded before being put to a vote. CHAPTER VI - VOTING Rule 30 Each member of the Preparatory Committee shall have one vote. Rule 31 Decisions of the Preparatory Committee shall be made by a majority of the members present and voting.- Rule 32 The Preparatory Committee shall normally vote by show of hands except when any representative :requests a roll call which shall then be taken in the English .alphabetical order of the names of the members. Rule 33 The vote of each member participating in any roll call and any abstèntions shall be inserted in the record. Rule 34 When the Preparator Committee is deciding a question relating to individuals, a secret ballot shall be taken. Rule 35 If, when only one member or person is to be elected, no candidate obtains in the first ballot the majority required, a second ballot shall be taken confined to the two candidates obtaining the largest number of votes. If, in the second ballot, the votes are equally divided, the LONDON F/PC/T/2/Rev.1 Page 6 chairman shall decide between the candidates by drawing lots, Rule 36 If the Preparatory Committee is equally divided when a vote is taken on a question other than an election, a second vote shall be taken at the next meeting. if the Preparatory Committee is then again equally divided, teo proposal shall, be regaraded as rejected, CHAPTER VII - LANGUAGES Rule 37 Chinese, English, French, Russian and Spanish, shall be the official languages of thc Preparatory Committee, and English and French the working languages. Rule 38 Speeches rmde in either of the working languages shall. be interpreted into the other working language. Rule 39 Speeches made in any of the other three official languages shall be interpreted into both working languages. Rule 40 Any representative may make speech in a language other than an official language. In this case he himself must provide for interpretation into one of the working languages. Interpretation into the other working language by an interpreter of the Secretariat may be based on the interpretation given in the first worlkng language. Rule 41 Verbatim records shall be drawn up in the working languages. A translation of the whole or any part of any verbatia. record into any of the other official language shall be furnished if requested by any representative. Rule 42 Summary records shall be drawn up in the working, lunuages. translation of the wholco or anW part of aày suismary record into aiy of the other official lanuages shall be furni.shed if reque-ted by any representative. LONDON S/PC/T/2/Rev.1 Page 7 Rule 43 The Journal of the Perparatory Committee shall be issued in the working languages. Rule 44 All resolutions, recommendations and other formal decisions of the Preparatory Committee shall be made available in the official languages. Upon the request of any representative, any other document of the Proparatory Committee shall be made available in any or all of the official languages, CHAPTER VIII - REPRESENTATION OF MEMBERS OF THE UNITED NATIONS NOT MEMBERS OF THE PREPARTORY COMMITTEE.AND OF SPChLZD*SXG7zReCxL ACGENCIES AM) in'C\-COVESRM.EbITIL Rule 415 `Vù:-. cof s aciaizcda it te'-,govorninifrital agcncies raay attend iveetings of th, Prep.aratory Coizzlittee anc- 0' its co.i-ittces ^id p^rticipn.to -L rut. vote in their deliberations with respect to items on their agenda rû;laliig to i.Latters -.ithin the scopc of thoir Rule 46 Tn L L j.riofS of th-e Report of the Cor«mLittee of the Economic snd Social f.to;1 r , :I.<-.rLtF for CorisuJ t1ttio. -ith No -GOVernnent 'vi by tht ?joi i; on 21 wTun 19!6, shall apply to the rm~eetin .N.of the2 h-- ;,>;.tory Corxittee as appropriate. The cosinzlittees o? the ?c;rr,,c, ;X!:.,j*7 n.';anitt.j i-ay consult with .thc World Fedler.atiolL of Trade Uniorin, th, intet.-'Hox>C1 Co-o.puraLjAre llince, the ~c'.rb;.Onf J*'lSrtion of Labour aid the Int.et*irti nnl of;ih.rr o? Commerce ei1;hex- fhllisled for tle purpose, b consult-nl;i*n\rf. i-ig"Af On *t-.- qlrl on v:1.. : llnh7: n Ot- Ihe î~ \tLit-7.r ^rsafritt.Qe or o0n the request of' the orgnnj.tjo2-, ,Ru216 47 The. repi'esentatiîvre of govcrnro lto_ are-,mebers of the Prepara'tory Corsnittcc but. who arc- c-.,mbors of the UMi ed I-ations, can take port as observers at all meetings of the Prcpc.ratory Corzm;ittee and o? its committees and sub-cormittecs. LONDON E/PC/T/2.Rev.1 Page 8. CHAPTER IX - RECORDS Rule 48 Summary records of the meetings of the Preparatory Committee and its committees shall be kept by the Secretariat. They shall be sent as soon' as possible to all representatives who. shall inform the Secretariat not later than twenty-four hours after the circulation of the summary records of any changes they wish to have made. Rule 49 Verbatin records of the meetings of the Preparatory Committee and its committees shall be kept by the Secretariat. One copy of the record of each meeting shall be sent as soon as possible to all representatives. Rule 50 The verbatim records of public meetings shall be available to the public. The verbatim records of private meetings shall be available to itenbers cf the United Nations and to ;puz;:ialized inter-governnrental agencies. CHAPTER X - PUBLICITY OF MEETINGS Rule 51 The greetings of the Preparatory Committee: shall be held in public unless the Preparatory Committee decides ,that a meeting shall be held in Private. Rule 52 The meetings of the committees of the Preparatory Committee shall ordinarily be held in private. Each cci:.dtt.,c nay decide that a particular meeting or meetings shall be held in public. Rule 53 The meetings of sub-committees shall be held in private. Rule 54 After a private meeting has been held, the Executive Secretary, with the approval of the body concerned, may issue a communiqué to the press. CHAPTER XI --COMMITTEES AND SUB-COMMITTEES Rule 55 The Preparatory. Committee: may set up such committees and sub- committees as it deems necessary for the performance of its functions. LONDON E/PC/T/2.Rev. 1 Page 9. Rule 56 Each committee and sub-coauittee shall elect its own officers. Rule 57 A chairman of a committee or a vice-chairman acting as chairman shall participate in the meetings of the committee as such and not as the representative of a member. The committee shall permit another , representative to represent that member in the meetings of the committee and to exorcise the member's right of vote. Rule 58 The provisions of rules 17 and 40 inclusive shall be applied in the proceedings of committees and sub-committees. Rule 59 A majority of the members of a committee or sub-committee shall constitute a quorum. Rule 6o A committee or sub-committee may appoint a rapperteur to present its report or for any other purpose it deams fit ad necessary. Rule 61 Committees and sub-committees may, by agreement decide to adopt rules of procedure regarding interpretations or translations of a more simple character than those laid down in these Rules. Rule 62 Sub-committees shall decide, in consultation with the Secretariat, upon the forr of their records and the procedure to be followed with them.

GATT Library

gt195bx8908

Second session of the United Nations Conference on Trade and Employment : The Preparatory Committee of General Agreement on Tariffs and Trade. Article XXVII - paragraph 1. Proposed by Australian Delegation

United Nations Economic and Social Council, September 13, 1946

United Nations. Economic and Social Council

13/09/1946

official documents

E/PC/T/W/331 and E/PC/T/W/307-344

https://exhibits.stanford.edu/gatt/catalog/gt195bx8908

gt195bx8908_90050488.xml

GATT_157

UNITED NATIONS NATIONS UNIES RESTRICTED ECONOMIC CONSEIL E/PC/T/W/331 AND ECONOMIQUE 13 September 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH SECOND SESSION OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT THE PREPARATORY COMMIITTEE OF GENERAL AGREEMENT ON TARIFFS AND TRADE ARTICLE XXVII - PARAGRAPH 1 Proposed by Australian Delegation 1. On the day on which the Charter of the International Trade Organization enters into force. Part II. of this Agreement shall be suspended and superseded by the corresponding provisions of the Charter. Provided that within sixty days of the closing of the United Nations Conference on Trade and Employment at Havana any contracting party to this Agreement may lodge with the Contracting Parties an objection to any provision or provisions of this Agreement being so suspended or superseded or to the incorporation in this Agreement of any provision of the Charter. 2. Within sixty days after the final date for the lodging of objections, or as soon thereafter as is practicable, the contracting parties shall, if any such objection has been lodged, confer to consider the objection and to decide whether the relevant provision of the Charter to which objection has been lodged shall apply, or be amended, or whether the relative provision of the General Agreement in its existing form, or in any amended form, should apply. 3. Lny decision to depart from the relevant provisions of the Charter in terms of paragraph 2 shall require a majority of two-thirds of the Contracting Parties present and voting, but shall be binding on all contracting parties. 4. On 1 November 1918 if the Charter shall have entered into force and any contracting party as not accepted the Charter the contracting parties shall confer to decide whether, and if so in what way, the Agreement insofar as it affects relations between the contracting party which has not accepted the Charter and other contracting parties shall be supplemented or amended. or whether the Agreement shall be terminated. 5. On 1 November 1948, should the Charter not have entered into force, or on such earlier date as may be agreed if it is known that the Charter will not enter into force or on such later date as is agreed if the Charter ceases to be in force, the contracting parties shall meet to decide whether the General Agreement should be amended, supplemented or maintained.

GATT Library

ff368fw0533

Secretariat plan of Work of the Second Session of the Preparatory Committee of the International Conference on Trade and Employment

United Nations Economic and Social Council, February 17, 1946

United Nations. Economic and Social Council and Preparatory Commission of the Conference on Trade and Employment Drafting Committee

17/02/1946

official documents

E/PC/T/C.6/88 and E/PC/T/C.6/85/REV.1-92

https://exhibits.stanford.edu/gatt/catalog/ff368fw0533

ff368fw0533_90230158.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL . AND eb ECrONOM4IQUE 17 Foruay 196 SOCIAL COUNCIL INAL EENGLIT SOCIAL ORIG: SH PARATORY COMMITTEE OF THE UNITEDuNImkmTnhx cQImTu 0E' M P-12,OF ME Tl-t ENTLA-w - iois - - D . S; . D - .*. O , :. OF M ~ O~~E Q-Uq1')t -- N IMBE AMD MXLO~I m1. At Its First Sssx-ean ondn -:¶rom 15 Octo 26 rovernber 194~, the PreTratory Cclmiee crf t Diterainere. Confer on --rad~e an resolved to cornvone e Seond Ses-on to eet atGeneva on 8 iApmril 1947, teo considero certain tes of its agnda in accrdance with the cooacmend. ocal Couuncil1 4$s Restionof 18 Febraary 3.16. nother ..ation of;tiMrewalrd n WeTrodei ;.on oel-tEmbodyingiaeral a Ageemnt , o.y- Tep)-f Cryonommcessions,,mmthdede fParaat-e7c~-te reco=,& hat, zmotng involveing suMemch negotiations btween ber glovunernments should be hed der u'esapotgnsoroship of the Pnnrptroe~r Ccmi~tee in corc!inwith, and. as pa~r of, thec nSecond Sesaon, a~d o vucted.in accordanmce'ith the Memorand= on kYcateraNl oT-adl .gemepnot' . eiaions aparyr9vdby the Prept-aty 0cmtte at its BFirset'SesiRon. Iyhs sme P~elution, mMnember governets wereommu invited to cnicate to the Secretariat their views on the above mmmetcne reocNr~eatinn. n-. Tver~emehans given azy idiication, In rply cto the S'1etammrui t .cznoicatlon pe nthis oit-that it 'ould.see any ~. of c~i~fiou'~y n te 6invenecond. Sesion- Ins ccordance with thia Resolution. ~ itve of thiAs act), i proposed esstoihat the Second. S;n- ~~~. ... . . iOnsf the 1 &'rep -tor. Ccm.ito. - multral tariff negotiator, on wi ~~~~~~~~~~~~~~~~~- v... . - . . - be conducted, v..lk ?.s.e as ped. It has been fo.rd. ap.rorate, however, to s-st tbat e cpe be .dRerae.tw day so that delegates /wi:U Page 2 Will not be inconvenienced by the Easter traffic. The Session will, therefore, begin at 3:00 P.m. on 10 April. In Geneva in the building of the United Nations and cabled communications to this effect are being addressed to the Governments concerned, as well as to the FOOd. and Agriculture Organization, the International Labour Organization, the lnternational Bank for Reconstruction and Development, the International Monetary Fund., the American Federation of Iabor, the International. Co-operative Alliance, the International Chamber of Commerce and the World Federation of Trade Unions. 2. By note dated 24 January 1947, the Department of Economic Affairs of the United Nations drew the attention of the delegates to the Drafting Committee, set up by the Preparatory Committee at its First Session, to the provisions of the Memorandum on Multilateral. Trade Agreement Negotiations approved in London (Annexure 10 to the Report of the First Session), in regard to the exchange of information in anticipation of the Second Session, and requested then to bring the question to the notice of their governments so that the necessary interchange of documentation could taker place as early as possible. This information refers to the base date for the negotiation of references, exchange of custcms tariffs and. submission of lists of requested. concessions. The documentation already received is being distributed. to the Governments concerned. and it is expected that governments will hasten tor forward to the Secretariat the necessary information whenever they have not already done so Such action is essential to the smooth beginning of them tariff negotiations.. The lists of products on which countries are requesting tariff reductions will be treated as strictly confidential by the Secretiariat, Also in accordance with the Momorandum in question, Governments have been asked to Provide the Secretariat with an indication of the number and, size of the negotiating teams that will be sent to Geneva for the tariff .- mgotiatiocs. E/PC/T/C .6/88 Page 3 ; II ulSchede of Meetings at Geneva 1. A ) 1 the SehventiHeads eof Diegations meeting held on . 21 Nbeove9mr (do1u46n cmet E/PC/T//Del17) in London, teheg Dleate or the -nited.gKimnjo stated that his delegation felt it would be Wise to concentrate at Geneve on ther taiff sculhedes for a consiader bletime at the bnneggiin of the conference, figxin 8 May as the daote n which to start discussing the gene ralucelasHs. e aded thath ti report of the Drafting mmCozttee would lie on the table for four weeks from the gbeinngin and then thDe egleations worldummon S on their experWts Nork on tariff negotiations could inuecocilong with iwrk on thge 'eeral culates. This proposawl Va aEeed to. ()bHow veer, the Delegation of the United States to theD arfingt oCmmittee has circulated a doucment (E/PC/T/C.6/53) usggestign that a nmbuer of the provisions Of the Charter mgihtu seullf bye x&mined semuntaneoutly w'th the initial discu.sions on tariffs, It being Understood that the tariff negotiations should in all cases have priority in the event of a conflict of meeting. This view is based on the following considerations: (i) It would appear desirable to use to the extent practicable the period that will elapse at the beginning of the Second Session while each Delegation is considering the lists of concessions offered by other Delegations. (ii ) It will be necessary to reach a conditional and tentative understanding on certain fundamental provisions of the Charter, as otherwise tariff negotiations that well be impeded, particularly in view of the doubt it would cast on the Value of the tariff concessions to be exchanged. Consequently, the United States suggests that all Delegations shouldc' be ready to discuss the Draft Charter from the beginning of the Geneva Session. Ac) Jt is E/PC/T/C. 6/88 Page 4 (c) It is necessary that the Governments concerned should reach agreement on which of the two procedures mentioned above, they wish to cASQ~the Seond, Session. The present meeting of. the rafting Coditee offers an excelletnt opporunity to do this, and it is suggested that Delegates, shoululd const thenmir Goverenitsa on ths nd the othq points dealt with in mmthis cocnnicnatiox ae advise the Secretacridatg acobrinly efoanre the dof the preesent meting. (d). A solution to the pmrgoblem iht be found by arranging for each Delegation to includeo, as frm 10 April, officials who covuld sere on the Tariff Steomeiring mCmtiontee ented beloww and. ho could also, as necessary, discuss and c arr y tothestage of provisional conclusions such questiatons reling to the tariff provisions of the Charter as wouldha'e tao bwe-elt rth In.the initial softages cthe Session. 2. Stages in the TNegariff otiations. (a) In accordance with Sectirn E, Base date for Negotiations. pare5ahn 3,e ad.. aion raF, pagraph 1, First Stage, of the Memuorandm on ;lteial laadtcer1aAgreement NegotonsiatAin. (ne=ure 10 to the Report of the First Sonessi) the preliminary stages of the tariff negotiations at vaGene are noiw beng accomplished. The Secretariat is circulating information the , provided for in the rrefered parg-aphs as. it is received, a-.avaiJs iitoppself,it of thu.ge cMertun. to r ebers to tranzin qu the datha,-netiont wnever they ha'v not already done so.- ril(b ) k.1.. (f iX ae nfT(if;tirimi e Conmtttze,netparagrinetd. n r 2, .Seton F oforandgu, should bm the ep, mmiho'l'.dbe set 2 i5ediatelJy, to 2ntraj7e L.o: ge the work. n ariff negotiations. . -- - c . *. .* . ; f (±±) Bach , : s .~~~~~~~~~~~~~~~~~~~~~~. Page 5 (ii) Each Member will submIt a schedule of the proposed concessions which it would be prepared to grant to all other members in the light of the concession it has requested from them. (Section F, paragraph 1 of the Memorandum mentioned above). Delegations will require some time to study the concessions offered by other members. (iii) Simaltaneously, a Heads of Delegations Committee will presumably be set up to direct the activities of the Second Session, including the tariff negotiations.* (iv) Should it be felt that certain parts of the Charter must be agreed at least tentatively before the tariff negotiations .-can eaq -place on sacaeeubri ssi-sucoUCh provnsio0 would be considered byr tphe arateprorym Comittee immediately the Second Session beg.ins Thisa stge of the work may take up to four weeks a-nd as the initialn cosideration of the tariff concession coulakd te less time - it is suggested that tentative tariff negotiations should begin in accordance with Section F, paragraph1,. Third Stage, of the Memorandum, as soc as the Delegations felt they had studied the concessions sufficiently.. . (v) There remains the question of the other parts of the Charter, which could be considerin ed starting 8 May -a general review of the entire Charter,s awyhich would be necssr to bring any texts which had been dealt with at the beginlning the Session nsline with the rest of the Charter. AL houiu.rii not.a memer of thePreparatory Committee and, son consequently, is not expected to sit on the Committee to be set up to study thew Ccbr-.ar -o vh h i any case - Lebanon will represent the SyiC-Lebdnse iOutoms Usn0l,& t ie onght reasopale.t -hve Syria on the Reads tof Delegaions Committee, Othe rwise, itwould be necessary to divide ti work into (1) aCharter aidffs (2) TiiaZ irns - el tpects; as the two db}e-otaresel. p.loaoinnterconheuted, sac A procwedure vold. e undesirable. - - - /i this E/PC/T/C.6/38 Page 6 In this connection, and due to the degree of the work already dons, it is suggested that the Preparatory Committee may find it convenient not to use a committee structure similar to that which was employed in London, but to avail itself of a system somewhat similar to that which has been used by the Drafting Committee, i.e., to study certain parts of the Charter in plenary session, setting up ad. hoc groups and sub-committees to deal with specific questions. This procedure might go far to avoid: the unnecessary repetition of discussion and. arguments advanced at the First Session. (vi) It is expected. that by the time the experts on the Delegations have studied the lists of proposed. concessions, the Tariff Steering Committee will have planned. as f-r as possible the broad. lines of the progress of the negotiations. The Secretariat is preparIng statistical material to facilitate such planning. The Tariff Steering Committee should endeavour to schedule meetings in accordance with a rational pattern. Although one hundred. and, thirty six bilateral combinations are possible, it-Is obvius that they will not -be carried out' - . simultaneously and - further that a number of them will have very little or no importance. For the rational planning of the' negotiations, their relative importance will. have to be studied in advance. It is probably that the stage subsequent to the - . cosideration of the original offers, i e.; the stage in which the first bilateral Negotiations take plmoace ang the more important. groupings .- including the groups within which : iicationisof preferences wivl. e discudsseh1 will take at ain kg , - '-' :, -least awtbe month .ai psibly:.co.iderly more, e.g.., .t the middle or eniof J.. *.. (vii) After this stage in the negotiations, it will probablybe necessary for- some general review to take place of what has been,, agreed. !nr 5c lary Page 7. Since secondary suppliers will ry vlppliepara.wil4.-not. have xticepated in the . f.: y negoiato lin reect wiloc: an, product, proin -i4. have. to be pr . -mlasde ,or t hei mo cplt .th.incp1 eupplirsan. iporters. Suchd a review, if properly prepatre beforehand., should not, maerially .*.the.prcved S. (viisi .A further aae will conci:tof a renewal of negotiations in the ;ur of which.prnci.paluppliers will take into account the views of.Se zry- upplies inomm the lighat of the c cts.te leter will have,=de.,-thm. ..Athis sotage,,negtiaticns sould take on a more defmilnitive and cTcpsete aspect. hi stage could be indefizte prolongioed if.Delegates endeavoured to strike a perfect bals . n itheoir negot 1icn with each. thers Government; i . howcve , itIs -xpeoted that Delegations will be interested mainly in the over-all picture which the results of the negotiations will .m -- r epesert.fothein and.not in its cmponzent pats. . (ir -nce a .point were reachedd-hen substantial antsatisfactory agreement -d -een attained, it would be time to review the clauses of the Ch arter,i:tshe light.f the reelts of the tariff negotiations, and t1o consider Items 1, 12, 13 and 15 of the Agenda or tmhe Preparatory Comittee at its Fir st Session, whichwere Sec-n . refrred to -t oN-ad Session.Once. this final consideration of the eclauses had takenpladjcqamnd any necessary aist=nts been ,de in.th light of the tariff reductions negotiated, there would be ofinal Plena=.sessics to approve the final roeport, to the Econm-c and Socissgn -ouncl. ad., i , General Agreement on Tariffs and Trade, the terms of which would also have been studied in the course of the Second iSession. This fnal stage should not take --hore than a week. (M The duration of the Second Session has bieen unofficIlly variously estimated at between three to five months; such estimates cannot be concrete insofar as the length of the meeting will depend on the approach of the various Delegations to the problem as a whole, -II E/PC/T/C .6/88 Page 8 III I . Quite apart from the Charter discussions, in respect of which its role is already well defined, it is proposed that the Secretariat will deal with, the following matters, among others, connected with the tariff negotiatins at the Second Session:- (a) Service the Tariff Steering Committee mentioned in Section F. paragraph 2, of the Memorandum on Multilateral Trade Agreement Negotiations and any CommIttee that may be set up to deal with the text of the General Agreement on Tariffs and Trade or any other mmoxittee established in connection wit ththe tariff negotiations. (b) oPrdviexp eert assistance to Delegations in exceptional cases when this is required in order to facilitate the negotiations. Govemrnesnt antipciantig that suchs asisnceta may be required, ares aked to advise the Secretariat as early asos psible since otherwise thse taff cannot be made available. (c) rCary out general liaison among various negotiating grpous and provide a central point for confidential information on the progress of the negotiations to be made available to Delegations. (6) Provide statistical assistance to Delegations, which will facilitate the speedy pgrorses of the negotiations. (e) Establish a stringent and thorough security servi.ce (f) Establish an Orrde of the Day Office and rendevr arious purely adminirstative services in connectiowin th the negotiations. 2. Particulars of a purely administrative nature were dealt with in a letter of J2n3auary addresdse to Delegates to the Drafting mComittee, who were rueqested. to advise their Governments accordingly.

GATT Library

px946xs3635

Sixth Meeting Held on Monday 4 November 1964 at 10.30 a.m

United Nations Economic and Social Council, November 5, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

05/11/1946

official documents

E/PC/T/C.V/15 and E/PC/T/C.V/1-18/CORR.1

https://exhibits.stanford.edu/gatt/catalog/px946xs3635

px946xs3635_90220109.xml

GATT_157

United Nations Nations Unies RESTRICTED CONSEIL LONDON ECONOMIC E/PC/T/C.V/15 ECONOMIQUE 5 November 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE EMPLOYMENT COMMITTEE V Sixth Meeting Held on Monday 4 November 1964 at 10.30 a.m. Chairman: Mr. EDMINSTER (United States) The CHAIRMAN announced that a working document entitled "Status of Committee Work as of 1 November 1946" had been circulated to members. He commented briefly on the contents of this document drawing attention particularly to the suggestions regarding future procedure, under part 5. Following a brief discussion concerning arrangements for Committee meetings and the importance of giving Delegates as much advance notice as possible, the Chairman invited comments on Article 59 of the United States Draft Charter dealing with Executive Board sessions, procedure and officers. H. E. Mr. COLBN (Norway) proposed, at the end of paragraph 2, to omit "and other officers". He said he knew no other important international charter with such a provision. If a vice-chairman were meant, this should be specified. Mr. KELLOGG (United States) remarked that the Food and agriculture Organization provided for more than one officer. The words might refer to a vice-chairman or a rapporteur. He had no objection to their deletion. Mr. HOUTMAN (Belgium) suggested that a meeting of the Executive Board should be made convenable by a minority of its members, if circumstances so warranted. This might apply, particularly, in connection with the implementation of Article 29. LONDON E/PC/T/C .V/15 Page 2 Mr. PIERCE (Canada) pointed out that the Executive Board could so .provide by rule. The words did not preclude the convening of a meeting by a minority. He suggested that the Board might well be left complete discretion. Mr. LAURENCE (New Zealand) suggested that power should be given to a specified number of Delegates not on the Board to cause a rneeting to be convened. If the organization proved successful, its membership would be much wider than that of the Board. Mr. HOUTMAN (Belgium) agreed, as did Mr.MiALK X (India) andMrx. AiA.UL (Cuba) that the Board could be left discretion. In this event, it was suggested that the second part of paragraph1 might be omitted, and the two paragraphs combine.d r H.E. Mra. COLBAN (oray) supported the text of ?xcle 59 as drefte. He sugwas gested tht tthe reference to a majority was irely a safe-guard and that if two or three members of the Board should desire a meeting there would not in fact be aqrifficulty in so arranging. Mr. LUI (India) ';observed in reference to the Canadian Delegate proposal that since, during the initial period, one-third of the Board would retire each year, the Chaiman by the end of the second year would have been elected by only one-third of the Board members. Mr. DAO (China) observed that as one-third of the members were to retire every year, thew choice of Chairman during the initial period ould be lited to those five members who are elected for a three year term. Mr. PIERCE (Canada) suggested as an alternative a.specific provision that the Chainm should be eligible for re-election for two successive ters..That would indicate that .he drafters had in mind the desirability of continupity of Chxma.~sip without causing the cormicraions that had' been referred to, -. H.E. COLBAN (Norway) reiterating his support of the text as drafted, felt that governments could not reasonably be expected to place the services of distinguished representatives at the disposal of the Executive Board for as long as three years. The present wording was sufficiently elastic. Mr. HOUTMAN (Belgium) suggested that a compromise might be found by adding to paragraph 2, the words "all members of the Board can be re-elected". Mr. KELLOGG (United States) remarked that the point was covered by Article 57 (2). Mr. HOUTMAN (Belgium) answered that this covered only members and not officers. Mr. PIERCE (Canada) replying to the points raised by the Delegate of Norway, maintained that the inclusion of a provision that would make clear the Chairman's eligibility for re-election would in norway detract from the present elasticity of the Article. Nor would his proposal imply an added obligation on a member government. If it were found that a government could not conveniently spare its representative to serve for more than one year then he would presumably make himself ineligible for re-election. Baron van TUYLL (Netherlands) desired to see a provision empowering the Chairman to participate in the deliberations of the Conference, without voting, especially in view of the fact that it is proposed to grant this right to chairmen of commissions. Mr. KELLOGG (United States) answered that it had been considered very unlikely that a government would fail to appoint, as a member of its Delegation, a man who had achieved the distinction of being elected Chairman of the Executive Board. If, on the other hand, he had become persona non grata with his government, it might be undesirable to have him attend the Conference. If the Conference wanted the advice and assistance of the Chairman of the Board it could always request him to attend. The point was left to the Drafting Committee. LONDON E/PC/T/C. V/15. Page 4. Article 60. Executive Board - Powers and Duties Mr. BURY (Australia) desired clarification of the position of the proposed commissions and of their relationship to the rest of the organization. It was the understanding of his Delegation that the commissions would consist of persons, experts in their particular field, whose services would not be available to the organization on a permanent basis but who would be brought in for advice from time to time. It was felt, however, that in certain laces the Charter tended to endow the commissions with quasi-executive functions. For example, Articles 65 and 66 gave an impression that the Executive Board would be unable to act in certain matters without the prior advice of the commission concerned. In general, he considered that the function of the commissions should be limited to advising the Executive Board which would refer questions to them, although there might be exceptions, e.g. in the case of the Commodity Commission. If, however, a commission was to exercise executive functions it should be composed of government representatives. Mr. KELLOG (United States) said that the Charter envisaged the commissions as primarily advisory bodies, acting through the Executive Board. This function was made clear throughout Articles 64-66. Any action taken by a commission, for example under Article 66(5), would be subject to immediate review by the Board under Article 61. A commission desiring to perform other than strictly advisory functions would be obliged to enlist the help of the Secretariat by requesting the Director-General to aupply the information needed. Artice 72 mpehasized their position by prov iing that rs of commissions have an exclusively international.-Ati s. . . Mr. BURY (Australia) suggested that the wording of Article 60 implied that the commissions would be acting to a large extent independently. To make their position clearer, he proposed that .the second sentence be amended to read: "It shall refer such matters to the commissions for advice, and shall take such action upon their recommendations as it may deem appropriate." Paragraph 4 could then be omitted. His main desire was to bring out the idea that the actions of the commissions proceeded from the Board - that their function was completely subservient to it, and not merely subject to its review. In answer to Mr. KELLOGG (United States), he said that he did not wish to prevent any commission from initiating an investigation without first obtaining the Board's permission. The substitution of the word "review" by the word "supervize", which he learned from Mr. KELLOGG occurred in an earlier draft, would meet his point to a large extent. H.E. Mr. COLBAN (Norway) desired in paragraph 3 ("The Executive Board shall recommend to the Conference the admission of new Members of the Organization") to delete "shall" and substitute "may". Mr. MALIK (India) assumed that the last sentence of paragraph 1 was not under consideration at this time. was not under consideration at this time. ~~~~~~~~~~~~~~~~~~~/ The CThviU'1answered.that the wording of this sentence could not be settled until m. .ws Imn about the deliberations of the Joint Committee, n.MLTG (United States) observed that the Charter of the United Nations provided that applications for membership must pass through the Security Council though this was not necessarily a relevant consideration. Mr. BURY (Australia) supported the Norwegian Delegate's suggestion. Article 62. Comosition and Procedure of Commissions H.E. Mr. COLBAN (Nonrway) desired clarification as to the status of commission members. Would the Executive Board for example, merely invite a certain number of well known experts irrespectiv of nationality and of whether their govssssernments were represented on the Executive Bo LONDON Page 6 or would the Board invite suitable persons and then request their national governments to place them, at its disposal for a specific task. He asked whether the conditions of office to be determined in accordance with regulations of the Conference, would include conditions regarding contracts, salaries, travelling expenses and the like, or whether these would be the concern of the national governments of the members of the commissions. Mr. K:LiOGGc (United States) said that the Un.ted StatesGEovermernt's view was that mmebers of the cmmoissions should have no connection with theirn ational govermnents but, asA rticle 72 provided, should act as exclusively international epmloyees. Salaries, travelling allowances and the like would therefore be paid by the organization. Should a matter r whmich ight have a political consequence be presented to any commission, it shild be referred to the Executive Bo,ard.which would contain political presentatives copmt ent to deal with i..t. -. MANThemp OUivU, ehasizing that he took up no position in the discussion declared that the intention of the draftsmen of the charter had been that mn'rs ofmm the cornsions could, as required, function as full tvnime ser , ofa ithe or. gnzation Thy -would not be appointed casually for particur.r ad hoc tasks. The wormki ofo the comssins was likely to prove onerous and to require more than merely incidental attention. .BR t ;r. BURY (Australia) feared confusion between the position of member' of co ron and that of wzmbs. of te secretariat. If they were to be ±.p3.t f : eeariat under the Director-General, there would be _no plnt in cprescribing theirdett qualifiations in great ail. ir. .OiN (Norwar) said tat he had never in his experience m1i e oer orit t: be ppoint-ed t semr. ve full tire. Sch work had o- the L'g O fat~ion, been `doze yr th expert staff of the secretariajt.- s whoW oter r epxent ethei rspegctivet Zovenentws but iverez }'.,'f'' ,;-*Ss LONDON .'' ' EC/T/C.V/15 ag 7, chosen because of their international standing had met,e from tim to time and considered materials carefully prepared bfor them y the secretariat. The sions providedr fo? in te Draft Charter really constituted separate expert branches of the secretariat. There should not be two parallel expert organizations doing the same work, one under the name of the secretariat and one under the name of this or that technical commission. i. PAHELTM (France) considered this problem of the character of the commissions vital to the future of the Trade Organization. Regarding the relationship between the commissions and the secretariat, and the division of their respective functions, he foresaw constant friction between the Deputy Directors-General, responsible for departments, and the Chairmen of the commissions, if thce oimmiossns were to comprise full-time, salaried experts. Who would bring various problems to the commissions' attention? Who would be responsible .for the study of such problems? Would it be the Chairman of the commission or the Deputy Director-General concerned? He doubted furthermore, whether it would be wise to have commission members serving on a fulltime basis and stressed the advantages of enlisting the help of experts for limited periods. The commissions should consist of persons wiith occupations of their own, bringing into the organization a wider point of view than that of the civil servants in its permanent employ. If the members of the commissions were made into civil servants, integrated with the organization and identified with its problems, they would lose touch with their own countries and with the activities which gave them their value, their breadth of view and their impartiality. He was not opposed to the setting up of a system of commissions but believed the problems involved should be carefully studied. It was agreed that a meeting should be arranged for the following day when discussion of Article 62 would be resumed. LONDON E/PC/T/C.V/15. Page 8. fo The wallowing Sub-Committees were then appointed: 1. On rticles 52, 54, 55, 59 and 60: Delegates of Australia, Belgium, Canada, India, the Netherlands, the United Kingdom and the United StatAmes of. erica 2.A On rticlAe 75 (mendments to Charter) and Article 79 (Withdrawal and Termination): Delegates of Cuba, France, Norway, United Kingdom and the United StatAes of merica. The Ccmmittee rose at 12.58 p.m.

GATT Library

kw065kn8617

Statement by the Brazilian Delegation on Economic Policy with Regard to Fluctuation in Prices in Agricultural Countries

United Nations Economic and Social Council, November 15, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee IV

15/11/1946

official documents

E/PC/T/C.IV/3 and E/PC/T/C.IV/1-19

https://exhibits.stanford.edu/gatt/catalog/kw065kn8617

kw065kn8617_90220076.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON E/PC/T/C.IV/ 3 ECONOMIC CONSEIL 15 November 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMITTEE IV STATEMENT BY THE BRAZILIAN DELEGATION ON ECONOMIC POLICY WITH REGARD TO FLUCTUATION IN PRICES IN AGRICULTURAL COUNTRIES With reference to Article 41 of the Suggested Charter submitted by the American Delegation on measures to counteract "Violent fluctuations in price, long and short term", the Brazilian Delegation wishes to submit some considerations peculiar to Brazil. First of all, the fact that Brazilian economy is based on the production of foodstuffs (coffee, maize, sugar, rice etc.), of raw materials (cotton, cleaginous fruits, ruber, timber, ores etc.) and on stock breeding must be emphasized. Therefore, in spite of its industrial expansion, Brazil may still be called on agricultural country. Out of 12,000,000 workers, almost 8,000,000 (say, about seventy per cent) are agricultural workers or else employed in forestry or mining. From the point of view of international trade, ninety-five per cent of the total value of Brazil's exports in normal times, is represented by a few primary commodities. The fall in the price of its principal product - coffee - which represents about seventy per cent of the value of its exports, has had serious consequences - greater than might be imagined - for the whole economic life of Brazil. If the gold value of coffee in 1928 is taken as an index of 100, in 1940 it is found to be fourteen. This fact clearly shows the impoverishment of Brazilian economy from 1930 to 1940. It must be noted that of all primary LONDON E/PC/T/C.IV/ Page 2 commodities coffee suffered one of the greatest falls in price. Brazilian imports consist of essential commodities which the country cannot do without and which are, therefore, practically incapable cf reduction. This means that finding resources to pay for its imports is a vital question for Brazilian economy. This situation led the Brazilian Government to adopt an economic policy of diversification of production, and, as the supply of foreign currency was very limited, to reverse it for acquiring products essentially for the country's existence. Consequently, aIl possible efforts have been made to replace imported manufactured goods by. domestic products. Circumstances, however, demanded immediate action to avert the collapse of the national economy, and hence the control of exchange, the freezing of credits and other governmental measures to ensure the essential food supply of the country. These are the facts which prompted the Brazilian Delegation to make the following points in connection with the consideration of article 41 of the Suggested Charter. 1. The economic policy of agricultural nations must be planned in such a way as to make possible the adjustments required by the changes which are taking place in world economy the most striding feature of which is the gradual elimination of the difference between agricultural countries, i.e. producing primary commodities, and essentially industrialized coutries. 2. It is far more difficult for countries whose economy is based on agricutural production for the export market to achieve this adjustment. 3. These agricultural countries cannot slow down the tempo at which their production is being diversified; this applies especially to new crops which have replaced old ones now yielding low returns. LONDON E/PC/T/C. IV/ 3 Page 3 4. Assuing that an international agreement on production will be reached, the basic production quota should take into account the possible expansion of consumption, resulting from either a general increase in population, or from a higher level of income in countries importing and exporting primary commodities. 5. With regard to primary products, economic policy should not hinder the cultivation of new crops in countries with conditions suitable for their economical production. 6. This ecnomic policy must aim above all at progressive adjustment to new economic conditions since in the long run, economic productivity alone can guarantee full employment and a high level of real wages.

GATT Library

hr072ky5219

Statement presented by International Chamber of Commerce to Representatives of Committee IV on Tuesday, 19 November 1946 : The International Chamber of Commerce were represented by Mr. Wallace B. Phillips, and Mr. E. Mackenzie Hay

United Nations Economic and Social Council, November 19, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee IV: Inter-Governmental Commodity Agreements

19/11/1946

official documents

E/PC/T/C.IV/17 and E/PC/T/C.IV/1-19

https://exhibits.stanford.edu/gatt/catalog/hr072ky5219

hr072ky5219_90220080.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL RESTRICTED LONDON AND ECONOMIQUE E/PC/T/C.IV/17 l9 November 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMITTEE IV INTERGOVERNMENTAL COMMODITY ARRANGEMENTS STATEMENT PRESENTED BY INTERNATIONAL CHAMBER OF COMMERCE TO REPRESENTATIVES OF COMMITTEE IV ON TUESDAY, 19 NOVEMBER 1946 The International Chamber of Commerce were represented by Mr. Wallace B. PHILLIPS, and Mr. E. MACKENZIE HAY The Internatioonal Chamber of Commerce greatly appreciates the opportunity that has been afforded by your Committee to present the Chamber's views. The Chamber has previously outlined suggestions quoted in Conference Document E/PC/T/9 dated 8 November 1946, which covered certain resolutions adoted by its Council in June of this year tand i isn of iteroest t observme fro seuch edtaile information as iFat ouspr dlSDsa_t-at several subjects upon which we thhen 1d Au'ts have nowvbeen clarified.and.emorcclearly defined. The subject Inof ternationaommoiidlCty Agreementsi brstles width ifflicutiesI. n thpe ast, the majority of agreements counclded wernde uekrtaen in tintehe rest pof rcoduers and the irqdncatpe -otection afforded.to consumers was a cons ant source of friction as well as an inherent wenakess. It is gratifying to -dn-herefore, that y-or Commit.-e is insistent that consumers shall be represented in any further Commodity Agreement in an equal manner to producers. A further point upon which the Chamber hopes that emphasis will be laid, is the necessity of leaving to the proposed Commodity Councils, the widest possible measure of independence, flexibility LONDON E/PC/T/C.IV/17 7 Page 2 = latr1idu in the thwrking out and the operation of thec of "he ative Cocmmodity greements.rerse~f_*ment-s. xtremely individual thingf.s ethodM5o exes extfi-el-\a ding and marketing othe same commodity in5g;2 ^ amn co;m of the world, very greatly, and these are _ ; .','''; --hese are count will hhave to be taken by the fu aunt wi .i ha-^. e f Agreements are to function -L . -a ;r-<.v_.: he Commodity Commisssionwo uldbe the appropr ate ; lay down broad general principles. It is highly deesiraabe--'~ e as three a hand as possible to the Commodity Councils '*s, ^*cils in he mechanisms which thommodity Councils will @.. - ou obviously commehas given mu e- _;; t : t-..- -- bject of buffer stocks and S:; bt t : an l be uf'ullv mployed in certain cases. The Innernational Chamber, nevertheless, is of the opinion that there is a very definite limitation to the use of buffer apart from the fact that they are inapplicable to perishable commodities, there are involved problems of finance, sterage, purchase and sale and, above all, the exceedingly complex problems of determining a long term economic price. It is-: e o-- r-^ e ;'i long prioce and in consequence, there is,,of a high, -- L^ n _-. cumulation of stocks, the ::fect of which zr of --=cC'.ue zza rather than to se-;-to sta pr levels.i-l .e- .> -it-_- :^- that once stocks ck begin to accumulat ' e' -_ ar.-' _ pressure to bear -oe '. for quant regulationitatil5Cc =-. in a situation quite contrary to that izr t;raCr._ '<- an c t- ity Agreements has hiththerto centred 7 sv. _ ctvo c c LONDON E/PC/T/C. IV/17 Page 3 round the problem of dealing With commodities in excessive supply and little attention has been given to the vital subject of shortages, which can be as prejudicial to consumers as are surpluses to producers. A further matter that the Chamber thinks most important, is the consideration that your Committee will give to the drafting of private commodity Agreements. There are many commodities for which it may be desirable in the future to conclude International agreements, (commodities of a somewhat lesser importance than the staples) which your Committee possibly may not consider will justify the establishment of a Commodity Council to control their management. The Chamber believes there is no valid reason why such arrangements should not be made, always provided that the full terms and conditions of privately - i'.ions of umva- ly concuded, Comrodity Agreemaents In conclusion, it scrzC mthe international Tha-b that if prthe work whicho is oceemding in the ther Comittees (and in of _rommittee II on commercial p ticulr We vwr c c-m-ercal olicy-) is successful, tohe mf-oce-hsm, d lely t conront. ronmociatesn h f utue, diminisheddo,omosjedwa.1l1ty w os lyiminished. intabii--. hiich characterized rld during the the cozwar .- y oarkets of thwo;d of m.ta d acter, attributable to the e.-Sz.re fnan .ny _.;-c he restrictions instability and an-.s ~~ ';r tin; - currher with tariffZand emb:rgoes ,hich-cluttered up the -heels of Commerce in the mst. mpedi If these irents caro ihat the be removed ere will wbe a rfree flo of tade between naetions, the mPrttparatory Comiee -ll hong wav-toward one a l y solvingthe -particular problem of Ccm. iC; it

GATT Library

pd489dt7230

Sucgested amendments by the Curan delegation to the proposed North American charter : Committee II

United Nations Economic and Social Council, October 28, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

28/10/1946

official documents

E/PC/T/C.II/19 and E/PC/T/C. II/1-23

https://exhibits.stanford.edu/gatt/catalog/pd489dt7230

pd489dt7230_90210227.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON E/PC/T/C.II/19 ECONOMIC CONSEIL 28 October 1946 AND ECONOMIQUE ENGLISH SOCIAL COUNCIL ET SOCIAL ORIGINAL: SPANISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT SUCGESTED AMENDMENTS BY THE CURAN DELEGATION TO THE PROPOSED NORTH AMERICAN CHARTER COMMITTEE Il 1. The Cuban Delegation proposes following amendments to Section E (Subsidies), Chapter IV of the North American proposed Charter: First: Delete the word "Export" in the heading of Article 25. Second: Substitute the verb "affect" for the verb "reduce" in Article 25, paragraph 1, so as to read as follows: "1. Except as provided in paragriphs 2 and 3 of this Aticle, if any member establishes or maintains any subsidy, including any form of income or price support, to the domestic producers of any product, which operates to increase the exports of such product from, or to affect the imports......etc." Third: add at the end of paragraph 1 of 1 Article 25, separating the final point by a comma, the .following words: " as established in paragraph 4 of this Article." Fourth: Amend paragraph 4 of Article 25 to read as follows: "4. If any member considers that another member, as a consequence of maintaining this last subsidy, affects the imports of such member, in the territory of the other member or if the latter unduly increases its exports, the member deemed to be affected may refer the matter to the Organization and request that it declare that the subsidization be reduced or eliminated. "The Organization shall investigate the matter and shall make the appropriate recommendations to the interested parties. If the Organisation finds that a member has failed, without just cause, to roduce or suppress the subsidies, the Organization may decide that LONDON E/PC/T/c. II/19 Page 2 the member affected (or in exceptional cases the members of the Organization in general) by such failure shall have thea right to withdrw from the trade of the other member any of the tariff reductions which the complaining member (or members of the Organization in general, as, the case may be) may have entered into in accordance with paragraph 1, Article 18. If such reductions are de. r:ecto withdrawn, such other member shall be at liberty resign from the Organizsation, giving sixty days' notice in writing. The dispositions of this paragraph shall come into force in confoprmity with the prescriptions of 2. The Cuban Delegation proposes the following amendment to Article 29; Section G, Chapter IV of the proposed North American Charter: - " Any member against whom any of the measures referred to are adopted shall have the right to bring, the matter before the Organisation, and the Organization shall, within a period net exceecding ninety days, investigate to thematter and shall make appropriate recommendations to the interested parties. If the Organisation finds thatt the measures for withdrawing the concession, suspending the obligation or modifying the concession, have been adopited without just cause, the Organization may deside that the member affected by the measure (or, in exceptional cases, the members of the Organization in general) has the right to withdraw from the trade of the other member any of the tarfiff reductions which the complainant (or the members of the Organization in general, the case MaY be) may have negotiated in accordance with paragraph 1, Artice 18. If such reductions are withdrawn de facto, the member shall be at liberty to resign from the Organization, giving sixty days' notice of such intention in writing."

GATT Library

vk631sg0300

Suggested Agenda : Submitted by United States Delegation

United Nations Economic and Social Council, October 19, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V: Administration and Organization

19/10/1946

official documents

E/PC/T/CV/2 and E/PC/T/C.V/1-18/CORR.1

https://exhibits.stanford.edu/gatt/catalog/vk631sg0300

vk631sg0300_90220096.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON ECONOMIC CONSEIL E/PC,/T/CV/2 AND ECONOMIQE 19 October 1946 SOCIAL COUNCIL ET SOCIAL ~ OF TH, rTT-SR .T\TCE COMMITTEE V ADMINISTRATION AND ORGANlZATION SUGGESTED AGENDA. Sumitted by Unlted States Delegation. Committee V has been assigned the following broad topic: ``Establishment of an International Trade-Organization as a specialized agency of the United Nations having appropriate responsibilities (in the fields of employment, industrial development, trade barriers, restrictive business practices, and commodty arrangements''. It is the suggested for that the agenda of the Committee for the purpose of discussing this topic be as follows: 1.General purposes of the Organization. 2. Member . 3. Functios. 4. The Conference. (a) Membership. (b) Voting. (c ) Sessions: procedue and 'f1 - . (d.) Powers and duties. 5. The Executive Board. (a) Membershitp. (b) Voting: (c) Sessions, procedure and officers. (d) T-'te aE&t acutle LONDON E,/PC/'T/CV/2 Page 2 6. The Commissions. (a) Establishment. (b) Compossition and procedure. (c) General functions (a) Functions of Commission on Comrnerciai Policy. (e) Functions of Commission on Business Practices. (f) Functions of Commodity Commission. 7. The Secretariat. (a) Composition. (b) Director-General (c) Deputy Directors-General. (d) Secretariat staff: 8. Miscellaneous. (a) Relations with other organizations. (b) International responsibilities of personnal. (c) Legal capacity. (d) Privileges and immunities. (e) Amendments. (f) Interpretation and settlement of legal questions. (g) Contributions of Members. (h) Entry into force. (i) Withdrawal and termination.

GATT Library

xg513sx8458

Suggested Chapter for an International Trade Organization of the United Nations

United Nations Economic and Social Council, November 7, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

07/11/1946

official documents

E/PC/T/7 and E/PC/T/W.14-E/PC/T/17

https://exhibits.stanford.edu/gatt/catalog/xg513sx8458

xg513sx8458_92290015.xml

GATT_157

United Nations Nations Unies LONDON E/PC/T/7 7 NOVEMBER 1946 ECONOMIC CONSEIL ORIGINAL: ENGLISH AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT SUGGESTED CHAPTER FOR AN INTERNATIONAL TRADE ORGANIZATION OF THE UNITED NATIONS , .h 1. "The Suggested Charter for an International Trade Organization of the United Nations" (Department of State - September 1946), which has already received a restricted-distribution under the symbol E/PC/T/W.15, will in future be refered to under the symbol E/PC/T/7. 2. No further copies of the Charter are available for circulation at present, but it is hoped that supplies will be received from the United States shortly. On receipt, copies should be attached to this document. .

GATT Library

xb528xr7162

Suggested Re-Draft of Article 57- Submitted by the Brazilian Delegation

United Nations Economic and Social Council, November 12, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

12/11/1946

official documents

E/PC/T/C.V/28 and E/PC/T/C.V/19-31

https://exhibits.stanford.edu/gatt/catalog/xb528xr7162

xb528xr7162_90220124.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL AND I ECONOMQUE 12 N4vember 19.6 SOCIAL COUNCIL ET SOGIAL :EN0RLINAL: 3GLISH PRACAMMITTY aoOlHETEE ORNATl,NTENATIONAENL CONFERCE ON ND uMDE Y.ENTLOeM 0114 V SUGGESTED RE-DRAFT OF ARTICLE 57- SUBIMTTE. BY THE BRAZILIAN DELEGATION 1. The Executive Board shall consist of twenty members of the Organization. 2. Subject to the position of paragraph 3 of this Article one half of the membership of the Thxeutive Board shall serve for a ternmof five years and shall be appointed by the members of the Organization having the largest share in the world trade and belonging to the following trade groups: Europe (two Directors), North America (two Directors), Latin America (two Directors), Asia (two Directors), Ocenia (one Director) and Africa (one Director). The other half of the membership of the Executive Board shall be to elect each year by the Conference, amongst the members not having appointed any Executive Director. A retiring member shall be eligible for immediate re-election. 3. Any change in the relative position in world trade of a member country appointing an Executive Director shall be taken,into consideration at the end of each term of five years, and the Executive Board shall make recommendations to the Conference in order to implement preceding paragraph. 4. Each member of the Executive Board shall have one representativ, and may appoint alternates and advisers to its representatives.

GATT Library

jk772by1128

Suggested Rules of Procedure of the Preparatory Committee of the International Conference on Trade and Employment

United Nations Economic and Social Council, October 12, 1946

United Nations. Economic and Social Council

12/10/1946

official documents

E/PC/T/2, E/PC/T/1-4, and E/PC/T/W/13,14

https://exhibits.stanford.edu/gatt/catalog/jk772by1128

jk772by1128_92290003.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL 12 October 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL SUGGESTED AVAKS OF PROCEDURE OF THE TRADE: AND EMPLOYMENT CHAPTER I - AGENDA Rule 1 The provisional agenda for cach meeting shall be drawn up by the Executive Secretry in consultation with the Chairman and shall be communicated to the representives as soon as possible after its preparation. Rule2 The first item. item upon the provisional agenda of any meeting shall be the adoption of the agenda. Rule 3 The Preparatory Committee may decide to review , and to or delete from the agenda. CHAPTER II - REPRESENTATION AND CREDENTALS Each member of the Preparartory Committee shall be represented by an .accredited representative. Rule 5 Each reprcsentative..may be accompanied by such alternate representatives .and advisers as he may require. Rulr 6 The credentials of representatives and the name of Alternate representatives and advisers shall be submitted to the Executive Secretary within one week of the opening meeting of the Preparatory Committee. The Chairman and the Vice-Chairman shall examine the eredential s of re[resemtatives without delay and submit a report thereon to the preparatory Committee for approva1. CHAPTER 111 - CHAIRMAN AND ViCE-CHAIRMAN The Preparatory Committee shall elect from its representatives shall all hold office for the durationof the Preparatory Committee's exis tence . If the Chairman is absent from a meeting, or a.ny part thereof, the FirstVice-Chairman or in the letter's . the Second Vice-Chairman , shall preside. Rule 9 If the Chairman i cease, to represent a member of the Preparatory Committee, or is so incapacitated that becan no longerheld office, the First Vîc.-Chirman shall become Chirman. If the First Vice-Chirman cease. to represe nt a member of the Preparatory P. .- :i- e, or i.n sc incapacitated that he can no longer hold office, the Second Vice-Chirman shall take is placc. Rule 10 A vice-Chairman acting Chairman shall have the same Powers and duties as the Chairman.. LOHDON Page 3 RuIe 11 The Chairman or a Vice-Chirman.acting as Chairman shall participate in the. meetings of the Preparatory committeeas such and not as the representative of the member by whom he was accredîted. The Preparatory Committee shallpermit an alternate representative to represent that member in the meetings of the Preparatory Committee and . to exercise its right of vote. CHAPTER IV - SECRETARIAT Rule 12 The Executive Secretary shall act in that capacity at all meetings of the Preparatory Committee.and its committees. He may apoint enother:member of the take to take his place at any meeting ofthe Preparatory Commiitteeor of its committees. Rule 13 The Excutive Secretary shall provide and direct such staff asis required by the Prepatory Committee or by any ofits committees or sub-committees. Rule 14. The Executive Secretary or his deputy acting on his behalf, may at any time upon the invitation of the Chairman of the Preparatory - Committeeor of the chairman of committee or sub- committee,.make either oral or written statements concerning any question under consideration. Rule 15 The executive Secretary shall be responsible for : making all necessary arrangements for meetings of the Preparatory Committee and of its committees and. sub-committees. E/Pc /T/2. Pa ge 4. A majority of the member of the proparatory committee shall constitute a quorum. Rule 1 7, In addition to excrcising the powers conferred upon him olsewhere by these rules, the Chairman shall declare the opening and closing of each meeting of the Preparatory Committee, shall direct the discussion onsire the chaervance of these Rules, and shall accprd the right to speak, put questions to the vote and announces decisions. The Chairman may also call a speaken to order if his remarks are not relevant to the subject under Ruel 16. The chairman of a committee or a rapporteur appointed by committee to present its report mya be accorded precudence for Chairman shall forthwith submit his ruling to the Preparatory f or decision and it shall stand unless overruled. Rule . 20 . During the discussion of any matter a representative move the adjournment 0f. the debate. Any such motion shall .have priority. In addutuib to the proposer of the motion one repreentative may be allowed to speak in favour of, and . Ajiy suclatll ;.^lisl"'s.'in LONDON E/PC/T/2 Page 5 Rule 21 .Arepresentative may at any time move the closure of the debate wether or not any other representatïve has signified his wish to speak. Not morethan two representatives may be granted permission to speak against the closure. Rule 22 The Chirman shall take the .sense of the Properatory Committee on a motion for closure. If' the Preparatory Committee is in favour of the closure, the Chairman shall declare the debate closed. Rule 23. The Prepa.ratory Comittee may limit the time allowed to each speaker . Rule 24. Proposed resolutions, amendments and substa.ntive motions shall be introduced in writng and handed to the Executive secretary who shall carculate copies to the representatives. Unless the Preparatory Committee decide otherwise, no such proposal shall be discussed or put to the vote at any meeting of the Preparatory Committee unless copie s of it have been distributed to the representatives at least twenty-four hours bc-fore the meeting concerned. Rule 25 Proposed principal motions -.and .draft resolutions shall have precedence in the order of their submission. ;Rule 26 Parts of a proposed motion or of i draft resolution shall. be voted on separately at the request of any representative, unless the mover of the notion or resolution objects. Rule 27 When an amendment revises, adds to or deletes from a proposal the emendment shall be put to t he vote first, and if it is .a.dopted, .hw.ll ;.n .- aVe ;> v tf 4;ç v-çe. LONDON E/PC/T/2 Page 6 Rule 28 If two or more ammendments are moved to a proposal, the Preparatory Committee shall. vote first on the amendment furthest removed in substance from the original proposal, then on the recondment next furthest removed and so on., until all the amendment haveu beenr put to the vote. Rule 29 It shall not be necessery for any proposed motion or draft resolution submitted by a representative on the Peparatory Committeeto be second before being put to a vote. CHAPTER VI - VOTING Rule 30 Each member of the Pro:paratory Committee shall have one voto. Rule 31 Decisions of the Pre.paratory Committee shall be made by a rnjority of the members present and voting. The Preparatory Committees shall normally vote by show: of hands except when any representative requests a roll call which shall there. bw. taken in. the English alphabetical order of the names of the ,members. Rule 33: The vote of each member participatirng ir. any roll call ard any abstensions shall be inserted in the record. Rule 34 - When the Preparatory Committee is deciding a question relating to inividuals, a secret ballot shall be taken.. LONDON; E/PC/T/2 Page 7 Rule 35 If, when only one member or person is to be elected, no candidate obtains in the first ballot the majority required, a second ballot shall 'ce taken cofined. to the two candidates obtaining the largest number of votes. If, in the second ballot, the votes are equally divided, the Chairman shall . decide between the candidates by drawing lots. Rule 36 If the Preparatory Committee is equally divided. when a vote is taken on a question other than an election, a second vote shaLl be taken at the next meting. If the Preparatory Committee is there. again equ-.lly divided, the proposal shall be regarded. as rejected. CHAPTER VII - LANGUAGES Rule 37 Chirese, English, French, Russian and Spanish shall be the ofïicial languages of the Preparatory Committee, and English and French the working languages. Rule 38 Speeches made in either of the, working languages shall be interpreted into the other -working language. Rule 39 Speeches made in an of' the other three official languages shall be interpreted into both working languages. LONDON E/PC/T/2 Page 8 Rule 40 Any representative may make a speech in a language other than an official language. In this case he himself must provide for interpretation into one of the working languages Interpretation into the other working language by .an interpreter of the Secretariat may bu based on the interpretation given in the first .working laguage Rule 4.1 Verbatin records shall be drawn up in the working languages. . translation of the ;whole or any part of any verbatia record into any of the other official languages shall be furnished if requested by any representative. Rule 42 Summary records shal1 be draw n up in the working languages. translation of the .whole or any part of any summary record into any of the other official languages shall be furnished if requested by any representative. Ruleé 43 .The Journail of. the Preparat.ory Committee s hall be issued. in the -..orkin- languages. Rule 44 All resolutions, recommendltions and 'other.formal . decisions of the Preparatory Comittee shall be made available.in the official languages. Upon the request cf any representative, any other document of the Preparatory Committee shall be made availble in any or.all of the official languages CHAPTER VIII - RECORD Rule 45 Summary records of the meetingsof the Freparatory Committee and its committees shalI be keptbv the Secretariat. They shall be sent as soon as possible to all representatives who shall inform the Secretariat not later than twentyfour hours after the circùlation of the summary records of any changesthey wish to have made.. Rule 46. Verbatim records of the meetings of the Preparatory Committee and its committees shall be kept by the Secretariet. One copy of the record of each meeting shall 'be sent as soon aspossiblc to all representatives. Rule 47. The verbatim records of public meeting shallbe avail.ableto the public. The verbatin records of private meeting shall be available to the members ofthe Econimic and Sociai Council and to any other members of the Preparatory Committee not represented on the Economic a nd Sccial Council. CHAPTER IX - PUBLICITY OF MEETINGS Rule 48. The meetings of the Preperatory Committee shall be held, in. public unless the Preparatory co'mmittee decides that exceptional circumstances require that a meeting be held in private. Rule 49. The meetings of the committee of the Preparaytory Committees shall ordinarily be- hold in public. Each committee may may decide that a particular meeting or meeting shall be held inprivate;. The meetings.of sub-committees shall be held in private. LONDON E/'PC/'/2 Page 10 Rule 51, Aftera private'meeting has been held, the Executive Secretary, with tne approvalof the body concerned, any issue a communique to the press. CHAPTER X - COMMITTEES AND SUB -COMMITTEES Rule 52 The Preparatory Committee. may se up such committees and sub- committees as it deems necessary for the purformanc of its functions. Rule 53 Each committee and sub-committee shall elect its own. officers. Rule 51. The provisions ot rules 17 to 40 inclusive shall be applied in the procedings of committee and sub-committees . R.ule 55 majority of the .members of a committee or sub-committee shall constitute a quorum A committee or sib-committee may appoint a rapporteur to present its report or for any other purpose it deems -and necessary. Ru1e 57 Commttes and sub-committees my decide to adopt rules of procedure re gardingi nterpretations or translations o f. more sirole character than those 1a.id down in these Rules. Rule 58 Sub-committees shall aecicLe, in, consultation with the Secretarirat upon the form of their records an dthe procedire to be followed with them.

GATT Library

bk118wj2081

Summary Record Committee IV Inter-Governmental Commodity Arrangements : First Meeting 18 October 1946 at 3.45 p.m

United Nations Economic and Social Council, October 18, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

18/10/1946

official documents

E/PC/T/C.IV/1 and E/PC/T/C.IV/1-19

https://exhibits.stanford.edu/gatt/catalog/bk118wj2081

bk118wj2081_90220065.xml

GATT_157

United Nations ECONOMIC Nations Unies CONSEIL RESTRICTED LONDON E/PC/T/C.IV/1 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL First Meeting 18 October 1946 at 3.45 p. m. 1. Opening of Session by Temporary Chairman The Temporary Chairman, Mr. J. A. LACARTE, .Dputy Executive Secretary declared the meeting open and introduced the Secretary of the Committee, Rules of Procedure allowed Committees to simplify the system of Inter- Election of Chairman and Vice-Chairman: Mr. J. R. C. HELMORE (United Kingdom) was unanimously elected he Committee on the proposal of HERVE ALPHALD (France) -:^,. -cr _-. ; -. . .- o:.-1% Ih -.z- _> a,.ec -~ "J n:-_: .-szc~w2v ae. ri ;- Nations Unies United Nations LONDON E/PC/T/C. IV/1 Page 2. A. General policy regarding inter-governmental commodity arrangements in relation to the objectives of an Inter- national Trade Organization. (i) Special difficulties in primary commodities. (ii) Objectives of intergovernmental commodity arrangements. B. Principles and requirements of intergovernmental commodity arrangements. C. Principles governing the institution of intergovernmental commodity arrangements. D. Obligations of members regarding intergovernmental commodity arrangements. E. Procedure preliminary to the establishment of an intergovern- mental commodity arrangement. (i ) Special commodity studies. (ii) Commodity conferences. F. Organizational relationships. ( i) Commodity Councils. (ii) The Commodity Commission. G. Exceptions to provisions relating to intergovernmental commodity arrangements." On the motion of N. HERVP. ALPHAND L FrFTh10!D (ance) discussion of the sAgugdgewasted ena s postponed until thee next meting so that thee delegat would pphavunie an ogiortty to ve consideration to it. 5 Recoommrds ofM Ccttgee ietinz: The xecDeiuty Sctve Se Mcreta AryR. ACAJ.E . Lge T, sugcted the folov~ agrr ntaneomrs e re ording of thl. pra-e xiprovte Wrcdiongs sf tmmithe Cotee: A vearbtim -reort to 'betakern f each meetginE adid L suibdUte to the delegations, specialized Agencies and observers from countries which aMrme eberos f thei UntNaed tions. B. Ammary Su RecorpdT (rcis) tbo e meeting ands al distributed to the delegationsp, selizciaed agencieans, d observers from countriwhes ich aMemre berf the United dNs ations. C. A b rief stmenatet on heac e megtin teo b inserted in thoue Jrnal. This would be ppreared by the Seeacrattri having regard to the LONDON E/PC/T/C. IV/1 Page 3. nature of the discussions and would be submitted for approval to the Clhirzin - o he Co tte. The Co;--a ttec a aree-. thc sug-ested ar.angezients. 6. Net L'eetinp The Cozzittee decide: a hold its secon& ::-eeting nn Saturday Xc October 19L.6 at 10.30 C.: 7. The :eezin. closed a" 1.20'- 1.

GATT Library

tm156rf3897

Summary Record Committee IV Inter-Governmental Commodity Arrangements : Held on Saturday, 19 October 1946 at 10.30 a.m

United Nations Economic and Social Council, October 21, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

21/10/1946

official documents

E/PC/T/C IV/2 and E/PC/T/C.IV/1-19

https://exhibits.stanford.edu/gatt/catalog/tm156rf3897

tm156rf3897_90220066.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON ECONOMIC CONSEIL AND ECONOMIQUE E/PC/T/C IV/2 21 October 1946 SOCIAL COUNCIL ET SOCIAL PREPARATION COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT SUMMARY RECORD COMMITTEE IV INTER-GOVERNMENTAL COMMODITY ARRANGEMENTS Held on Saturday, 19 October 1946 at 10.30 a.m Chairman: Mr. J.R.C. HELMORE 1.Consideration of provisional Agenda Consideration was given to the Agenda suggested by MR.CLAIR WILCOX (United States) and several delegates expressed their desire for a general discussion of the problems of commodity arrangements. It was decided to adopt the suggested agenda and then to proceed with a general discussion of the problems facing the Committee. After this the Chairman,with the assistance of the Secretry , would suggest any points requiring further discussion and not covered by the provisional agenda. 2. Participation in technical discussions It was agreed that during discussions of technical points alternate delegates could be requested to participate. 3 . General discussion of commodity arrangement policy MR. CLAIR WILCOX (United States) referred to the fact that primary commodities are produced by large numbers of small producers in many parts of the world. Both the supply of and the demand for these staple commodities were largely inelastic. When primary producers are in distress they naturally seek aid from their Governments which may take E/PC/T/C.IV/2 Page 2 action prejudicial to the interests of producers in other countries. It is desirable, therefore, to gree to international action to meet commodity situations which might otherwise prevenat the mintenance and development of international trade. MR. B.K. ADARKAR (India) thought that commodity machinery should be designed to promote stability of agricultural prices as well as to deal with chronic disequilibrium between supply and demand. Instability of prices caused insecurity in primary producing countries, and consequently affected their demand for industrial products. Greater stability of prices could be promoted by combining a measure of quantitative regulation with some international scheme of buffer stooks. MR. J.T. DEUTSCH (Canada) suggested that consideration should be given now to arrangements for important international commodities which have been subject to very wide fluctuations in the past. Any scheme adopted should be flexible and provide for the stabilization of raw material prices. Countries relying on the export of a few commodities would have difficulty in accepting the obligations of an international tradecnarter unless export prices were stable. MR. E. McCARTHY (Australia) sated that effective commodity agreements could go g long way towards removing the impediments of international would need to differ according to the peculiar conditions of the commodity concerned. It was desirable to distinguish between products on which detailed date are already available so that further study was unnecessary and those in iwhich information would have to be collected He thought that buffer stocks would be important in some cases but pointed that such an arrangement was not suited to perishable commodities. It was desirable to proced with negetiations for agreements in certain primary products as carly as possible. In alI agreements consumers should have representation equal to that of producers. LONDON E/PC/T/C IV/2 Page 3 MR.H BRCADLEY (United Kingdom): throught that buffer stocks arrangements warranted careful study. the problems of particular commodities should be considered as part of general Stabilization ever , temperary arrangements may have to be adopted to deal with particularly urgent and temporary p roblems. Consideration of the two- price system was justified but if such a system were adopted in any particular case, there should be a gradual reduction in the top price until the economic position has been restored. The FRO were giving consideration to somewhat related problems, and although this committee is looking at commodity arrangements in relation to the wider problems of trade and employment, it is desirable that the solution should be be similar. It may be desirable to esbtablish soon a commodity organization which could later be brought wiithn the ITO. MR. JOHNSEN (New Zealand) said that full recognition should be given to the position of countries whose economic structure was dependent on . the export of a narrow range of primary products. MR. BEYLEVELD (South Africa) supported the suggestion that commodity arrangements should aim at stability. He thought that provision should be ade for dealing with shortages as well as surpluses. PROF. de VRIES (Netherlands) mentioned that a recent League of Nations publication gave figures for the exports and imports of sixty- two countries. Of these countries , forty-two have in their export exports more than ninety per cent of primary products and only nine countries are below fifty per cent in their exports of primary products. He suggested that the Committees might obtain useful advice by consulting with people with experience in commodity agreements. The general discussion was adjourned until the next meeting. Consideration was given to a letter received from the International Chamber of Commerce regarding attendance at Committee meetings and it was agreed to suggest to the Secretariat that a reply to sent drawing LONDON E/PC/T/C IV/2 Page 4 attention to the fact that the rules of procedure do not provide for the presence of such non-governmental bodies at Committee meetings and asking the International Chamber of Commerce to specify the particular peints on which they wish to present their views. The Committee could later decide whether it wished to hear. these views and, if so, the method of procedure for consultation. 5. Election of Vice-Chairman The CHAIRMAN announced that the Norwegian Delegation had made certain adjustments in their representation on various committees and that M. ROBERSTAD (Norway) would no longer be a delegate to this Committee and therefore withdrew from the position of Vice - Chairman MR J. MELANDER (Norway) was then elected vice-Chairman of the Committee on the proposal of MR.E.McCARTHY (Australia). 6. Next Meeting.eetinEg. It was agreed that the next me eting ommitteeof the C should be held on Tue sday, 2nd October at 11 a.m.Hea in thor re Mallial HIP1. 7.om The CImittee rose at 12.35 p.m.

GATT Library

mp881bh5469

Summary Record : Fifth Meeting Held on Monday 28 October 1946 at 11 a.m

United Nations Economic and Social Council, October 30, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee IV: Inter-Governmental Commodity Agreements

30/10/1946

official documents

E/PC/T/C.IV/8 and E/PC/T/C.IV/1-19

https://exhibits.stanford.edu/gatt/catalog/mp881bh5469

mp881bh5469_90220071.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON ECONOMIC CONSEIL E/PC/T/C.IV/8 30 October 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL COFERENCE ON TRADE AND EMPLOYMENT INTER-GOVERNMENTAL COMMODITY ARRANGEMENTS COMMITTEE IV SUMMARY RECORD Fifth Meeting Held on Monday 28 October 1946 at 11 a.m. Chairman: Mr. J.R.C. HELMORE 1. General Provisions which might be applied to all lnter- governmental Commodity Arrangements (continued from Fourth Meeting). Mr. BROADLEY (United Kingdom) suggested that Article 46 (9) of the Suggested Charter from the basis of the first part of the discussion. He asked whether it was contemplated to await the expiry of the full five years term before complaints about the working of an agreement were considered. Mr. McCARTHY (Australia) believed the specified term would be too short in the case of some products and too long in the case of ? He doubted if all the procedure set out in Article 45 should be gone through when an agreement was being revised. He maintained that in all cases, review should be undertaken in good time prior to expiry or renewal of the agreemet because, firstly, renewal might take some time and, secondly, sudden termination would be disruptive to the industry concerned. It might take several states to reach complete agree- ment. The initial agreement might not achieve alI its objects. The conditions regarding failure of an agreement were dangerous E/PC /T/C .IV /8 Page 2 because apponents might attack an agreement n its entirety when in fact certain additions or amendments might make it successful. The remedy for partial failure of an agreement was improvement, not rejection. Mr. GUERRA (Cuba) drew attention to the Cuban Delegation's amendment to the Draft Charter (E/PC/T/C.IV/W.4). He emphasized flexibility as the essential element in commodity agreements. The CHAIRMAN suggested that the Drafting Committee should consider the Cuban amendment: Mr. GUERRA (Cuba) agreed but asked that Point 1 of his amendment (reasonable and just prices) should be discussed in full committee . Proessor de VRIES (Netherlands) pointed out that Article 49 excluded from the provisions of Chppter VI inter-governmental agreements not regulating production, trade or prices, e.g research arrangements . He thought that all forms of agreement should come under the rules of Chapter VI. Mr. Clair WILCOX (United Staes) suggested that at this stage agreement should be sought on the allowing points: (a) that commodity agreement should be drawn up for fixed terms irrespective whether the actual term should be the same for every agreement; (b) that the terms of agreements be subject to review in the light of their operation; (c) that .agreements be renewable after expiry of the initial term; (d) that agreenments should contain provisions for settling disputes. E/PC/T/C .IV/8 Page3 He thought that there was little disagreement on these points and suggested that the Drafting Committee should con- sider them in detail. The Committee then turned to discussion of the settlement of disputes. Mr. BROADIY (United Kingom) believed that settlement of disputes raised the problem of enforcemet. If a party to an agreement faild to fulfil its obligations. what action should be taken? This also involve the problem of enforcement against countries outside the ITC. Mr. GUERRA (Cuba ) thought that disputes should be referred to the ITO for a decision. Professor de VRIES (Netherlands) state that disputes could be of two kinds: (a) Disputes regarding interpretation. (b) Disputes regarding participants interests. He thought that these should be treated separately. Article 76, which applied to interpretation of the Charter, might be extended to cover interpertation of commodity agreements. As regards disputes on matter of interest, these might in the last resort be put before an Arbitration Committee or perhaps before an Economic Chamber of the International. Court . The CHAIRMAN suggested that Drafting Committee should produce a formula whereby disputes might be settled in the first - instance by the particular Coucil concerned. If this failed, the matter might be referred to the Commodity Commission, and then, if necessary. to the final deternming body for other ITO matters. Mr. Clair WILCOX (United States) suggested that a re- commendation might be made to Committee V to extend Article 76 E/PC /T/C. IV/8 Page 4 to cover commodity agreements. . OEYLEY (United KikDdom) IsueduwheKhnrgdak emente agrets ot=prhvideprior ta zctiagainst countri s, e wthhr ht mesr cnr .- of tohe which failed in their 1do nt, obligsaotions. whilch their cShta izttion he emc er d to pammit pr equiaeer'dizaiposreerix qs . discriminations on probchibntaons.ntro t-p dr-Aur Shi Mir. MucCorted Mr. BRObr. (AstbutBUTrradla p-RCA,e Mr belceesieanvedfiApatt, _c'uld bebaecdi,yf'cld ultoJ'st- wthif in the usl ondividfar r ul ammmedidits mmSoe putesight, "ev have rtfeored td the govern entsbinvelvde oromSo.s Iflv settlement was dnot react lovel, final hudem nt at thajgeshouldth :- . be y thonConfefe of t b IT Cnce ITy heWO. -. nMe trhouoh it uhuld rac t-wior l bevel e to lve a e for settlkno oespu~ s igi I-¢een parties tto mmmmthe iodi aGmeehsathanldt decido on o -itonwi hgWregard oonsoun^rtise utside t-e agreements. C.nta t it_ C,mmitCee I oight ie fruitful in due course, as it was confronted with similar Mr. Clair WILCOX (United States) believed that commodity agreements should be voluntarily entered intio and that withdrawal should always be possible. He deprecated coercion and sanctions. If a large consuming country agreed to pay a certain minimum price under an agreement, and found by experience that the price was too high, it should not be compelled by any sort of sanction to continue paying that price indefinitely. It would also be unjust to discriminate against the expansion of a new low-cost producing area. Mr. MELANDER (Norway) thought that the probleme had two aspects: (a) Legal questions regarding interpretation. These LONDON E/PC/T/C.IV/8 Page 5 should be settled in accordance with Article 76. (b) Questions of a political character based on national interests. In such cases, to invoke sanctions against countries not upholding agreemets, would raise serious political problems. Mr. GUERRA (Cuba) deprecated coercive measures. He did not regard enforcement as a matter of helding a country within an agreement, but only of ensuring fulfilment of particular obligations by countries adhering to an agreement. Sir Gerari CLAUSON, introduced by Mr. BROADLEY (United Kingdom), stated that a special situation arese when parties involved did not subscribe to the commodity agreement. Non- participants might then gain at the expense of participants. Mr. HAKIM (Lebanon) said that, since agreements were voluntary, the right to withdraw was quite natural. If one 'party failed in its obligations it was natural for the agreement to provide for certain sanctions. Sanctions were provided in most inter-governmental agreements. Mr. WILCOX (United States) said that if a party failed to live up to its obligations, it would in effect withdraw. Suspension or expansion would then become largely academic. Mr. BROADLEY (United Kingdom) recommended that the Drafting Committee should have in mind the relevant parts of the Draft Wheat Agreement regarding obligations of consuming countries in policing and regulation. Expulsion from an agreement might be a reward rather than a punishment. He agreed that a commodity agreement could ultimately only be successful to adhere to it. But policing by consumers might see an agree- ment through temperary difficulties and thus help to secure LONDON E/PC/T/C. IV/8 Page 6 countries from withdrawing its long-term success. Mr. McCARHTlY (Australia) emphasized that the importer must assume equal responsibIlity with the exporter in implementing an agreement. Mr. BROADLEY (United Kingdom) asked whether party should. be able to withdrawa any time without giving notice. Mr. McCARTHY (Australia) replied that, in his view, this would constitute a breach of agreement unless special escape clauses were provided. At 12. 30 p.m. the CHAIRMAN adjourned the meeting. Page 7 COMMITTEE IV Fifth Meeting (continued) Held on Monday. 22 October 1946 at 2.45 p.m. 2. Types of Goods to which the Commodity Arrangements might apply: Mr. Clair WlLCOX (United States) said there were tree methods of defining the areas to which commodity arrangements would apply: (a) to list the commodities or industries which should be included. This would be dangerous as it might prove either too restrictive or too comprehensive. (b) To adopt a definition cI primary commodities. This definition would not apply in all cases, as the stage at which commodities entered international trade markets differed from industry to industry and from commodity to commodity, The definition must therefore be drawn in general tems and its interpretation left to an administractive agency particular cases. (c) Areas may be defined by reference to the economic characteristics of the industry involved. This is the method that was used in Article 45, paragraph 2 (b). He explained that sub-paragraph 2 (b) (i) described the situation ruling in agricultural countries where burdensome excess caused wide- spread distress. A substential reduction price would not increase demand or reduce supply, as both demand and supply were inelstic. Sub-paragraph 2 (b) (ii) referred mainaly to mining products where demand was relatively inelastc and production relatively elastic. Minerals could not be exclused from international commodity action; but it was uneesirablel to include all minerals. One must consider the case of a country heavily dependent on its production of minerals. Here a recession in price would probably LONDON E/PC /T/C .IV/8 Page 8 mean that production would be reduced, with resultant unemployment. In an economy that was heavily diversified there were alternative opportunities of employment, but in countries heavily dependent on a few products, these alternative opportnities did not exist. It was with the latter countries that sub-paragraph 2 (b) was mainly concerned. The United States Delegation's view was that agreements would not normally apply to highly fabricated goods. But it was possible that in some cases the existence of a synthetic substitute would make a commodity agreement incperable unless the synthetic product was included in the agreement. Article 45, Section 3, would cover such cases. Mr. DEUTSCH (Canada) said that the area of agreements should be confined to primary products. Substitute products should not be included in the definition but treated as an exception. Mr. McCARTHY (Australia) thought that there should be room in the definition of primary products to include those processed in a minor degree such as butter, milk, pig lead and lead ore. The Charter should also deal with the situation where a burdensome surplus was not yet in existence but was likely to develop, and present action was needed to prevent it. Too much emphasis was laid on burdensome surpluses; more should be put on the need to stimulate consumption. r. BROADLEYM(Unuted Kingdom) anreed.awithidefLnitionmon the lines of Article 45 (2 (b)). He thought, however, that the need for an agreement shoud not be linked up with a reference to small producers. Even if small scale production were gradually super- seded by plantation methods, agreements woudl still be needed. Mr. HAKIM (Lebanon) said that the problems of surpluses and unemployment were only one aspect of commodity agreements. The LONDON E/PC/T/C.IV /8 Page 9 other was the problem of shortages. Mr. Clair WILCOX(United States), in reply to Mr. BROADLEY, pointed out that where production was controlled by a small number of large-scale producers, the problem of inelasticity of supply did not arise, because supply could be curtailed to adjust itself to demand. Mr.QURESHI (India) said that one should not wait for burden some surpluses to arise, but act much earlier and aim at stabilization of commodity prices. The last slump had shown that demand for industrial products depdened in large measure on the prices ruling for agricultural products. He suggested that in the first sentence of Article 45, (2), the word "prices " be deleted. Mr. McCARTHY (Australia) saw no great difficulty in defining products eligible for commodity agreements. He agreed that the scope of a commodity agreement could be defined by reference to the difficulties which arise relative to primary products. Some re-arrangement of Articles 41 - 45 might be necessary. Mr. BROADLEY (United Kingdom) questoined whether widespread unemployment was a sufficiently precise criterion even in the field.of mining for the application of a commodity agreement. Mr. McCARTHY (Australia) agreed that the criterion of unempIoyment was not altogether satisfactory: yet when the prices of minerals fell to a certain figure, mines had closed down and unemployment had arisen. However, unemployment was certainly not a satisfactory criterion in, regard to agricultural products. Mr. Clair WILCOX (United States) agreed that Chapter VI would gain a great deal from logical re-arrangement. 3. Methods which might be used in Commodity Agreeements Buffer stocks Mr. BROADLEY (United Kingdom) said that the United Kingdom LONDON E/PC/T/C. IV/8 Page 10 Delegation hoped to circulate a paper on buffer stocks which they had prepared for the Washington Conference.There might be various types of buffer stock: - i . (a) An interorganial con ganzatw wh purchaseould'jchs st a lredetermineduiesce and would sell at anotherdoppre at ine price. This organization would be present ingiiti; a passive capoacitya t buy t the loure r figoe and t sell ichsero prte the hosheroffigur.igure. internationalaorganilation (thrizmo i acti arole,c xc nto itnervneth i he marwitthinh needetermined rabge oif an es¢4 . I oothaoes, thhe ord zization-wJrou le ea rroom rfoft the ay of o cmmercial trading within the price ranges l 1aid wn. Buffer-f stocks presented o probltls:em )% Tq qu'asionn o ffnancie i./., hat vati w-ould mporteers and consumers adn exportersanda oorducers contribute. (ii) Thep roblmes of storage, location of tockasa nd hZ agenms re-uered in mdiffecent paBts oE the (c) The method contemplated for the Wheat Agreement by which exporting countries operate what might be described as their own buffer stocks . Different commodities required different types of buffer stocks. Perishable goods did not lend themselves to buffer stock technique, and would require other measures. There should be an exchange of views on the appropriateness of buffer stocks, as part of commodity arrangements. If the Committee thought fit, a small group might give further consideration to the subject. Mr. WORMSER (France) said that the lessons of the past E/PC /T /C. IV/8 Page 11 showed that buffer stocks were necessary, but were not a complete remedy. Mr. Clair WILCOX (United States) said that the United States would be happy to explore a possible broadening of Article 45 to include long-run price stabilization. Buffer stocks had been considered as one of several devices to be employed though these were not enumerated in the Draft Charter. He doubted whether it was desirable to name all these devices which might be used under a commodity agreement. The purpose of buffer stocks was to reduce fluctuations over a period: they were not intended to keep prices high where the normal laws of supply and demand were in operation, but to reduce fluctuation within narrow limits. The international organization would come out even, financially if its maximum and minimum prices were always properly related to the long-run equilibrium prices. He had certain misgivings, however, about the operations of the authority which would have the difficult task of predicting the proper economic level of the average price. There would be political pressure to set the average price on the high side. Some countries might decline to participate if prices were not stabiIized at a high level; but high prices would mean buy, and even governments might unload surpluses on the organization. This in turn would mean heavier carrying charges; consumers, in view of high prices, would buy substitute products and the organization, in order to avoid accumulating substantial stocks would require a strict control of production n many countries. It would be difficult to impose this entral; 'iv -;__ t-- c--c-r z l.the organization w oldulbedibetff_* . ar _ ofu th-_h n which it had a heavy wit ld aa,-ocerhan o vinvestta -hiovc- a -ha Page 12 the market. The organization would eventually be obliged to sell for whatever price it could obtain; and instead of effecting stawboIZt efn it Wz-d rdo~eati ca~ts gup Os bm=usi -eve noree- sevoinerpe f£c-utrnt , o-res Htha-dzf '= Ee aa gven, the -cae- ar itozt ..0ff' scc It .:w,seetobDe nimew; eno~to inzit,on aprogrammen]mit -of buorstocoks fzr el commodi'veatiaes he -t same .e ime . t. - . Mr McCA)RTI (Aeedustralia agreo'nohat there was =zeed. o fC- wtohl or o ~f 'ezck-I :e al-chiryCca inr. the hrt o?frstacs be. -cpoudmle itl czonotrof prodzp ; n,uctt p ulallytasic production -was likely to be s limu - a by-the uricyte ofXrty rne. n y were noartn themselves a scheme; they 5rea~y :enr ea :n otaer rice c t , toi=rns al i:e, w _S the -.in an. Mr DEUTSCH (Canada) said he was apparehensive about buffer stocks, if these were considered as a general solution to commodity problems. None the less, there should be a place for them in the Charter as a means of reaching their objective of long-range Professor de VRIES (Netherlands) said that buffer stocks were ~~~~~~~~~~: :. -.; . wgap between goodaande-bad harvests.vea :' A so yi.c ec hte understamd whygArticle 45 V-, ( .r(ii))- in .cl ued t.e DEUTSCH (Canadas said )e was apprehensive abou_ 1bufer7.. accumulatedhz z s ocks could b unloaded. atg hiiper ices. Buffer tks 5 could C not S affectr c Ceain tommodity prices,n2 uless producnio-,. dan poexrto cnolpt werimposed.e The fincaalnidd ie starting oa vass organitation wit ih a view LONCDON E/P C/T/C IV/8 page 13 to making buffer stocks function efficiently should be considered. It was unwise to attempt to include an Article in the Charter referring to methods. The need of flexibility in commodity arrangements was imperative. Mr. BALA (Czechoslovakia) said he was in favour of buffer stocks particularly when these applied to agricultural products. Buffer stocks would be extremely useful in tines of emergency. Sir Gerard CLAUSON (United Kingdom) stated that any device purporting to meet shortages and surpluses, and thus stabilize prices, had obvious attractions; but one should avoid the suggestion that production and consumption automatically balanced over a period. He agreed that producers would not readily agree to low prices. It was possible that, for a given commodity, production and consumption might balance over a period. The only case of that nature he could remember was that of cocoa. As a general principle, he believed buffer stocks to be dangerous unless conceived as an adjunct to some scheme of controlling supply. If a regulating scheme exists, buffer stocks could prove very useful, as had been proved in the case of tin. The CHAIRMAN asked that the Drafting Committee be guided as to whether they should mention buffer stocks and other methods. Mr. McCARTHY (Australia) said that buffer stocks were not in themselves schemes for international agremeents, but only a means of making such agreements effective. He believe they should not be included in the Draft but only considered in connection with individual commodity agreements. Mr. Clair WlLOCX (United States) said that buffer stocks were one of several possible devices, and could be used in various combinations. The business of the present Committee, however, was to evolve general principles of organization and procedure. E/PC/T//C .IV/8 Page 14 Sir Gerard CLAUSON (United Kingdom) state, that nothing should go into the Charter which excluded buffer stocks. The CHAIRMAN felt that members now recognized buffer stocks as one among several possible methods of dealing with primary cmmodities, and believed, the subject should, be left out of the Draft. Mr. McCARTHY (Australia ) agreed with Mr. WILCOX's last state- ment and explained that his own reference applied to buffer stocks only because there had been misunderstanding regarding them. The CHAIRMAN took it that members agreed that there were no instructions for the Drafting Committee under item 4. He there- fore proposed that no further discussion of that item was needed. 4. Conditions lrecedent to the Institution of Negotiations for Commodity Agreements Aiequate information - need for special commodity studies Mr. DEUTSCHE (Canada) suggested that, the establishment of Study Groups should not be obligatory in aIl cases. Profeessor de VREIS (Netherlands) thought that the formation of a Study Group should not rest on a decision. of the ITO. It should be enough for a group of members or a specialized agency like the FAO merely to ask for a group to be formed. He also thought that the ITC should be empowered to call a conference with- out a preliminary Study Group. 5. obligations of Members regarding existing Inter-governmental Commodity Arrangements Mr. McCARTHY (Australia) hoped that commodity agreement negotiations might be initiated prior to final approval of the Charter, possibly when tariff negotiations were being discussed or even earlier. Mr. CIair WILCOX (United States) assured the meeting that the clause in question would next be binding on any member until LONDON E/P C /T/C .IV/8 Page 15 ratified. Agreements entered into should, however, be consistent with the principles of the ITO. - Mr. McCAM, ustrlia) sarabid dthatit might 'be dsizmtlein - iJePciparcuormstaommnces, _ofrthe Crelat Ccitte te intiate nez-ailt~ic tmhe neanwhw;e. re =hight be caes in wzich i woudm beg useful if soe arency were to take the initiative in 2*oin d isuss :ns. Mr. G7R. (uba) stated. that twamhe uban nemndent aied- 'rtlf', agt Z'ine witerm hijt-hn w- gthe. rsoaizaticnesould act n-the proof-sal fa country thait -.gvedn stu' shouldm.be ad~, and secondly,f ating ixi mafo ter r the Stroupudty G o submit its =beli ved th-n ifat. oun a czrpeny ddcoie. - the expefrt - a i_ular product, it shouldcb- eee to promoteef z greemtent even. if this were not recommended by the, 0rganization. 6 . Drafting Sub-Committee The Committee agreed that the Drafting Sub-Committee should comprise the following The Chairman and Vice-Chairman of Committee, IV, in an ex- officie capacity, and the Delegates from: Australia, Canada, Cuba. France, Netherlands, United States and United Kingdom. 7. Next Meeting The next meeting was fixed for Thursday, 31 October, at 8. The meeting rose at 6.25 p.m.

GATT Library

ny916hr3813

Summary record of Fifteenth Meeting : Held at Havana, Cuba, on Saturday, 7 February 1948 at 6.00 p.m

United Nations Conference on Trade and Employment, February 9, 1946

Fifth Committee: Inter-Governmental Commodity Agreements

09/02/1946

official documents

E/CONF.2/C.5/SR.15 and E/CONF. 2/C. 5/SR. 1-15

https://exhibits.stanford.edu/gatt/catalog/ny916hr3813

ny916hr3813_90200101.xml

GATT_157

United Nations Nations Unies UNRESTRICTED CONFERENCE CONFERENCE E/CONF. 2/C. 5/SR.15 CONFERENCE 9 February 1946 TRADE AND EMPLOYMENT COMMRCE ET DE L'EMPLOI ORIGINAL: ENGLISH FIFTH COMMITTEE: INTER-GOVERNMENTAL COMMODITY AGREEMENTS SUMMARY RECORD OF FIFTEENTH MEETING Held at Havana, Cuba, on Saturday, 7 February 1948 at 6.00 p.m. Chairman: Mr. BONOW (Sweden) 1. CONSIDERATION OF DRAFT RESOLUTION CONCERNING THE INTERIM CO-ORDINATING COMMITTEE FOR INTERNATIONAL COMMODITY ARRANGEMENTS (Document E/CONF. 2/C. 5/16) Mr. CAPLAN (United Kingdom) supported the Draft Resolution and stated that the recent publication of the Interim Co-ordinating Committee for Commodity Arrangements gave a clear account of the work accomplished. The Resolution would not affect the work of the Committee, but was a necessary amendment to recognize a constitutional fact. The Committee included a representative of the Food and Agriculture Organization in recognition of their substantial interest in the commodity field. The Draft Charter recognized that the primary responsibility for international agreements relating to commodities was placed with the ITO but that there should be effective co-operation between FAO and the ITO as indicated In Article 64. The Interim Committee is concerned with inter-governmental action in commodities, and this was of interest to FAO because of the effect on production and consumption, particularly as regards the nutritional aspect. The important thing was that the United Nations should recognize that this Committee would prevent unwise duplication of work. There were useful opportunities for co-ordination and the United Kingdom delegation strongly commended the Resolution to the Committee. Mr. ROYER (France) said. that the Resolution touched only on administrative questions, changing the conditions under which the Interim Committee would. be constituted. When a Member entered the ITO It would be necessary to transmit to the Organization agreements concluded and negotiated; it was preferable to take measures in advance to ensure that agreements reached in the interim period would be in conformity with the Charter of the ITO: that task had been entrusted to the Interim Committee by the Economic and Social Council. The Draft Resolution was adopted unanimously. 2. CONSIDERATION E/CONF. 2/C. 5/SR.15 Page 2 2. CONSIDERATION OF REDRAFT OF THE FINAL TEXT OF CHAPTER VI PROPOSED BY THE CENTRAL DRAFTING COMMITTEE (Document E/CONF.2/C.8/3) Mr. ROYER (France) as Chairman of the Drafting Committee stated that drafting changes had been made only in the interest of coherence and precision; changes which might involve questions of substance were simply noted. Article 52 - approved without comment. Article 53 - approved, subject to the consideration by the Central Drafting Committee of, the consistent use of the phrase "primary commodities" in other Articles, as noted by the representative of Chile. Article 54 - approved without comment. Article 55 It was agreed that the phase "Unless the Organization decides that the request is not well founded," Article 55, paragraph 2) be replaced by "Unless the Organization decises that the case put forward in support of the request does not warrant such action, ......." Article 55 was approved as amended. Article 56 - approved, subject to the return to the original text of paragraph 1. Article 57 Mr. CAPLAN (United Kingdom) explained that the word "inter-governmental" had been deleted from the title of Article 56 because It vas considered superfluous. He stated that titles of Articles had no legal force. Article 57 was approved, subject to the return to the original text of' paragraph 1 (c). Article 58 It was agreed, as proposed by Mr. KUNTER (Turkey) that, for purposes of clarification, the word "action in the last line of paragraph 5 (b) of` Article 58 should be amended to read "finding", It was agreed that the words "shall conform" which were in the original text should be retained. Article 58 was approved as amended. Article 59 was approved after the Committee had endorsed the congratulatory remarks made by Mr. CAPLAN (United Kingdom) regarding the French text of that Article. Article 60 The CHAIRMAN dreW attention to the Note to Article 60 by the Central Drafting Committee, and Mr. CAPLAN (United Kingdom) pointed out that any country participating in commodity agreement should have a voice, and the redraft of Article 60 made this clear. /Article 60 E/CONF. 2/C .5 /SR.15 Page 3 Article 60 as proposed by the Central Drafting Committee was approved. Article 61, 62 and 63 Approved without comment. Article 64 Mr. ROYER (Frence) pointed. out that, in the French text, the "s" in "necessaires" in the fourth line should be deleted. With the above-mentioned drafting correction Article 64 was approved. Article 65 After some discussion it was agreed that the words "continued" and "or otherwise" in the second sentence of paragraph 2 should be deleted. Article 65 was approved vith the above-mentioned amendment. Article 66 Approved without comment. Article 67 The CHAIRMAN drew attention to the Central Drafting Committee's Note to Article 67. After some discussion Mr. ROYER (France) suggested that the words "'objectives of this Chapter" be included along with "the purposes and objectives set forth in Article 1", In paragraph 1 (d) and that paragraph 2. (c) be left unchanged. It was agreed that this proposal should be accepted. Article 67 was approved with this amendment. Mr. SCHWENGER (United States) on behalf of the Committee thanked the Chairman of the meeting for his leadership. The meeting rose et 7.45 p.m.

GATT Library

rg739pv3413

Summary Record of Fifth Meeting : Held on 5 November 1946 at 3.0 p.m

United Nations Economic and Social Council, November 7, 1946

United Nations. Economic and Social Council and Committee III: Restrictive Business Practices

07/11/1946

official documents

E/PC/T/C.III/11 and E/PC/T/C.III/1-19

https://exhibits.stanford.edu/gatt/catalog/rg739pv3413

rg739pv3413_90220048.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL LONDON AND ECONOMIQUE E/PC/ T/C.III/11 7 November 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL ENGLISH COMMITTEE III RESTRICTIVE BUSINESS PRACTICES SUMMARY RECORD OF FIFTH MEETING held on 5 November 1946 at 3.0 p.m. Chairman: M. DIETERLEN (France) - The CHAIRMAN announced that it had been decided that all committees except Committee II) should have finished their work by Saturday, 9 November. It had also been decided that the Report of the Preparatory Committee should comprise three parts:- 1. A descriptive and chronological report of the work of each committee. 2. Instructions to the drafting committee. 3. Draft Charter. He emphasized that, as time was limited and the report was to be complex, the Committee should economize time as much as possible. The document tabled (E/PC/T/C.III/12) was a new text presented by Mr. MCGREGOR (Canada) based on a compromise of views expressed by members of the Sub-Committee. It was to be regarded merely as a working paper. The Sub-Committee had thought that the terms of reference of the Preparatory Committee did not empower it to study problems relating to "services" as well as "goods". Therefore "services" appeared only in parenthesis in the tentative revision. Mr. WILCOX (United States) asserted that the Economic and Social Council had only suggested an Agenda to the Preparatory Committee, and the present discussion was not necessarily limited thereby. The CHAIRMAN felt that the Committee should limit its discussion strictly to the suggested Agenda, which was wide enough, but LONDON E/PC/T/C.III/11 requested the views of other members on the point. Mr. LECUYER (France) pointed out that a similar problem had arisen in other committees. He feared that, if the scope of the Agenda were amplified, discussion would be prolonged. The CHAIRMAN agreed with Mr. LECUYER (France) and suggested the matter might be considered at a Plenary Session or at a meeting of the heads of delegations. He believed that "service" had been included in paragraph 3(a) of Article 34 of the Charter because the United States desired engineering services to be covered by the provisions of Chapter V. Mr. MULHERKAR (India) quoted from the Resolutions of the Economic and Social Council to support his contention that all means of promoting trade and employment were legitimate for discussion. "Services" must, therefore, also be considered. Mr. WILCOX (United States) repeated that the Economic and Social Council had only suggested terms of reference. The Preparatory Committee had adopted a definite Agenda, Items 10(a) to (f) covering paints to be considered at the present meeting, and members were not limited thereby to discussion on "goods" excluding "services". He was opposed to discussion of the matter at the heads of delegations' meeting. The CHAIRMAN proposed in view of the observations by Mr. WILCOX (United States) and Mr. MULHERKAR (India), that "services" should be included within the scope of the Committee's discussion. Mr. FLETCHER (Australia) suggested that "goods"' formed, for the present, a wide enough subject for debate. "Services" could be discussed subsequently. His delegation had not brought the necessary experts to the Conference to discuss shipping, banking etc. Mr. HOLMES (United Kingdom) thought that it would be practical to include "services", but that the question should be postponed. LONDON E/PC/T/C.III/11 Page 3 The CHAIRMAN stated that in view of the observations which had been made he thought the Committee need not commit itself to "goods", but its discussion could also relate to "services". However he suggested the matter be left for the present on the understanding that any representative might raise the question at a later stage. Discussion of new Article 34 Mr. MCGREGOR (Canada) explained in detail how the Sub-Committee had arrived at the new draft of this Article. Mr. NAUDE (South Africa) reserved the position of his Government with preference to Article 34 Section 2(a) from which he would need to receive instructions. Mr. DAO (China) made a similar reservation. Mr. LAURENCE (New Zealand) said that the reference to public commercial enterprises in paragraph 2(a) conflicted with Chapter IV Section (f) dealing with "state trading", also, at the end of Section 2(b) the phrase "if they appear to have or to be likely to have such harmful effects" appeared. It is not clear who would be the judge of these harmful effects. The CHAIRMAN took note of the reservations to Section 2 sub- paragraph (a), but considered the second point raised by Mr. LAURENCE was answered in Articles 35 to 39 on procedure. Mr. MONTERO DE BARROS (Brazil) reserved his Government's position on the phrase in paragraph 2 (a) in Parenthesis "i.e. trading agencies of government or enterprises in which there is a government interest." He noted also that the Brazilian amendment to Section 3, which would have added a sub-paragraph (g) concerning practices which might hamper industrialization of undeveloped countries, was not mentioned in the redraft. The CHAIRMAN explained that the sub-committee had considered this amendment had been covered by the broad statement in Section 1 "or LONDON E/PC/T/C.III/11 Page 4 any of the purposes of the Organization as set forth in Article1." Mr. HAFKA (Lebanon) was not satisfied with the definition contained in paragraph 2 (b), as the fact that a government possed an interest in an enterprise would not necessarily make that enterprise public. The CHAIRMAN appreciated thisthis point but recalled that workof the Committee would be taken up by a Drafting Committee, and it would be better to keep to general lines rather than to seek to define the text word by word. He suggested that the definition might be omitted. Mr. TERRILL (Uinited States) was in favour of retaining the definition as its exclusion might wreck the provisions of Chapter V and affect the whole Charter. The exclusion would set up two standards for international commercial conduct and would permit the evasion of Article 4, 5 and 6 of the Charter. Government enterprises should adhere to the same rules as laid down for private concerns The CHAIRMAN observed that there were two opposing views to be forwarded to the Drafting Committee, and enquired if there were any further observations. Mr. ANDREN (United Kingdom) referred to paragraph 2 (b) of Article 34. His government reserved its position on this provision. Mr. THILTGES (Belgium) said that the Belgiam amendment to paragraph 3 (c) had been omitted. The CHAIRMAN stated that the Sub-Committee had considered Mr. Thiltges's amendment was safeguarded by the Articles on procedures. Discussion of Articles 35-39 Mr. MCGREGOR (Canada) gave the following explanations: - LONDON E/PC/T/C.III/11 Page 5 (a) The amendment proposed by the indian Delegation to provide for consultation between members before the complaints procedure of the Organization was set in notion had been embodied in paragraph 1. (b) With regard to paragraph 2 the United Kingdom Delegation had wished the right to submit complaints to be restricted to commercial enterprises which were interested. After discussion it had been agreed to extend the right to other Organizations. The United States draft had not provided that complaints originating from sources other than members themselves would require the permission of a member. This had been provided in the new text. The last sentence of paragraph 2 had been inserted so that vexatious or frivolous complaints might be eliminated. (c) In connection with paragraph 3 it should be noted that the Organization did not have any direct access to Private enterprises. (d) Paragraph 4 marked the Commencement of the procedure for full enquiry. Up to this point the Article had been concerned onIy with preliminary enquires. Paragraph 4 also ensured that no commmercial enterprises would be condemned without being given the opportunity of presenting its views. (e) The concluding phrase of paragraph 6 represented a modification of the United Kingdom draft which the Sub-Committee had considered was too specific. (f) Paragraph 8 provided for full publication of reports. Public opinion would be one of the strong sanctions behind the word of the Organization. The CHAIRMAN stated that the next meeting would be at 10-30, 6 November 1946 when Mr. McGregor would continue his explanation of Articles 35 to 39. LONDON E/PC/T/C.III/11 Page 6 He considered the moment had now arrived to elect a rapporteur. Mr. NAUDE (South Africa) proposed and Mr.ADAHILLA (Cuba) seconded, Mr. MCGREGOR as rapporteur with Mr. WILCOX (United States) Mr. HOLMES (United Kingdom) and Mr. LECUYER (France) to assist in the work. This proposal was adopted. The meeting rose at 6.55 p.m.

GATT Library

kk996db1032

Summary Record of Meetings Committee V. Administration (Administrative and Organisation) : First Meeting Held on Friday, 10 October 1946 at 5.0. p.m

United Nations Economic and Social Council, October 19, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

19/10/1946

official documents

E/PC/T/CV/1 and E/PC/T/C.V/1-18/CORR.1

https://exhibits.stanford.edu/gatt/catalog/kk996db1032

kk996db1032_90220095.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON E/PC/T/CV/1 ECONOMIC CONSEIL 19 October 1946 ORIGINAL: ENGLISH AND ECONOMIQUE SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT SUMMARY RECORD OF MEETINGS COMMITTEE V. ADMINISTRATION (Administrative and Organisation) FIRST MEETING Held on Friday, 10 October 1946 at 5.0. p.m. Temporary Chairman: Mr. E. WYNTHAM-WHITE The first Meeting of Committee V of the Preparatory Committee of the International Conference on Trade and Employment, took place at 5 p.m. in the Convocation Hall, Church House, Westminster, on Friday, 16 October 1946. The Wyntham-White TEMPORARY CHAIRMAN (Mr. E. ?) was happy to declare open the first session of Committee V. He explained to the delegates that the agenda had been given or Page 14 of Journal No. 4, distributed that morning. It gave him great pleasure to introduce to the Committee the members of the Secretariat, MR. BRUCE TURNER, Secretary, and MR. GEORGE KUANG, Assistant Secretary. Before proceeding to the agenda, Mr. WYNDHAM-WHITE desired to call the attention of the delegates to the Rules of Procedure which had beer adopted by the Plenary Committee, on especially to Rule 57, which provided that "Committees and Sb-Y.mtfte imgt deide to aGo rul-s &[ r degari ng tinrerpteations or translatio foo mr_ spme chcater thanthose aid odwn b y these Rules. The TEMPORAC?IA Nstatedthat the first item on the agenda was the election of a Chair. LONDON E/PC/T/CV/1 Page 2 on the proposal of the delegate for Australia, seconded by the delegate for France, MR. LYNN R. EDMINSTER (United States of America) was unanimously elected Chairman of Committee V. MR. EDMINSTER then took the Chair and expressed his gratitude for the honour which had been done to him and to his country. The CHAIRMAN then called upon the Committee to elect a Vice- Chairman and on the nomination of the delegate for Lebanon, seconded by the delegate for Chile, MR. H. CABAL (Brazil) was unanimously elected Vice-Chairman. MR. WYNDHA -WHITE suggested that at this stage it would be appropriate for the Committee to appoint a Rapporteur, unless it was preferred to postpone the appointment to a later date. It was decided to defer consideration of this matter to a later meeting. The CHAIRMAN announced that with reference to Item 2 of the agenda, an elaborated draft agenda, covering the Committee's programme of work, had been submitted by the United States Delegation and circulated to members. He explained tnat the agenda headings had been taken from the "Suggested charter for an International Trade Organization" prepared by the United States Government. Comments were invited as to its suitability as a working agenda for the Committee. MR. BURY (Australia) was of opinion that in the form presented, the prepared agenda was not sufficiently elastic. The Committee might well discuss the first three items but consideration of the remainder very much depended on the progress made by other Committees. For the present the Committee might corfine its attention to the first three items. MR.HAWKINS (United States of America) thought that there might be other topics, such as ltems 7 and 8, not so closely related, to the work of other Committees. He proposed that the Secretariat consider LONDON E/PC/T/CV/1 Page 3 the agenda, and suggest an order in which the questions might be taken up. The CHAIRMAN stated that the Secretariat had already done some preliminary work in this connection, and a suggested order of business would be circulated to the delegates at that meeting. He assmed that they would prefer to consider this matter over the week-end, so that the details of the agenda and the order in which the items might be taken up could be Discussed at the next meeting of the Committee. The SECRECTARY (. Bruce Turner) informed the Committee that it was proposed to provide three categories of records. There would, in the first instance, be a verbatim record of the entire proceedings of the Committee. This would be a restricted document, and would be circulated only to delegations and to observers from the Specialized Agencies and countries Members of the United Nations. Secondly, there would be a summary record of each meeting, containing the main arguments advance and decisions taken. This also would be a restricted document. In addition, a very brief summary record would be prepared, to be issued in the Journal of the following day. This would be available to a very much wider public. The SECRETARY would agree the contents of this brief summary with the Chairman who, at his discretion, would consult with members of the Committee. It would, however, contain no attributions of opinions expressed by any particular delegation. The CHAIRMAN suggested that, subject to the cocurrence of his colleagues, the next meeting be held at 5 p.m. on Monday, 21 October. He wished however to add that the hour of 5 p.m. was in no sense to be taken as a precedent for future meetings. MR. CABAL (Brazil), before the meeting rose, was anxious to convey his heartfelt thanks to the Committee for the honour done LONDON E/PC/T/CV/1 Page 4 to himself and his country by his election to the post of Vice- Chairman. He would do all that within him lay to further the work of the Committee. The Committee rose at 5.40 p.m.

GATT Library

vd294xx0957

Summary Record of Meetings : Fourth Meeting held on 30 October 1946 at 3.0 p.m

United Nations Economic and Social Council, November 1, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee III

01/11/1946

official documents

E/PC/T/C.III/6 and E/PC/T/C.III/1-19

https://exhibits.stanford.edu/gatt/catalog/vd294xx0957

vd294xx0957_90220042.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON E/PC/T/C.III/6 ECONOMIC CONSEIL 1 November 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT SUMMARY RECORD OF MEETINGS held on 30 October 1946 at 3.0. p.m. DISCUSSION OF SUGGESTED REDRAFT OF ARTICLE 34 OF THE UNITED - STATES DRAFT CHARTER Mr. McGREGOR (Canada) introduced the redraft which he said was based upon Article 34 of the United States Charter, but which incorporated amendments suggested by various members. He referred to the following significant points of differences between Article 34 as originally drafted and as set out in the redraft:- 1. The phrase "Whenever such practices have harmful effects on the expansion of production and trade... ... real income" corresponded to the phrase "Which thus have the effect of frustrating the purpose of the Organization ... ... real income in ArticIe 34 (1) as originally drafted. Most members would probably agree that these words represented a better criterion. 2. Article 34. (2) of the Charter had established a prime facie presumption that certain stated practices "have the effect of frustrating the purpose of the Organization". The redraft did not maintain this presumption but had retained the list of practices as those which miggt be regarded as harmful. 3. The words in paragraph 2 of the redraft "If they appear to have such harmful effects" represented a compromise between "are capable of having harmful effects" and "appear likeIy to have harmful effects". He would have preferred the latter alternative. LONDON E/PC/T/C.III/6. Page 2. 4. Some members favoured the retention of the word "service" exceptions might need to be specified when Article 40 was discuss f the word "service" r,- J- J 2 . --/ a ii u .or^s- a great improvement upon the original. He made the following points al. e ad The ed as of great importance:-e:-egarded.asoan Article 34(1) 1 of the Charter involved a o --he Creolv actcices which had th effect of frustrating ththeeffect, c rusng anization. The redraft was an improvement in in-ra-,-;- i_=C ause it implied that certain practices sometime simesain^ cs imes did not have harmful effects, this being aing a t-hs bS termination.0r iIe.= tion acie presumptin contained in Article 34 (2) of thiofthen rtic een included inaorder that d bdencludgrture would wesldsure ou on enterprises against wen homha complaihad been beenwh a ca ear and discharge the onus of proof thrown upon them?charge th othe delegkation would prefr to see this npresumption- eestio--ofld th retain pects redraft represented a substantial softereente4 aSIusant so f the Charter. He ageed with the first change he aeeritI t fir-s c not with the second. However, if the second change sco change o the securing of an agreed text, he would not press his rs hi obj.e in mFnal mm heentioned that he would prefer wordithe ngwo ar likely to have such harmful effects" as the final pharase oa I p paragraph he re2 of tdraft. FIASTD( Noway) supported paragraph 1 of the redraft. Regard paragraph 2 he maintained that it should be the task of the Organization to investingate whether practices were harmful whenever complaints were lodged. LONDON E/PC/T/C. III/3 Mr HOLMES (United Kingdom) stated that he would need time to consider the redraft but he could say already that he regarded it as a great a great improvement. He made the following observations:- 1. He sympathized with Mr. ELSTAD's remarks which he thought were thoug upon the desire to see in the Charter a provision that any t any imate complaint would be investigated.te.. egarding the phrase "`Shal be subject to investigation ..... a- reat hid ef, it ect, its -.hicironclded arararph 2 f theredraf should be given.be stated -kiohe2eara- had. to 3.h o ld--bemare omit the word n-Is i wbthe, Crter toc (1) of3e=T tedrafrize% =t-aEpc=o ..Caanbsitut therefore the:- . . -X t w - e-o_ .o- e' w4thjt.F was ne "one or more"ot enrtr t tisledi.he. rs cpomamraperci etrpriseaed" n n a-h 2b) of the rScirt. 5-d.s h- taerve-hi positionregarding the d ofefinition mercial enterprises in para=raph 2 (a) of [jg edraft.g =-p 12)" or.+. the, r~,- - ~ j'c ghopt sho.bestaed l bywncm< --- aken. ta o b* ughhndaatrta=ra Asa oundt a-raphs I a' ft were defectiovein om 2- -e sn the thex s that wher tha- former -poke of measures tod prevLet gst.czi vevpctatioi,ces anc the Itter f' :n.stgf-n A therell waslom - f amghn. Het folJo- fcrca ivstig 'ti the lteorprs sgetped th.-it` atartz cad "shaagrah; 2 shold. reahal, ve such harmful effects, be - ~ ~ t hely Sbe- subject to investigation bT hzchja p p - t ts iome".) wziL'sbaT tcjriate descns`'-.. KIM that it was The ~i t give . y. hat- ot posslble-o - , ,-.- - . i na;l~fcd3 rtble,. tth. crese:mae Mi coul done after the rmn& k Ch. chapter 7.coered. ------ ~ ~ RTnd crefrrre iA54- of thatr o the edaft. He did not agree with aragrapn2 of the lsater because he thought it should not be left t a conladant to lle.,e some- practice was, IIz<1 unless proven otheiw-se a Pin tali cas He found no evidence in the redraft that his previous contention in favour of mentioning services, such as banking and shipping, had bee considered. In due course he would introduce an amendment to give effect to this contention. Certain exceptions to Chapter V were set out in Aticle 40 of the Charter. When this Article was considered, India would press for dele tion of some of these exceptions as conflicting with the practices list in Article 34.ticie ..e ERTZ (Netherlands) thought that the redraft was a valuabl a. valua contribution to the 's wottee However, he .wever, h world requi-e time consiHis preliminary tlizi-nar whoughts -ere: - I.panTho exarnsicn of production was nou an ajectiveob-j6ativ therefore the wol" "usefu] should be inserted before t0e Phrase n exoasicn of Production" paragraph I. The expansion of prandoductimight not e Tig ht necessarily ie-adto the maintenance of high levels no real i-come. Therefore it wouli probably be etter tocrephrase the 1lst part of paragraph tu'read "whenever such-practices by their influence on expansion c production and trade and the maiin aance L..all countries of high lewels of real incomeharmful :hwi'u".effects. RMAN .;AIFULEinvited members to submit observations in writing on aft to the Ss o theec.retariat He proeosppointment int-ment of a sub- commttee to study the remaining Articleapters of Ch2V of the aCharter asked that mem bers not represented on cthme sub-omittee should submit t . I ino for wservations in.-iting for studymby the suH-cocmittee. 'he proosed t followIng as meiuersmmittee:szb-coittee: UuuMrw 7C OX nited States) Mr. McGREGOR (Canada) nMr^HCKingdom)QIS.wr-ngd=m ; r. - iTGES LEENDERTZ 3herrlands) r. DLETERLIN (France) as Chairman of Committee II LONDON E/PC/T/C.III/6 Page 5 This proposal was accepted. The Chairman announced that a suggested amendment to Article 40 of the United States Draft Charter had been submitted by the Chilian delegation, and would be passed to the sub-committee for attention. He also announced an addition to the Agenda submitted by the Brazilian an delegation. In connection with the Brazilian delegation's proposal, the Chairman stated that the concern behind. the prorosal related to the objectives of the Conference as a whole. He pointed out that in paragraph 1 of the redraft the phrase the maintenance in all countries of high levels of real income expressly paid attention to this concern. He asked whether, in, view of this, the Brazilian delegate would wish the Committee to devote a special part of its d scussion to this question. He could assure the Brazilian delegate that the Committee would not lose sight of this question. In view of the Chairman' s Statement and his assurance the Brazilian delegate agreed that the Committee would not need to devote a particular cart of its discussions to a consideration of his proposal. it was agreed the first meeting of the sub-committee should be held at 3.0 p.m. on Thursday, 31 October. The Chairan thought that it would be unnecessary to call a further meeting of the Committee, until the sub-committee had completed its work. If the necessity arose, he would call a full meeting of the Committee at an earlier date . The meeting rose at 3.20 p.m.

GATT Library

pf826zt8926

Summary Record of Meetings. Preparatory Committee Executive Session. : Third Meeting held on Wednesday, 16 October 1946 at 3.0 p.m

United Nations Economic and Social Council, October 17, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

17/10/1946

official documents

E/PC/T/EC/3 and E/PC/T/EC/1-5 E/PC/T/EC/PV. 2/1-3/CORR. 1

https://exhibits.stanford.edu/gatt/catalog/pf826zt8926

pf826zt8926_90210010.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL LONDON E/PC/T/EC/3 AND ECONOMIQUE 17 October 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT SUMMARY RECORD OF MEETINGS PREPARATORY COMMITTEE EXECUTIVE SESSION THIRD MEETING Held on Wednesday, 16 October 1946 at 3.0 p.m. Chairman: MR. SUETENS (Belgium) The Preparatory Committee not in Exceutive Session to discuss points 8 and 9 of the Provisional Agenda (Document E/PC/T/1). DR. COOMES (Australia believed that the work of the Conference should provide for the following:- 1. The acceptance by members of unequivocal obligation to take effective action to maintain and expand effective demand. 2. Positive and to industrial development of under-developed countries and the recognition of rational protection as a legltimate instrurment of devlopment. 3. Immediate and positive action designed to give greater stability to the incomes of primary producers 14. Measures to ensure that disequilibraum in the balance of payments is corrected by expansion of countries with positive balances rather than by contraction of those witn adverse balances. 5. Measures to ensure the right to protect domestic economy from the effect of a decline in economic activity abroad. Page 2 6. The right to have obligations accepted under the Charter reviewed in the event of persistent failure of countries to fulfil obligations to ailatain effective deman. He therefore proposed that the agenda should be altered as follows: (a) Paragraph 10(a) to readt "lnternational agreement relating to the achievement, meintemace and expansion of levels of effeetive internametical demand, that provision should be made for discussion under the heading (a) Ermploy- ment pellicy; (b) Full use of international resources; (e) Economic development." (b) A new topic relating to industrial development to be inserted, designed to proviate or positive aid in such development, to establish qualitative standards by which prospective development can be judged, to recognise the legitimacy of reasonable prouction as an imaturment of development. He further pro-osed, when askeIu specifically by THE CHAIRMAN, that the scope of Committee. 1. shoould be amanded that an individual Corrmmittec for industrial Cidveloarient midit be established.. mr. nehru (India) supported tl pracosac ustralial anendmnts to the agenda, speaking mor particularly on behalf of indust trially undeveloped countries. liquidation of poverty concerned India vitally: consequently industrilization had moderniztion of industry, resulting in increased production, would help enormously in the realization of this idea. In the particuirlr case of inidia, economic progrtss must be rapid, burdens must be shared equitably and products must be more rationally distributn pritvate enterprise as implied by the Trade Organization Chiarter would not suuffice alone to solvee the problem. H.E. SEMOR BOR BLAUM (Chile) with the Mr. org (Freanch) pronounced undeveloped contries should be found to expend will implement this propoul. the elemesion the Ausrgani prporaits. DR. COOLES (Austrilia), aspcially suporting the properal that might not be able to provide aurfieient prosonal for an development be added to the shold of one of the Coationes puresped. DR.SPEEMMEREX (Netherlande) felt tha it be unise to try to read any definitive conclusion on this point as he the United States of American been diasted by all delegations. the Charter mentioned had been guiation that industrial develpment might be included in the of an existing cormitt. LONDON E/PC/T/EC/5 Page 4 DR COOMPS (Australia) said he was not opposed to industrial development being embraced by the Agenda of another Committee, providecd its importine was exstabkt borne in and. H.E.N. ERIK COLPAN (Morany) believed that Conittee (Employment and Exonomic Activity) could include discession of industr-l on its and subggested Committee structure Aimat be The Charkin Ajusnme the ting until 5 p. m. (Austraia) hea text which he haped would rally Mr. clair wilcox (united States) suggested that:- 1 seratarit be unded thus:- "International relating to the anchiement and minatemen of high and stadily rising levels of offective 2. A new paragarph (b) be insorted, vis:- International agreement relating to industrial develoment. 3. Old pragraphas (b) be renmend paragraph (c) He proposed that comittee I consider paragraphs (a) and (b) and corittee II enosider paragraphs (b) and (c), these Committtees deiding for the melves whether to discuss points involved jointly or in Sub-Committess. H.. E. SENOR DON MANUEL ELEGACH (chile) agreed with NR. Clair Willox's (united sates) admendets. LONDON E/PC/T/EC/3 Mr. NEHRU (India) stated that the subject of full employment and full economic development were so distinet that they should be dalt with separately;but as this was a preparatery committee he would nevertheless accept mr. clair wilcox's amendments. mr. wunsz king (China) sugrested a separate Comittee for industrial develeoprcnt be stishdl atr te eine the possibility of coordiinatief t ruts of the discussion cf the five Corrnittees on this ceint. The eoting aâdptud il re aci amencenlnts. Dr. COOMPS (Australia) crecaid tara, (o) b arnended te rad: Establishment of Interationa Trade Organiations, as a specializd ageney of the United Nations, having appropriate responsibleities the above fields. " Mr. NEHRU (India.) supperted this propesed amendment. Dr. SPEEKENERK (Netherlands) believed special consideration should be given to countries rbuilling thir industry in the post war period. M.HERVE ALPHAND(Franc) belived cunsideration must also be paid to these ccuntris in the frent line during the war. The Metting adotd th. proposed amendment to para. (a) Mr. HELMORE (U.K.) fearing that separate enumeration of special circumstances in each country would very much complicate the agenda and prolong debate, preposed the adoption of the sugisted Conrnittee structure.. The CHAIRMAN declared discuseion closed on this qustion. The Meeting adopted adopted the draft proposals reagrding distribution of Committees, subject to the approved amendments. LONDON E/PC/T/EC/3 Page 6 The CHAIRMAN said that a Plenary Session would be held at 11 a.m. on Thursday, 17 October 1946, at which each Delegation would have an opertunity to make a general statement M. HERVE ALPHANE (prance) suggested that the U. S. Delegation should express its views first and the othe Delegations alphabetically therafter. The CHIRMAN agreed to this suggestion. the meeting rose at 6.10 p.m.

GATT Library

sp776sr4625

Summary Record of Meetings. Preparatory Committee. : First Session. First Meeting held on Tuesday, 15 October 1946 at 5 p.m. Corrigendum

United Nations Economic and Social Council, October 13, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

13/10/1946

official documents

E/PC/T/EC/1 Corr.1 and E/PC/T/EC/1-5 E/PC/T/EC/PV. 2/1-3/CORR. 1

https://exhibits.stanford.edu/gatt/catalog/sp776sr4625

sp776sr4625_90210008.xml

GATT_157

United Nations Nations Unies ECONOMIC AND SOCIAL COUNCIL CONSEIL LONDON E/PC/T/EC/1 Corr.1 13 October 1946 ECONOMIQUE ORIGINAL: ENGLISH ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT PREPARATORY COMMITTEE First Meeting held on Tuesday, 15 October 1946 at 5 p.m. On page 2 please read, in report of Dr. J.E. Holloway's speech: - "felt that it was undesirable for delegations of experts and technicians in the sense that are Government officials, to express public opinions on Government policy".

GATT Library

rf589db4521

Summary Record of Meetings. Preparatory Committee First Session. : First Meeting held on Tuesday, 19 October 1946 at 5 p.m

United Nations Economic and Social Council, October 16, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

16/10/1946

official documents

E/PC/T/EC/1 and E/PC/T/EC/1-5 E/PC/T/EC/PV. 2/1-3/CORR. 1

https://exhibits.stanford.edu/gatt/catalog/rf589db4521

rf589db4521_90210007.xml

GATT_157

United Nations NatiSns Unies RESTRICTED ECONOMIC CONSEIL 16 October 1946 LONDON E/PC/T/EC/1 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE OF TRADE AND EMPLOYMENT SUMMARY RECORD OF MEETINGS PREPARATORY COMMITTEE FIRST COMMISSION FIRST MEETING held on Tuesday, 19 October 1946 at 5 p.m. Chairman: Mr. (Belgium) . The Executive Committee in the Memoroal Hall under the Chairmanship of Mr. (Belgium) chairman, to the Conference on Trade Employment ( account E/PC/T/2) and certain other Chapters I, II, IV, and V were without discussion (Chapter III having already been at the planery session.) Chapter VI - Mr. (Czechoslovakia) proposal to add a to add a provision in Rule 31 for reco the opnion of the cases of divergence of opnion. He further suggested a provision in Rule 30 that a majority of abstentions in the votig on any involved the rejection of the motion. Mr. WYNDHAM-WHITE, Ececutive Secretary, said that the views of minorities would be duly .recorded in the Preparatory Committee reports to the Economic Social Council. As regards Rule 30, Mr. Wugenthaler's proposal raise delicate issues. The draft Rules of procedure of the prepare copy committee had been modelled on the Rules of procedure of the Economic and Social Council. After some further discussion, Mr. AUG (Czechoslovakia) withdrew his amendment. Chapter VI was than adopted. LONDON E/PC/ T/EC/1 Page 2 Chapter VlI- (China) asked, with regard to Rule 39. whether Spanish could be used in debate. Mr. WYNDHAM-WHITE Executive Seen they, replied that, if a delegate spoke in Spanish, his speech would be treated into the working languages of the Conference, but helped would Spanish sparingly. Mr. MARIO MOREIR. D. S (Brazil) whether this Rule. exctended to Portugues. Mr. WYNDHAM-WHITE, Executive replied that the rive official languages of the United Nations organization were Chinese, English, French, Russian and Spanish, while English and French were the working language. Chapter VIl was adopted. Chapter VIII was adopted. Chapter IX - Mr. CHAIR WILCOX (United States of America) missed the question of publicity for the proceedings of the Conference. In his opinion the proceedings of all Committee should in the ordinary way be private. Mr. ALPHAND (France) moved that Rule 49 should be amended to read that the meetings of the Committees should ordinarily be hold "in private" instead of "in public", leaving it to each committee to deci when they should be held "in public." Mr. LEBON (Belgium) support Mr. proposal. Mr. OWEN, assistant General Secretary, felt strongly that, if the Conference was to succeed, the Press and public opinion must be kept well- informed. The nations of the world ought to know of work that was beir done by their delegates. SENIOR DON ALBERTO INOCENTE ALWAREZ (Cuba) was in favour of the fullest publicity, and was against the proposed amendment to Rule 49. Dr. J. E. HOLLOWAY (Union of South Arfica) felt that it was undesir for delegations of experts and technicians, who were not in any sense Government officials, to express public opinions on government policy. It was indeed inconsistent with the Constitution of his country (South Africa that they should do so. LONDON E/PC/T/EC/1 Page 3 Mr. ERIK COLDAN (Norway) thought the rules, as drafted, sufficiently flexible to allow of adaptation to circumstances. He would like, however, to quit the words "exceptional circumstances" in in Rule 45. of the fullest publicity. Mr. MCKINNON (Canada) thought the majority of meeting would have to be private. Mr. WUNSZ KING (China) supporte Mr. Calban's suggestion to omit the words "exceptional circumstances" in Rule 43. The CHAIRMAN took vote on the proposal to omit the words "exceptional circumstances" from Rule 48. The motion was carried. Rule 48 was then adepted as amended. Mr. CLAIR WILCON: (United States of America) moved three new Rules to be adeed to Chepter IX on the subject of the attendance at the Conference. of inter-governmental Organizations, non-governmental agencies and observers of countries, not members of the preparatory Committee. At the suggestion of the CHAIRMAN, it was decided to adjourn the debate on these three proposed Rules until the following day. The meeting rose at 7.30 p.m.

GATT Library

cw421bc3097

Summary Record of the Meetings. Second Preparatory Committee Executive Session. : Held on Wednesday, 16 October 1946 at 11 a.m

United Nations Economic and Social Council, October 16, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

16/10/1946

official documents

E/PC/T/EC.2 and E/PC/T/EC/1-5 E/PC/T/EC/PV. 2/1-3/CORR. 1

https://exhibits.stanford.edu/gatt/catalog/cw421bc3097

cw421bc3097_90210009.xml

GATT_157

United Nations Nations Unies RESTRICTED ECONOMIC CONSEIL LONDON AND ECONOMIQUE E/PC/T/EC.2 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT SUMMARY RECORD OF THE MEETINGS SUMMARY RECORD OF THE MEETINGS SECOND PREPARATORY CORRGENDUM EXECUTIVE H+eldQ on ';1re ic .,, t 3Wc 1 1',.6 r~. i 11. .r.:. It had not yet b&.,n ,os.:il1 to' ;... . '" i:-i ':; :..rs' t..O. He hoipec thnt the le ;.c c :m.;'. :1 . u1 to PJ<. .:.'. : r. W*JU\SZ' };Ii: (Chr.in.) -i ` : tY.kç-, t ; no*e - ;;>, *: :: i2 tv the Chii-icsc snLa in,- tLh, :e:t.u`!!` -ol sl i:!i;t . v.ishcd to ror.: thz ,o;..itt. 1:. u'i:-:. -:: s Vi tE. 0V;icia lanrue-cs. It *-;ns uxùicrstooc: 111 cS;t_;C.. ~. i.. .crz<S' '* ih i il' tki.>l:it.d Statcz' proposQzs th:.t r-', z::csx: 3:.oinliz.:âc. cicz, 'citE t7horn th, Econox'ic and Sociail oc 1 cs ::s e- .ci;;ed to oQcfl negoti-tions ax-:icd nt brLin:ir.: tho..: _Ilt r 1ltionzEi,.vith th. Council, rnizht attend a11 ctic_:s. Oic thlis uOnd. tai.ipar&vr..ph 1 'ras adopte-d. Paragraph 2 as ciS E :j:.-c t th- c-ickî.rt th:.t tEce four non-governr:nintnl or uùz..tioe.. :t: ' co. u.:itt&sOult ;ere nnried in L½ ru!1 c. :r. 2`ALPIld (PranUc) thcuht ' . , :i' tE!e giropooc.l should contain ssi:îc distinction N.c..t. .:. vct véhThhirc..rAbcc-s of the United nations r.d .'hosz vt2 ;.:. not. `e thercforc proposed the follo':zing c.lInt: LONDON E/PC/T/EC .2 Page 2 `ThE REPRESENTATIVES OF GOvernments, who are not members of the Preparatory Committee but who are Members of the United Nations, can take part as observers at all meetings of the preparatory Committee and of its committees and sub-committees._ "The representatives of governments, who are not Members of the United Nations can take part as observers in meetings of the Preparatory committee and of its committee and sub-committees on the inviration of the Chairman and with the concurrence of the Preparatory Committee. He therefore preposed the following amendment ot the social paragraph o the French amendment: .sub-ccî.a.Ii; tcc ; .C,__`Il; l," Dr. h c coomb (Australia) doubted whether decisions as to the position of non-Members of the United Nations came within the purview of the Preparatory Committee. He therefore preposed the following- amendment to the second paragraph of the French amendment ; "T..e oausticr. cf tbc ci'ricze .ce o?, rorteo tnt1veo of governments not Members of the United Nations should be referred to the Economic and Social Council for discussion and advice to the Preparatory Committee." This modification of the French.amendment was accepted, and the United States proposal was adopted subject to te modified French amendment. 3. Journal. Mr. Wyndham whith, Executive secretayr, in answer to a question from Mr. maruand (united Kingdom ), felt that in spite of the changes in the rules of procedure, the Journal would still be of use to the Cor:.-rttee. It ';oul;. bri circu7.ae Gcxc.ii :iorntri;v..ithn thu^ tixies ci? v Trious .-ietinrs, raeit3l, ;;-, t.:UL2.r2 rCciz OI' r..ct$n s hJlcl in tiublio. I't ight hC> . osibl'l l-or s :ne records to b>e jîivn o? Cor:7 ttee r.ac-.lin.Ks, :>tor co.^sult-.iica n :ith tht. fhriiro:zrn a thoC socr^etories o? tr.= variouzTl 7~c2.W_ cx . c>(> oncerricu.. the chairman proposed that consideretion of the secretariat note on the proposed Committee structure (E/PC/TW.11) be adjourned until the afternoon meeting. The meeting rose at 1.45 p.m.,

GATT Library

ph450jx8234

Technical Sub-Committee II : Report on Sixth Meeting held 7 November 1946

United Nations Economic and Social Council, November 12, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

12/11/1946

official documents

E/PC/T/C.II/46 Corr.1 and E/PC/T/C. II/38-48

https://exhibits.stanford.edu/gatt/catalog/ph450jx8234

ph450jx8234_90210258.xml

GATT_157

United Nations ECONOMIC AND SOCIAL COUNCIL Nations Unies CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED LONDON E/PC/T/C.II/46 Corr.1 12 November 1946. Original: English. PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT TECHNICAL SUB-COMMITTEE II Report on Sixth Meeting held 7 November 1946 Corrigenda to E/PC/T/C.II/46 as follows: Page 14, paragraph 4 First line of paragraph between words "was" and "based" insert an one case". Fourth line of paragraph between words "not" and "provide' insert "appear to" .

GATT Library

bc786qx8476

Technical Sub-Committee of Committee II : Comments by New Zealand Delegation Respecting 9 of United States Draft Charter

United Nations Economic and Social Council, October 30, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

30/10/1946

official documents

E/PC/T/C.II/28 and E/PC/T/C. II/24-38/CORR. 1

https://exhibits.stanford.edu/gatt/catalog/bc786qx8476

bc786qx8476_90210236.xml

GATT_157

United Nations Nations Unies RESTRICTED CONSEIL LONDON E/PC/T/C.II/28 ECONOMIC 30 October 1946 AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT TECHNICAL SUB-COMMITTEE OF COMMITTEE II COMMENTS BY NEW ZEALAND DELEGATION RESPECTING 9 OF UNITED STATES DRAFT CHARTER In view of a possible conflict with certain procedures in operations in new Zealand, pargraph 1 of Article 9 of the United States Draft Charter in its present form would not, it is considered, be acceptable to New Zealand. The following observations are made for the purpose of indicating certain difficulties in that connection. It is understood that it is proposed that the provision in that paragraph relating to the procurement by governmental agencies of supplies for public use should be made the subject of a separate article and considered accordingly along with the provision relating to that matter in Article 8 of the Draft. Comment on that question is accordingly withheld in the meantime pending an opportunity to consider the proposed provision. The following outline is given- of the procedures referred to in the first paragraph hereof:- Film Hire Tax. At one time a. revenue duty was imposed at time of importation on cinema films imorted into New Zealand. This proved unsatisfactory and it was decided a number of years ago to abolish the import duty and substitute a Film Hire rireu Tax representing a percentage of the net monthly rental receipmts fro sound-pictlmure fis. The rate of tax on British films is less than that on foreign. films. Cinema films are at present being produced. in New Zealand to a mvery sall extent only mpand corise almost exclusively documentary, educational and LONDON E/PC/T/C.II/28 Page 2 news reals. Films. made wholly in New Zealand are exempt from the froi.' the ld seem that under the Article in question as at presention as -lt resent tax could be levied on imported film than the taxr t;x coulrI bAportJ;L fill. than the tux Zealand. However,in view proiuc(A in Ne'; Za1and. Hoviever, in vi Zealand, it would presumablyuction in Nuw Zualanid, it vould presuwmtbly nds the principle embodiedi,, I)roc3lurc fo'llored offends th,. irinci eïibodied in th_ propcs:,l ,'tici. Uam aaufacltvs:r;L Tlo`bacdo;f. ng in ith a viî; hro.: ntin! th. developmunt of tob:a.cco groi ulation taht .'or local cft CO lo.' it is I'rovid.A by regulatiohat than cco ..ianufcturçrz in .?ed-«.nd sh1ul use not less thrn a certain rown leaf in .t 1r;s.nt tihirty 1,ur cont) of INewa ealaid groyrn laf es.production per yüucfrnaof fet,.n:ed tob-acco and cigaret procecdurem s adortin ordr to :.nsurthnt thc roducrs i.tight vnggie in th groxIng,al oI5 tobcinvolving considerable capital outl, or leaf coifiderit ihat a rrrkut \ould b. :a.viila-batisfactory quality. for reich econlynoai.ma-rriosr_ guaanteed. Thure isoest ^ial ber d it anufactueurs hei Niwe:,ar. :nd it is on thuse ti groïrrs depend fpresentrkt for the crops. The resentt procedure ensures that e-ac maessacturea shalj. utilize rot luja than f certain proportion of doi.iesteo a;2' . It iLr' found in th- prst that notwithstanding a margin of prufcrcnc, rmesticd under the tariff for doicstio leaf, riousnLustry crd a rather tr;carious existenee. Leaf is produced on a Large nuï.1b oferelatively siill holdings. Th; industry provides desiraben uatanyoyiam Wor d-Seivicezn and i.rnfroia',rld Wïr I as ec11 ;sefroa ehe warinecently cncludLd are inaged la production. The Oovernlunt nrs acordming;l particularly arxious to safeguard the interests of the yroducurs. Thky 2re desirous, therefore, of continuing the present prost dur: .hibh biaS Lound the mst practicaole in the ircounstances. LONDON Page 3 E/PC/T/C.II/28 Wool Packs (or Bales). These articles which are used as containers for woo ol for export, are produced iewn Naland Ze mfroocally grown flax , l Dro-in flax fibre. The mnufacticles was undertaken in this national are ture of suchs un&_rtxken in th}e natiolnl interest land involvi or srble cz1it.l .utlyfornt. The dustry pgroved oef i e w vwalealand nar-ùee vlu hroujout thulatc;r Nc-=na isablC toments produce only portion of its r:uireaas, however, the remainder India(packs mdcf juatae) buin i:Tort.d fro: InNouty is pyVibl of the fact on th i>ec1 artlol ::n2 in ievi nfct that they are used ary product ine econnection ith th o::crt cIf L ,ri. tac is good reason at tossiblehweir cost should 'c its loew s psuibk Yy, be duty. accoardinvent,gly, they shoulr.t b.. subject In cy eat, since the rtmportaicleswo are -rted, any duty y^yb on iLgiort;ouldn econforiety vt expertation..nh gn rrnl pctice, bo reundsd o e.icn. UiurtherLore, twh, const.-atly flotuatties of jute -..o in any o fix a cas rodcrwit exwîrl;ev7 >- ?IfiCut tan aff vhich-uou1aord stabieity todure wocal industry. Th, proceure hich has been followed, therefoain h.m er n reqally a cert:rin iu b of locGaljy poduced red wito ae umbli^zf mooaarc *.th x nui.er o? iLported packs. This has Oivcw general satis'aotion.aIt vill be appreciated. thLt no greater oe imported rlesser nuibryer omeetf acks ar.iorted than eces to ie.;t requirements; er other methods of achieving the ehthe procedure hn r.-7nolatagv evecetho1is of achieving tha purose, :d in the circunsances it is subi..itcd tt provision should be.nde to -I)r-tit of its btin, Unassrla'.doVuhicle. X[ith a vie.7 to encoourginion o rotor vehicles in an unssenld conrdimployment in Newtion, therhby.proiding avenues fo' eilont in Now icles which are importedcih Zealnnd, provision xnade in l93!-. wherob vàich are irqorted in an unassebled condition al on iach certain Iroesses would be prforn in Nqev elan *nd crtain locally j)rodud. materals would be used in thir coxuetion d be-itted at concessional rates of ed in duty compared ith thoraes ptybDe n vehicles i;:.od in ompletely LONDON E/PC/T/C.II/28 Page 4. built-up form. The rate of duty payable under the British Preferentialc:rential Tariffem oen unascsbld svenhiles eipe ocenlyad. val. and on fiv r t ,. and ; built-een per cent ad. val. It will be obvious,.Wr ent v . i;ll b1se obvious,> asures were adopted requiring that .vasurç ; .atcIl r;:quirirl th oduced materials, e.g. upholstery .rc;1uavl z.lteri.ls, ,. u1ihcstcry o low duties, the , 'bhiah ouldubject te lo.-7 lutics. t tariff wsuld ere are good reasons for not rt tio.. Ti.,r_ -re COOCI rcnsons for eepurpose even if that wereachicv.r th ,ur. ose cven if thnt viae tors, it is necessary to makero:; other inctors, it is r.ncssary to ake ditions, and the tariff is ;:et chln4nl condition ^rd thu tari!fr i es. It wiil be seen that ch cirauistunccs. It '-.ill bc sen thnt ist the importation of motoron is to issist t1w i;.Uertation cf i.n vehavailable thereonicles thruh thu cincsins in duty nv.ilathereon. It is conflict with the not clar that tha.durk in cluestion is in confh tho it is consideredprovisions f thc,ro, osd rrtic:l , but in any cr.sc provision ultimatelythnt its ,-rintcnancc ,:h u.ll not b. erecludc>l bymately de. Each of th thro prociars outlincs aoYe uas thirobjectives npower wthe utilization of meial rcsorcus ail :nnoerhich are in accord ' the general objectives of tha IO prol.ess In this connection it is necessay to hwe rc:r to the fact that the question. of industrial dloev.-:ient is tnth_ct of consideration by a joir.t coittwuueof Ce,,no:.-eurier-Ztate ,: II. It .ol se.,erof'r,hnt he of Article 9 of the United States Draftsfinal sentence of *aralrmh 1 the Unitad St^ts Draft st ommittee.be considered in rcltin to the f'indnrgs f that Ccl.-. ntime that Subject to that observation it is suggste, a lu anti at cwoenesideration right be iven to thciakXinj,f provisions vvrb Meieras hempleying-,,t tire f ziZnur of the promised Crter, tre uisplyin or o ÏiiGht er-aftr find it n-caesaytto uieloprocedures not oclosel confori.r to the provisions decided uirnregarding. interrnal e Organization thereof,fo,treatnt of iieortd ,oCs, silould. ranisatn thereof, LONDON E/PC/T/C. II/28 Page 5. giving full particulars and the reasons why it is rs and th rmosans *Nhy it is necessry to eeutoilize thi.ie,m Sanddw 1r cee tascss tho nattrvith to bers whose interests might be affected.Ornization or tvh iR. buinterests might be affected.

GATT Library

zt943rr3589

Technical Sub-Committee of Committee II. Comments by the South African delegation and the Australian delegation on Sub-Committee report E/PC/T/C.II/54 of 16 November 1946. : COMMENTS BY SOUTH AFRICAN DELEGATION

United Nations Economic and Social Council, November 20, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

20/11/1946

official documents

E/PC/T/C.II/54/Corr.5 and E/PC/T/C. II/48-54/Rev. 1

https://exhibits.stanford.edu/gatt/catalog/zt943rr3589

zt943rr3589_90210268.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON E/PC/T/C.II/54/ ECONOMIC CONSEIL Corr.5 AND ECONOMIQUE 20 November 1946 SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT TECHNICAL SUB-COMMITTEE OF COMMITTEE II COMMENTS BY THE SOUTH AFRICAN DELEGATION AND THE AUSTRALIAN DELEGATION ON SUB-COMMITTEE REPORT E/PC/T/C.II/54. OF 16 NOVEMBER 1946 COMMENTS BY SOUTH AFRICAN DELEGATION Page 5, paragraph 2(b) Under the heading of "discriminatory restrictions", South Africa desires to be associated with New Zealand in the reservation on the assembly of motor vehicles. A reservation must also be entered in respect of groundnuts. Page 11, lines 2 to 6. (Several reservations .............. normal tariffs). In view of the fact that South Africa is not mentioned in this connection in any of the documents issued on the deliberations of the Sub-Committee, it is desired that her reservation be now duly recorded. Page 16, paragraph (d), line 3 Amend word "excepts" to read "acceptsts". Page 18, paragraph (b) South Africa desires to support Australia in this proposal regarding the revision of. legislation. LONDON E/PC/T/C.II/54/Corr. 5 Page 2 COMMENTS BY AUSTRALIAN DELEGATION The Australian Delegation has considered the Draft Report of the.Technical Sub-Committee of Committee II (E/PC/T/C.II/54) of 16 November 1946 and considers the report correctly sets out the points o. agreement and which were indicated during the discussion. Nevertheless, Australia feels that the document in its present form offers. insufficient guidancé to the proposed January Drafting Committee to enable it to prepare suitable alternative draft Articles for discussion at the second meeting of the Preparutory Committee. Atustralia accordingly proposes the following amendments for consideration by the Draftin, Committee: Amend Paragraph 2 of Article 9 (page 5 of Rapporteurs Report) by addition of the following words at the end of the paragraph:- "Unless it is demonstrable that such requirements are * less restrictive or less onerous in operation than other. permissible practices, such as tariffs and subsidies, * of all of which matterss the Organization shall be the judge." Amend Paragraph 6 of Article 10 (page 10 of report) by the addition at the end of the paragraph of the following sentence: ."Any member country shall, however, be free to maintain its existing requiremenents of direct consignment (expedition directed ) in respect of any goods in regard to which such direct consignment is a requisite condition for entry of thé goods at concessional rates of duty, or has relation to the country's prescribed method of valuation for duty purposes. Article 11 Wherever the .words "like or similar product" occur in paragraph 1 of Article 11, the words "or similar" be indicated in square brackets, LONDON E/PC/T/C.II/54/ Corr.5 Page 3 leaving consideration to be given to the price at which the like product is sold. Faragraph 1 (b) of Article 11 to be amended to read:- "(b) In the absence of such domestic price, the highest comparable price at which the like product is sold for export to any and every purchaser in any third country in the ordinary course of commerce." It be recommended to the Drafting Committee to include provisions to enable member countries to protect themselves against other forms of dumping, such as freight dumping and dumping by deprecia- tion of currency. Article 12. Page 19 of Rapporteurs' report. It is noted that the words "rate of exchange either one or more than one rate for each dual - or multiple -" have been omitted (apparently in error) after the word "multiple" in the penultimate line of paragraph 2 (c) on Page 19. Articlee 13 Paragraph 2 (page 21 of Rapporteurs' report) to be amended to read: - 2. "Members undertake, on receipt of a request from another interested member country, to review any Customs Laws and/or Regulations the subject of the specific request, with a view to giving effect etc. (balance of paragraph 2 as per origanal drat). Article 14. Paragraph 3 to be shown in square brackets, indicative of the fact that the paragraph is not acceptable to the majority of the countries present at the Conference. LONDON E/PC/T/C.II/54/Corr. 5 Page 4 Paragraph 6 amend by adding at beginning of paragraph the words "As a general rule", and replacing the word "shall" by the word "should" in first line. Article 15 Paragraph 3 to be placed in square brackets to indicate that a majority of the countries present do not favour the giving of notice of intention to impose legislative increases in rates of duty, but have no grave objection in regard to administrative changes in practice. Article 17 Amend by addition of an additional sentence reading:- "Provided that a campaing in support of the use or consumption of products of national origin or manufacture, and not directed against the products of any specific country, shell not be deemed to be a breach of this undertaking." Article 32 Preamble. It is recommended that the Drafting Committee prepare a suitable addition to the preamlbe of Article 32 on the lines suggested by the United Kingdom (pp. 32/3 of Rapporteurs' report) in regard to discrimination and restriction on international trade.

GATT Library

fv638ch1904

Tentative list of intergovernmental and non-governmental organizations

United Nations Economic and Social Council, December 21, 1946

United Nations. Economic and Social Council and Economic and Employment Commission

21/12/1946

official documents

E/PC/T/EC/5 and E/PC/T/EC/1-5 E/PC/T/EC/PV. 2/1-3/CORR. 1

https://exhibits.stanford.edu/gatt/catalog/fv638ch1904

fv638ch1904_90210012.xml

GATT_157

United Nations Nations Unies RESTRICTED ECONOMIC CONSEIL LONDON AND ECONOMIQUE E/PC/T/EC/5 SOCIAL COUNCIL ET SOCIAL 21 December 1946 ORIGINAL: ENGLISH ECONOMIC AND EMPLOYMENT COMMISSION TENTATIVE LIST OF INTERGOVERNMENTAL AND NON-GOVERNMENTAL ORGANIZATIONS A. TRADE AND PRODUCTION 1. International Trade Organization (International Conference on Trade and Employment ) 2. International Bureau for the Protection of Industrial Property 3. International Bureau for the Publication of Customs Tariffs 4. International Bureau of Commercial Statistics 5. International Wine Office 6. International Wheat Advisory Committee 7. International Wheat Council 8. International Tin Committee 9. International Rubber Regulations Commitee 10. International Sugar Council 11. International Wool Secretariat, London 12. Inter-American Trade Mark Bureau 13. Inter-American Development Commission 14. Inter-American Council of Commerce and Production, Montevideo 15. Inter-American Coffee Board 16. Committees and Boards of Commodities in short supply: (a) Combined Tin Committee (Members: United Kingdom, United States, Netherlands, Belgium, Canada) (b) Combined Rubber Committee (Members: United Kingdom, United States, Canada, Netherland, France, Belgium) (c) Combined Hides Control: (Members: United States, United kingdom, Canada, France, and certain other consuming countries) LONDON E/PC/T/EC/5 Page 2. (d) Combined Cotton Textiles: Committee: (Members: not available at the moment) (c) European Coal Committee B. COMMUNICATIONS 1. International Bureau of the Universal Postal Union, Berne 2. Bureau of the International Telecommunication Union, Berne (a) International Radio Consulting Committee (b) International Telephone Consulting Committee (c) International Telegraph Consulting Committee 3. International Office of the Postal Union of the Americas and Spain (a) International (Postal) Transfer Office 4. International Radio Office 5. International Institute at Rome for the Unification of Private Law C. FINANCIAL AND MONETARY 1. Each - International Settlements""i'2 tar-American Bank 3. 4. I*tcz.tiD±j. Bar; for _4. IInternational Bank for Reonst D. PDOD `INl :.GRICULTU 1. Poca rL-.l ..gricilturFoFood and Agriculture Organisatio of t Yashingt: (D.CW 2. int3Dt..1 Sec-%sInteInte .3. t :-L , Inistitutc, ,3. 3. Pan-American nst LONDON E/PC/T/EC/5T Page 3 (FOOD AND AGRICULTURE. Continued) 4. Combined Food Board: (a) Angols and Tarteric Acid Committee - (Members: United States, United Kingdom, Canada, France) b) Beans and Peas Committee (Members: United States, United Kingdom, Canada, Brazil, Argentina, Chile, France and UNRRA) (c) Cerelas Committee (Members: Canada, United States, United Kingdom, India, Australia, Argentina, France, Belgium, Norway, Netherland, Denmark, Brazil and UNRRA) (d) Cocoa and Spices Committee: (Member: United States, United Kingdom, Canada, Australia, Belgium, Brazil, France, Netherland, India, New Zealand, South Africa, Southern Rhodesia, and UNSR.) (e) Dairy Products Committee: (Members: United States, United Kingdom, Canada, Denmark, Belgium, France, Netherlands and UNRR). (f) Fats and Oils Committee: (Members: United States, United Kingdom, Canada, Belgium, France, Netherlands, Norway, Denmark, Argentina, Brazil and UNRRA) (g) Feeds Committee: (Members: United States, United Kindom, Canada, Belgium, Netherland, Denmark, Brazil, France, Norway, Argentina and UNRRA) (h) Fertilizers Committee: (Members: Canada, United States, United Kingdom, France, Norway, Belgium, Netherlands, Denmark, Chile and UNRRA) (i) Fishery Products Committee: (Members: Newfoundland, United States, United Kingdom, Canada, Norway and UNRRA) (j) Fruits and Vegetables Committee: (Members: United States, United Kingdom, Canada, France, Greece, Turkey and UNRRA) (k) Neat and Neat Products Committee: (Members: United States, United Kingdom, Canada, Belgium, France, Denmark, Netherlands, Argentina and UNRRA) (l) Rice Committee: (Members: United States, United Kingdom, Canada, Cuba, China, India, Netherlands, France, New Zealand and UNRRA) LONDON E/PC/T/EC/5 Page 4 (m) Seeds Committee (Members, United Kingdom, United States, Canada, Denmark, France, New Zealand, and UNRRA) (n) Sugar Committee (Members: United States, United Kingdom, Canada, France, Netherlands, Cuba and UNRRA) (o) Tea Committee ( Members: United Kingdom, United States, Canada, Australia, Netherlands, India, New Zealand, South Africa, Southern Rhodesia and UNRR.) (p) Vitamins Committee (Members: United States, United Kingdom, Canada and UNRRA) E. GENERAL ECONOMIC QUESTIONS 1. International Statistical Bureau 2. Inter-American Financial and economic advisory committee 3. Pan-American Resources Commissions 4. Inter-American Statistical InstituteOn Pan-American Union: Administrative Division concerned with Economic Questions 6. Middle East Statistical Bureau, F. LABOUR 1. International Labour Organization, Montreal G. TRANSPORTATION L 1. ProInternational Civil Aviation Organization MontrealDntrial ternational Commission for the Maintanance of the Lighthouse Itirrousc rtel:-';x Spzrtl nt International Association of Navigation CongressesConireSsCn nt International Association of Road CongressesEI Cone: r tional Commission for Air Navigation 6. International Hydrographic Bureaueau International Technical Committee of Aerial Legal Expertsl Eerts American Highway OrganizationstrLî z n-American Railway CommitteeCor-i- LONDON E/PC/T/EC/5 Page 5 (TRANSPORTATION Cont'd) 10. Permanent American neronautical Commission 11. Central Commission on the Navigation of the Rhine 12. European Commission of the Danube 13. International Commission of the Danube 14. Permanent Technical Hydraulic System Commission of the Danube 15. International Elbe Commission 16. International Commission of the Oder 17. International Hydrographic Bareau 18. International Conference for Promoting Technical Uniformity on Railways 19. Central Office for International Railway Transport 20. European Central Inland Transport Organization.tior, ited Maritime Consultative Council Washington and Londonlo EDUCATION rON ed Nations educational, Scientific and Cultural Organi l REI. E J. 12ILUn ionpDsed Health 0rIx.i-.tior eau -,.r-.rican S .nitory Lur-etu icial and private) ORGANIZATIONSr.i-off-ici~ `1 naw ......... NON-GOVERNMENTAL (Semi-official a 1. Transport: (a) Internatior± Jl ,.ir TrcJfficù -csDcnl Air (b) IvitirnationaJ. L;r.International Legal Cmmit (c) InternaticrA(c) International Aero (a) Permanent IOn(d) Permanent International Association of (e) InternationLl1 M.b(e) Internatioal M (f) Internati.orn-(f) International Sipp (g) International Shipping Fueerrtion LONDON E/PC/T/EC/5 Page 6 (NON-GOVERNMENTAL ORGANIZATIONS Cont'd) (h) The Baltic and International Maritime Conference (i) International Mercantile Sarine Officer's Association (j) International Railway Congress Association (k) International Railway Union (l) International Railway wegon Union (m) Union for the Use of Carriayes and Vans in International Traffic (n) International Committee of Transports by Rail (o) Union of Railway Administrations of Central Europe jU2'îhS rnational Conference on Goods Trains Time-Tablesirs fi.;ahIs Conferences on Time-Tables (r) International Union for the Issue of Combi (s) IrterrttiDir InterInternational Association of Manufacturer of R 1,7otor (t) IMoor (u) P'T'er îr.Permanent International Association of Road ongressesrma ) International Federation of Coomerciall otor Users.DUsclrs. rnational Touring Association.Ci t1iDr ral Council of International Touring12DL;C._TDUrir£ nal Chamber of Commerce (and its Committees for the CDxLiteS for t s of transport)it s ol' tr:ilzprt) Container BureauîCLi C:ont:i.^cr Pu-.u adcasting UnionLl.r iistin,- Urn less CommitteetiDor;al iiW.s Iai Mearitime RadioCommitteeti.::.e ; kc3irs Crnitte of Scientific Radiotelegraphy ti'ion visory Committee on Televisionsii LONDON E/PC/T/EC/5 Page 7 (NON-GOVERNMENTAL ORGANIZATIONS Cont'd) (hh) World Power Conference (and affiliated to it, International Committee on large Dams) (ii) International Conference on the Principal High-Tension Electrical System (jj) International Union of Producers and Distributors of Di' ctric Power-;e ) International Meterological Organization(i l) International Statistical Institutec brXtpiD national Transport 2. L£ibcl: ïiDrld FUânr'.tiDr it. M.ler:Dbers: Unit~?d. States, )

GATT Library

xx772kx5918

Tenth Meeting Held on 9 November 1946 at 10.30 a.m

United Nations Economic and Social Council, November 11, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

11/11/1946

official documents

E/FC/T/C.V/26 and E/PC/T/C.V/19-31

https://exhibits.stanford.edu/gatt/catalog/xx772kx5918

xx772kx5918_90220122.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL E/FC/T/C.V/26. 11November 1946. AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERNECE ON TRADE AND EMPLOYMENT COMMITTE V Tenth Meeting Held on 9 -November 1946 at 10.30 a. m Chairman: Mr. L. R. EDMINSTER (United States) The CHAIRMAN said that the first item on the Agenda was the Report of the Sub-Committee on 11"Ammendments and Withdrawals" (E/PC/T/C.V/W. 3). He called upon Mr. PALTHEY (France), Chairman of the Sub-Committee, to explain the various alterations proposed in the original draft of articles 75 and 79 of the suggested Charter. 1. Articlee 75 -Ammendments to Charter Mr. PALTHEY (France) stated, with reference to Article 75, that the Sub-Committee had examined three different questions. First, whether the Charter should attempt a precise, definition of the conditions under which new amendments should be presented to the Conference. In this connection, it was thought preferable to leave such conditions to the determination of the Conference itself in accordance with its rules of procedure. Second, what majority should be required for the adoption of any amendment. In this connection, it was decided to recommend that the present United States draft provision be retained. The third and main question was the extent to which new amendments should be binding on the minority which. did not accept them. In this connection, the Sub-Committee thought it best to recognize, as a general principle, that amendments should be binding for all.In those cases where new obligations are involved, however, it was proposed that the Conference shall determine E/PC/T/C.V/26 Page 2. whether such amendments should be binding on all Members and that any Member may then choose either to accept or to withdraw from the Organization. In its proposed redraft of Article 79, the Sub-Committee had recommended a reduction in the period during which a Members must remain in the Organization, from five years to three, together with a reduction from one year to six months in the period of withdrawal notice to be given under paragraph 2. Mr.LAURENCE (New Zealand) asked for clarification of the second sentence of paragraph 2 of Article 75. He presumed that the decision of the Conference to impose the obligation to withdraw was to be taken by a simple majority votes .It was a question of whether such a decision was not of sufficient importance to call for a two-thirds majority. He wondered also, whether a conflict might not arise if, within the three year period provided for in Artlcle 79 (1), an amendment were introduced which any Member was not prepared to accept. MR.PALTHEY (France) replied that it was envisaged that an amendment would firt be adopted by a two-thirds majority; the question whether it was to be binding on all Members would then be decided by a simple majority. He did not consider there was any conflict between the freedom to amend the Charter at any time permitted under Article 75 and the obligation to remain in the Organization for three years provided for in Article 79. The latter was an Article of general scope which would apply cray insofar as it was not modified or qualified by other specific provisions. It was the thought of the Sub-Committee that freedom to withdraw for reasons other than those connected with amendments involving new obligations, should be preserved. Mr. ALAMILLA(Cuba) agreed with the French Delegate's explanation. The second paragraph of Article 79 would only apply where withdrawal occurs, after the three year period, in accordance with the general terms of Aticle 79. The right of a Member to take advantage of the escape provision of Article 75, within the three year period was clearly provided for. The LEGAL OFFICER suggested that tne New Zealand Delegtes point might be resolved by replacings the word "nevertheless" in the last : sentence of paragraph 2 of Article 75 with the words "notwithstanding the provision of paragraph of Article 79." Then in the first paragraph of ,Artilce 79, the words ".In addition to the provisions of paragraph 2 of Article 75" would be deleted. This amendments was agreed to. Mr. DAO (China) asked whther the terms of Article 30 would not be an conflict wlth thec amended terms of Article79. Mr.KELLONG (United States) replied that in drafting the Charter, it had been felt that the provsiosns of Artcle 50 could apply at any time, even during the initial three year period, since it involved action on the part of the organizations as a whole. If the Organization were deliberately to take steps which would warrant a member's wthtdrawal, the matter would presumably have had sufficient consideration. To make the position quite clear, a reference back to Article 30 could be inserted in Article 79. Mr.DAO (China) suggested that the phrase "Except as otherwise provided" might be added at the beginning of Article 79. Dr. ALAMILLA (Cuba thought that to be consistent, an apropriate reference should be included in Article 30 to make at explicit that withdrawal in 60 days was permissable notWithstanding the provisions of paragraph l of Article 79. Mr. KELLOG (United States) suggested that,since other points of the same nature would probably arise, the remarks made on this matter be passed or to the Interim Drafting Committee for their consideration. Baron van TUYLL(Netherlands) aseked Mr. PALTHEY (France) if the Sub- Committee had considered the possibility or providing for new obligations to enter into force only after the laps of a certain perriod after their LONDON E/PC/T/C.V/26 Page 4. acceptance by two-thirds of the Members. As matters stood, new obligations would take effect for some Members before taking effect for others, Further- more, his suggestion would have the advantage of giving , Members time in which to take any legal or administrative measures that may be necessary. Mr. PALTHEY (France) replied that the Sub-Committee had not considered this particular point. Generally speaking, the Conference would have to determine how new obligations should be implemented and would have to prescribe a reasonable period during which. this could be done. Baron van TUYLL (Netherlands) inquired whether the French Delegate meant that this question could be left for the determination of the Conference in the Rules to be drawn up under paragraph 4 of article 75 as amended? Mr. PALTHEY (France) replied that it was difficult to envisage how an amendment would be implemented. This might differ with each amendment, depending on its nature. It was necessary to envisage a transitional period which would be, in effect, part of the amendment. There being no further comment, the report of the Sub-Committee, as amended, was agreed to. 2, Article 76 - Interpretation and Settlement of Legal Questions. The CHIRMAN invited Mr. Alamilla (Cuba) to give the view of his Delegation on paragraph 1. Mr. ALAMILLA (Cuba) said that the success of the International Trade Organization would depend on full representation by the Members of the United Nations. The Organization now consisted of fifty-one nations, of which seventeen used Spanish was their exclusive official language. They constitued the largest body of countries using a common tongue: and it would be appropriate that a Spanish text of the International Trade Organization Charter should be equally authoritative with the Eniglish and French texts. LONDON E/PC/T/C.V/26 Page 5. The CHAIRMAN upon the Legal Adviser to give an Opinion on the point. Mr. REN??F, Legal Adviser, pointed out that paragraph 1 of Article 76 was bound up with the question of what will be the official language of ITO. A simiIar paragraph of the United Nations Charter (Article 3) had been taken *as an indication that the official languages of the United Nations should be Chinese, French, Russian, English and Spanish. He would consider the Cuban request an any similar request which the Chinese representative might make, as justified. It ??s ???reed that the Chinese and Spanish texts should be included in paragraph 1 of Article 76 and should, be regarded as equally authoritative witlh the English and French texts. Mr. ???? (India) asked if there was any particular object in retaining the second sentence in paragraph ? of Article 76 to the effect the "The Executive Board may require : preliminary report from any of the Commissions in such cases as it is ?eemed appropriate", since the services of the Commission would always be at the disposal of the Executive Board. Mr. KEL??GG (United States) said that paragraph 4 of Article 60 did, in fact, cover the same ground. It was felt, however, that the Commissions would play an extremely important part in furnishing the Executive Board with well considered opinion of experts in cases of disputes. Hence it was thought wise to reiterate this idea, in connection with Article 76. Mr. HOUTMAN (Belgium) called attention to a srnall error in the French text - the use of the word "justiciable" for "justiciaire", He observed that paragraph 2 stated that "any justifiable issue arising out of a ruling of the Conference with respect to the interpretation of sub-paragraphs (c), (d), (e) or (k) of Article 32 or paragraph 2 of Article 49 may be submitted by any party to the dispute to the International Court of Justice". Why had sub-paragraphs (a) and (b) of Article 32 ?een omitted in this connection? LONDON E/PC/T/C.V/26. Page 6. Mr. KELLOGG (United States) said that paragraphs (c)., (d), (e), and (k) had been singled out for special treatment, as they dealt with matters of security and it was thought that every nation would want an unrestricted right to take such matters directly to the Court, if necessary. The thought behind the rest of the paragraph was that the ITO should, as far as possible, itself settle all disputes resulting from its operations. Thus it was provided that all questions would be referred to the Conference. If the Conference decides that a question is (a) very important and (b) of a legal nature, suitable for decision by a court of law, it would be passed on to the International Court. Even the party which wins its dispute in the Conference is obliged to go to the Court on the appeal of the other party. In response to an observation by Mr. HOLMES (United Kingdom) that Article 32 had not been passed on by CommitteeII, the CHAIRMAN expressed the opinion that this need not preclude a provisional examination of article 76 on the understanding that the Committee would return to it later, should this prove necessary. Baron van TUYLL (Netherlands) had some doubts about the phrase "if the Conference consents" in the twelfth line of paragraph 2, and requested *an explanation from the United States Delegate. Mr. KELLOGG (United States) said that two decisions in addition to that on the substance of a question, would be required of the Conference. On the one hand it had to decide whether the dispute was of a suitable nature for the International Court of Justice to deal with ? and secondly whether the dispute was of sufficient importance to justify an appeal to the Court. The United States legal experts had foreseen a considerable amount of future work for the International Court of Justice, and had considered that some reasonable measure of protection should be afforded the Court through the inclusion of appropriate provisions in the constitutions of various specialized agencies.... ............................. . '.';....... 'n.. , .,,.4......... .'..-7- LONDONM /PC/T//.V./26': Page 7 Baron van TUYLL (Netherlands) commented that in a Conference composed of goverment representatives, some political decisions might be taken and it would be unwise, in such cases, to prevent aggrieved governmen?s appealing to the Internation?l Court of Justice. A happier solution would be the establishment by the International Court of Justice of ? special Chamber to hear commercial cases. A special sub-court for trade disputes would eliminate all objections. Mr. HOUTMAN (Belgium) agreed with the Netherlands Delegate. The ITO could not but benefit by submitting as many cases as possible to the Court, especially if a special chamber were established to deal with them. Dr. ALA????A (Cuba) also agreed that the phrase "if the Conference consents" should be deleted. To protect the Court against too crowded a docket, however, he suggested that a specific qualification to the effect that only very important issues should be submitted, be written into the Article. . KELL??? ( Unidte Statesr pe-lying to the points raised byhe Netherlands Delegate said first, that under the United States proposals, the Commissions would be international' exports with international responsibility, and would function as a court of first instance whose decision would be based entirely on non-political considerations. Secondly, it was hoped that ITO would enjoy great prestige and it was desired, therefore, that as possible, it should retain within Itself the means of dealing with commercial disputes. Mr. MALIK (India) though sympathizing with the principle underlying the Netherlands proposal, thought that responsibility for settling disputes of a commercial nature should remain with the Conference itself. He suggested, however, as a possible solution, that the phrase in question be amended to "with the consent of the Conference which shall not be unreasonably withheld. " LONDON E/PC/T/C.V/26 Page 8 Mr. BURY (Australia) stated that his Delegation would regard any tendency to treat the Commissions as a court of first instance, performing judicial functions., as a very dubious proposition. He did not think the Conference should be given power to prevent certain kinds of disputes from being referred to the International Court of Justice. Mr. RENOUF, Legal Adviser, stated that Article 26 of the Statute of the International Court of Justice would allow for the setting up of a * special chamber to consider commercial cases. It seemed somewhat peculiar to invest the Organization with a jurisdiction which is strictly judicial when it comes to judging complaints and deciding whether they should be passed on to the International Court. There were really no legal considerations involved, however, and the right of appeal could be restricted in the manner proposed if it were so desired. Mr. PARANAGUA (Brazil) said that, decisions of the Organization on matters within its jurisdiction should be final. When a question of interpretation or some legal question arose, it would best be referred to the Court. But decisions of a commercial character should be the sole responsibility of the Organization whose decision should be immediate and final and not suspended pending appeal to the Court. The CHAIRMAN proposed the following agenda for the next meeting of Committee V, to be held at 10.30 on Saturday, 9 November: (a) Conclusion of the discussion of Article 76. (b) Discussion of Article 78, paragraphs .3 and 4 (c) The appointment of an adhoc drafting Sub-Committee, and .(d) the appointment of one or more Rapporteurs. The Meeting rose at 12.55 p.m.

GATT Library

vq250fg2341

Text of Cable from Chairman of FAO Preparatory Commission to Chairman of ITO Preparatory Committee

United Nations Economic and Social Council, November 16, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

16/11/1946

official documents

E/PC/T/DEL/9 and E/PC/T/DEL/1-17

https://exhibits.stanford.edu/gatt/catalog/vq250fg2341

vq250fg2341_90210088.xml

GATT_157

United Nations Nations Unies ECONOMIC AND SOCIAL COUNCIL CONSEIL ECONOMIQUE ET SOCIAL RESTRICTED LONDON E/PC/T/DEL/9 16 November 1946 ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Text of Cable from Chairman of FAO Preparatory Commission to Chairman of ITO Preparatory Committee There is circulated herewith the text of a cable dated 14 November 1946, from The Right Hon. S.M. Bruce, Chairman of the Preparatory Commission of the Food and Agriculture Organization to Monsieur Suetens, Chairman of the Preparatory Committee of the International Trade Conference. LONDON E/PC/T/DEL/9 Page 2 Washington, 14 November 1946 Chairman, ITO Preparatory Committee, Church House, London, S.W.1. As you are aware, part of the work of the ITO Preparatory Committee and FAO Preparatory Commission is similar, namely the consideration of international commodity policy. I understand that your Committee will shortly adjourn and a Drafting Committee reconvene in New York about January 20th. As my Commission will continue in session for some weeks yet I am making the following suggestion: I am suggesting to delegations of Governments represented both here and in London that they may care to suggest to their Governments to arrange for sending to Washington some of their London colleagues who have been most closely associated with the commodity policy discussion in order that our work may be effectively co-ordinated with what has been done in London. I wonder whether you would care to make a similar suggestion to your delegates in London to the effect that as soon as the conversations are finished their Governments might wish to transfer certain of the London delegates to reinforce the Washington discussions regarding commodity arrangements for agricultural products. Bruce Chairman, FAO Preparatory Commission.

GATT Library

vv070xc8984

The question of voting in the International Trade Organization : Memorandum submitted by the Delegations of the Netherlands and the Belgo-Luxembourg Economic Union

United Nations Economic and Social Council, November 9, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

09/11/1946

official documents

E/PC/T/C.V/21 and E/PC/T/C.V/19-31

https://exhibits.stanford.edu/gatt/catalog/vv070xc8984

vv070xc8984_90220117.xml

GATT_157

United Nations Nations Unies RESTRICTED LONDON ECONOMIC CONSEIL E/PC/T/C.V/21 -,,S CONOMIQUEUE 9 vember 1946 C I O: IL EngliORIGINAL: FRENCHgresh CONI TE$V. .. * TARATY C0~4IT~OFw I1 A C T O .................. .: 'Oi1iSADIE O~ ~41 ZATIONNIZATION*~~~ COvT4TI * MEMORZJWSUtTln BY .Dr-ADIONS OFs OMIC UNION5IUNEDS ANlDTE3 BO-IXJOUEGECONICtJTION ~ nie Bnlgo-Luxetbourg and Ietherids Delegations have noted with interest Meica and. ~th propowith regard to the right to vote inEx the Conference and in the ecutive Board (Articles 53, 57 and 58 of the American Suggested Charter). The hatwo Delegtions consid is ers th this voting problem:f cqsderable importance and that it is desirable to find a. solution which will give satisfaction to all the countries ess of the ITO depends largely on thes largelython e 9UCCof th1eod te ~~~~~~~~~~~~~~~~~~~~z , extent t^which the various member states will feel that their opinions have been taken into consideration and their interests safeguarded. This ciS the more understcn~ale in f the faCtthat the countries represented have to maintain different points of oomicmvcisitg gite nturally from varying econ^ situions and they aremse anxious to see their particular probl stated and blem is of . . fairly resoled intthe Conference. Cons u.ntly, the Netherlands and B3lgian Delegations cannot but give their support to the request ofnn ountries which have proposed th3acceptance o' the Charter's principle that each ener has the right to one vote in the Conference. The creation of a feeling of confidence and goodwill iBconditional upon that. TE5 V TOIO OIGI H LONDON E/PC/T/C.V/21 Page 2 On the other hand, from the point of view of the facts, it must be recognized that the various countries represented in the ITO have economic interests of varying importance which necessarily impose upon them varying responsibilities. However much support the principle of complete equality may command, it should be noted that the United Nations Charter, itself - to which the countries represented at the Conference are signatories has in fact affirmed the inequality of states by attributing to them in the Security Council a varying political authority through the' allocation of permanent or non-permanent seats, as the case may be. In the economic sphere, it must be recognized that the realization of the aims of the Organization is conditional upon co-ordinated action by the countries which are the most important economically, on whose assistance the development of the other countries and the world expansion of trade is dependent in the long run. The British proposal aims to meet this situation by introducing proportional voting based on criteria to be determined later. The Netherlands and Belgian Delegations consider that the determination of these criteria would be an extremely complicated operation, each state being naturally inclined to take into consideration the criteria most favourable to it. Therefore, it seems that the best solution would still lie in reconcillig equality of rights with the 'de facto' economic inequality of nations by adopting the system of the Charter, i.e. granting a single vote all member states without any other distinction beyond that implied in the creation of permanent and non- permanent seats on the Executive Board. This system should be flexible enough to allow states which have no permanent seats to have seats on the Board in rotation and for relatively short periods For example, the creation of six permanent seats and nine non-~ a~nn ~~~~~6 1 e o- LONDON E/PC/T/C.V/21 Page 3 ' permanent seats coodopted as a formula, so long as the ould aso a forl,s s long a the ITO had olnly a limitemnumber f embe countries, this figure being capable o being raised for oxample t'eight and twelve seats respectively if the ITO should succeed in obtaining the adherence e all .early all states. With these conaditidons in ind, thae Bedgin an Netherlands r to sions have toh boonzr tcmsubmit to the Genemrl Comittee mendments to Chapter VIemd =nd:nts to Chapter lI, Section C: Article 53 Unchaned . Artiae 57 grFpr~1rh. hshall cotive Boa rd 3laJ. nsist of fifteen membioneel ofed the Organizatolectdby the Conference. Bconomicyimportance, virtueo their eomsix members shall be apoptedm as permanentm ebersm; nine, otherm ebers shall be Gatned non-permaneotseats. The t otal number of"sats man be increased by a decision of the Conference taken with a two-thirds majority of its members. Paragraph 2. The non-permanent members of the Executive Board shall be chosen for a period of three years. At the first election of the non-permanent members, three members shall be elected for a term of one year and three others for a ternof two years. A retiring member shall not be eligible for immediate re-election. Paragraph 3. These elections shall take place in accordance with arrangements to be approved by the Conference with a two-thirds majority of its members. Paragraph 4. Each member of the Executive Board shall have one representative who any appoint alternates and advisers. Article 58 Unchanged.

GATT Library

mt974gw7189

Thirteenth Meeting held on Wednesday 13 November 1946 at 3 p.m

United Nations Economic and Social Council, November 15, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

15/11/1946

official documents

E/PC/T/C.V/31 and E/PC/T/C.V/19-31

https://exhibits.stanford.edu/gatt/catalog/mt974gw7189

mt974gw7189_90220128.xml

GATT_157

United Nations Nations Unies RESTRICTED ECONOMIC CONSEIL LONDON E/PC/T/C.V/31 AND ECONOMIQUE 15 November 1946 SOCIAL COUCIL ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMITTEE V Thirteenth Meet:ing held on Wednesday 13 November 1946 at 3 p.m. Chairman: Mr. EDMINSTER (United States) ArticL.es 64, 65 and 66, Functions of the Commissions. The CHAIRMAN observed that the main responsibility for the substance of these Articles obviously rested on the other Committees. The responsibility of the Fifth Committee was chiefly to see that the recommendations of the other committees concerning the functional and organizational implications of the provisions which they had tentatively approved were taken due account of in Chapter V. To this end, the Chairman and Secretary had already taken the initiative in attempting to secure from the other Committees such information and suggestions as they might wish to make. Their efforts had achieved partial, but not complete results, and would be continued, with co-operation from the Committees. He proposed that the Fifth Committee should now discuss the Articles in a preliminary manner and make such suggestions as fell within the terms of reference of the Committee, afterwards appointing a Sub-Committee to examine all the material arising out of this Meeting and collected from the other Committees or from individual delegations. The Sub-Committee might elect nerely to refer the various questions raised to the Interim Drafting Committee. Mr. BURY (Australia) agreed in principle, but remarked that the time was growing short and the Committee had discussed the Commissions in general terms already. Its work of adapting the general scheme of LONDON E/PC/T/C.V/31 Page. 2 the Commissions to each of the Commissions in particular would have to be done in the context of the reports of the other Ccmmittees. For example, Articles 63 and 66 might have to be drastica1ly re-drafted, It would therefore be difficult to do more at present than to see what proposals the other Committees may have to make and to link them together into a logical system for alI the Commissions. This could be done by a Sub-Committee. 'The CHAIRMAN reminded the Committee that the present meeting probably represented the last opportunity that it would have of commenting on the functions of the various Commissions. If it referred the whole task to a Sub-Committee, it would not be able to discuss the matter before its report was due to go to the Plenary Session. Some of the other Committees, especially the Second Committee, would be veru late in making their suggestions. It was vital to have the views of the Third Committee on the Commission on Business Practices, before Committee V could usefully undertake consideration of Article 65. Dr. ALAMILLA (Cuba) said that his delegation had presented two amendments to Articles 66 (7, 8) in the Fourth Committee in an effoft to secure for the Commodity Councils a certain liberty of action which it considered essential. If the Fourth Committee did not agree, his delegation would have to reserve its right to re-introduce the amendments in January. He called attention to these points so that any Sub-Committee appointed to deal with Article 66 would bear them in mind, in considering the recomrmendations of Committee IV. The CHAIRMAN said that the Chairan of the Fourth Committee had sent him on the previous day a document which appeared to cover the two amendments. It ran: Page 3 "In re-drafting Chapter VI of the Charter, this Committee has, except in one instance, used the term "Organization" without specifying the part of the organization which should perform the particular administrative function to which reference is made.. "Although Committee V will doubtless consider this matter in relation to other sections of its work, it is felt that some guidance from Committee IV may be helpful. "The ideas of the Drafting Sub-Committee of Committee IV as to the allocation of functions to various parts of the Organization relating with commodity arrangements is set out on the attached schedule. A copy of the re-drafted Chapter VI is attached for ycur reference. " There followed a copy of the re-drafted Chapter VI, to which a document was appended containing a list of the various functions provided for in Charter VI together with an indication as to the authority within the Organization by which each of these functions would be performed. Dr. ALAMILLA (Cuba) observed that the Document was only the report of the Sub-Committee, and that the Fourth Committee would not meet until the follow ing Monday, when it might decline to approve the report, or might amend it. Mr. PALTHEY (France ) maintained that the Fffth Committee had a duty to enquire fully into the functions of the Ccnmmissions. The Drafting Committee, according to the Heads of Delegations, would not be competent to do this work, it would confine itself to the orderly dafting of matter referred to lt. He considered that a Sub-Committee should be appointed to consider the reports of the four other Committees; in the light of its report, the Fifth Committee could then proceed with a full discussion. Mr. TURNER, Secretary, said that the most important factor was the time table. The reports of most of the other Committees would not be ready at the earliest until next Monday or Tuesday, and LONDON E/PC/T/C . V/31 Page 4 Committee V could not meet after Tuesday morning, for the Plenary Sessions were to begin on Tuesday afternoon and to finish if possible on Wednesday. He could see no alternative to the kind of procedure suggested by the .Chairman which would involve leaving the detailed examination of these Articles to the Drafting Committee or to the next Session of the Preparatory Committee. Mr. PALTHEY (France) agreed, The CHAIRMAN explained that such documents as that which had come from the Sub-Committee of Committee IV would, when they became available, by-pass the Fifth Committee and go to the Drafting Committee, to be worked into the Draft Charter for discussion in the Spring, when any member dissatisfied by its contents would have an opportunity to be heard. Baron van TUYIL ('Netherlands) suggested that for the sake of speed a separate Sub-Commi'ttee might be appointed for each of the Articles in question - namely Articles. .64, 65 and 66. Mr. DAO (China) asked whether it was correct to assume that the functions of the Commissions would be decided either finally or tentatively by the other Committees. The task of the Fifth Committee should be to apportion functions among the Commissions, but since there would be no time for discussion, no member would want to commit himself either on this question or on the number of Commissions to be set up. He also asked whether the findings of the Sub-Committee which it was proposed to appoint would constitute a separate part of the Committee's report or be in the form of an appendix thereto. Mr. HOUTMAN (Belgium) emphasized the right of delegates to return in future to the consideration of any matters which were to be referred to a Sub-Committee. LONDON E/PC/T/C.V/31 Page 5 H.E. Mr. COLBAN (Norway) said that to summarize the function of the Commissions in the light of the decisions of the other Committees was a simple matter of drafting. The Committee was not called upon to do more than approve of the scheme before it, leaving open the exact wording of Articles 64, 65 and 66 until such time as the views of the other Committiees were known. The Interim Drafting Committee could quite well undertake this task, and could explain any difficulty to the Preparatory Committee as its Second Session. To discuss the functions of Commissions before the other Committees had made their results known The CHAIRMAN suggested that the best procedure might be simply to drop further consideration of these three Articles and to transmit to the Interim Drafting Committee any proposals received regarding Commission functions. Mr. MARIAO (Chile) asked what would become of the Chilean suggestion to establish a Fourth Commission for increasing the level of production, industrializaton and employment. The CHIRMAN answered that this was a matter which rested primarilh rested with the Joint Committee. (India) strongly supported the Chilean proposal. The Delegation had represented strongly at an arlan early stage that one main duties of the Conference should be to suggest means of developing the industries of the less developed areas developed areas. The of restrictive business practices and the reduction of ers might increase employment, but were only were only negative mehods.If the demand for various goods, servces and commodities could be increased in India and China those countries absorb abscrb th of the entire the entire world and still there would there under would be under One of the fundamental tasks of the ITO was tasks of the ITO was to seek ans of increasing demand in those countries. Page 6 Mr. PALTHY (France) reiterated, that the Fifth Committee had the duty of implementing the decisions of the other Committees and of deciding whether the conclusions reached by the Joint Committee vvould justify the establishment of a fourth Commission. It could only do so on the basis of the report of that Committee. H.E. Mr. COLBAN (Norway) supported this view, and said that any proposal to set up a Commission for Industrial Development should be sent automatically, by the authority of the Fifth Committee, without examination, to the Interim Drafting Committee to be dealt with in the same way as the other three Commissions for which provision has already been made in the Draft Charter. After further discussion, the CHAIRMAN stated that he did not think the Fifth Committee should decide whether or not a Commission should be set up. This was the duty in the first instance of the Committee concerned with the particular field of activity in which the proposed. Commission would function. The Fifth Committee's task was to translate such decisions into terms of organization. Dr. ALAMILLA (Cuba) agreed that the necessity for a Commission should be determined by the appropriate Committee, but maintained that its functions were a matter for the Fifth Committee. He proposed that, if the Joint Committee found that a new Commission was necessary, the Fifth Committee should meet in New York to decide on its functions, which were not a matter for the Drafting Committee. In any event, there was no profit in discussing the question at the present Meeting. LONDON Page 7 Mr. HOUTMAN (Belgium) said that during the discussion on Article 50 (1) (Functions of the Organization), he had asked the United States Delegate whether a Commission of the king under discussion should not be provided for. Mr. KELLOGG had replied that the Economic and Social Council had appointed a special committee on Economic Development which would do what was needed. In view of that reply he could not understand why the question had been under discussion for an hour at the present meeting. Mr. TURNER, the Secretary, pointed out that the reference in Article 30 (1) was merely to the collection of information and not to the establishment of a commission. Mr. HOUTMAN (Belgium) replied that the problem was identical, and that the Secretariat had, in a document before him at the moment, formulated the functions of this important Committee. Mr. HOLMES (United Kingdom) said that a Drafting Sub-Committee of the Third Committee would probably ask the Fifth Committee to join with them in discussing the future contents of Article 65 (Functions of Commission on Businrss Practices). He had no strong personal views on whether this question should be considered by either of these Committees or the Inrerim Drafting Committee, but he hoped that whichever body discussed it would take account of the revised draft of Article 65 which had been submitted by the United Kingdom Delegation (E/PC/T/C.V/22 of 9 November.) The CHAIRMAN said he thought that a majority of the Committee was in favour of sending to the Interim Drafting Committee the material to come from the Third Committee, including the suggestions of the United Kingdom Delegate. LONDON E/PC/T/C.V/31 Page 8 There would be no time for Joint Meetings, The Committee's immediatets immediate to transmit the suggestions of other Committees of other Committes or of individual delegates direct to the Drafting Committee Drafting Committee. (Norway) in response to the Chairman's Response to the Chairman's request, restated his previous proposal namely: advised the Committee, in the Comittee , in view of the time, to approve the scheme of the Ch to approve the scheme Charter 64 - 66 or the proposal for a 64-66 or the proposal for a fourth reports to the Interim Drafting Committeethe Interim :Drafting Committee political decisions but would report political decissions but would report to the Preparatory Committee . The Committee agreed to this procedure . Article 36. Interim Tariff Committee. e New Zealand United States), in answer to the New Zealand Delegate explaiined that his government anticipated next spring representatives of the nations forming preparatory Committee reductions. and negotiate multilateral tariff reductions.These, it was hoped in would be substantial and would materially succeed in on was set up, barriers.Then the Organization was set up those, countries which had made such reductions would automatically be members of the Interim Tariff Committe. Mr.LARENCE( New Zealand) asked whether the Charter would be a post-negotiation document in relation to the proposed Spring negotiations. Was the Interim Tariff Committee to be a Committee of authority which would enter on its functions before the entry into force of the charter, and would it continue in existence under Article 56 (1) after the Charter because valid? E/PC/T/C.V/31 Mr. KELLOGG (United States) agreed that the negotiating meeting was intended to put into effect tariff reductions at whatever time might be agreed upon, which right be before the Charter came into force but it was impossible to say with any certainty. It was his, understanding that the United States government did not wish a possible failure of the Charter to come into effect to endanger the good work it is hoped will be accomplished by the Spring meeting. It was desired, therefore, to make the result of these negotiations independent of the entry into force of the Charter. The negotiationg countries might wish to set up among themselves an interim body to see that the agreement was implemented, but he did not think that any conerete suggestions had yet been made. Mr. LAURENCE (New Zealand) , while thanking the United States, foresaw a difficulty in that, according to Article 56 (1 ), the functions of the Interim Tariff Committee could only follow the entry into force of the Charter. Article 18 (3), upon which Article 56 (1 ) depended, had significance only after the Charter came into effect. On the cuer hand, Article 56 (2) implied that some group of countries would have assumed certain responsibilities beforehand. He asked whether the general agreement, on tariffs and trade was not as important as certain sections of the Charter, and whether a draft of this agreement should not be worked out at once, or at latest before the spring meeting of the preparatory Commission, Mr. KELLOGG (United States) commented that the negotiating countries would decide the date on which they wished the tariff reductions to take effect. It was hoped that their decision would be such that, if the Charter failed to come into effect, their good work would nevertheless proceed. E/PC/T/C. V/31 Page 10 If the Organization were set up, it was hoped that the countries which had actually reduced their tariffs would all join it, When the Organization began its work, those countries would form the nucleus of the Interim Tariff Committee, and other countries joining the Organization would be expected to make corresponding reductions in their tariffs. When they did so, they would become members of the Interim. Tariff Committee: but, if a country did not do so, Article 18 (3) gave the Committee the right to require it either to make reductions corresponding. to those made by the other members, or to leave the Organizaticn, on the princi#e that it could not benefit by the reductions of other members without contributing a corresponding benefit itself. Mr . BURY (Australia) said that the provisional view of tet A.stralian Delegation was that. the tarfif negotiations and the Charter were two inter-dependent factors;b ut if at any time special measures should be needed to protect the results of the negotiation, the United States Draft seemed adequate. Dr. AAMILLAA (Cuba) said that the Sub-Committee dealingw ith Article 18 had, been told that certain provisions of the Charter would be incorporated as an essential part of the tariff . agreement. Article 18 (3) had been redrafted in such a way as to exclude its present contents from the Charter and sbustitute .reference to a memorandum or supplement to the Charter which would set cut the methods by which the tariff negotiations would take place Mr. LE PAN (Canada) suggested, in Article 56 (2) (Page 38, first line), to delete the words "be entitled to" ,so that membership of the Committee should be obligatory on all members who had completed negotiations comparable to those completed by the original members of the Committee. Article 18 (3) , empowering the Organization to consider questions and disputes arising out of tariff negotiations and agreements, prescribed that for an interim period after the comig into force of the Charter the forum in which such questions would be considered should be the Interim Tariff Committee, In his delegation's view every member who had entered into tariff agreements should be a member of that forum - the Interim Tariff Committee. Mr.L AURENCE (New Zealand) asked that the position would be if a Member country did not desire to join the Committee. Mr. KELLOGG (United States) suggested that a member might abstain from voting. The Committee approved the amendment, with the direction that reservation by the New Zealand Delegate should be recorded. Mr.LE PAN (Canada) entered another reservation on Article 56 (3) (Each member of the Committee shall have one vote), suggesting that if a system of weighted voting were introduced for the Conference, a similar system might be found appropriate for the Interim Tariff Committee. Mr. HOLMES (United Kingdom) and Mr. LAURENCE (New Zealand) concurred. LONDON E/PC/T/C. V/31 Page 12 article 1 General Purposes of the Organization The (CHAIRMAN recalled that discussion of this Article had several times been deferred, and suggested that it should be referred to the Plenary Session without discussion. Suggestions of other Committees not at present available would probably bear upon its provisions. Mr. BURY (Australia), while agreeing, said that his delegation had submitted an alternative draft to the Committee and would like the attention of the Plenary Session to be drawn to this, with a note that the Committee had not discussed it. The Committee then dealt with a number of residual points. Article 69 (2) Deputy Directors-General Mr. TURNER, Secretary, mentioned that the United States Delegate had reserved the right to refer to this paragraph again after the general character of the Commission had been discussed. Mr. KELLOGG (United States) said that his delegation was content with the wording of the Charter as redrafted. Article 71 (2) Relations with FAO Mr. TURNER, Secretary, said that reference to food and agriculture had bean deleted from this paragraph on the understanding that an appropriate reference would be made elsewhere in the Charter to their importance in relation to commodity arrangements. The Fourth Committee, in redrafting Chapter VI, had referred specifically to the Food and Agriculture Organization and had included a new article on relationships with it. LONDON Page 13 The Two-Thirds Vote Mr. TURNER, Secretary, reported that the Legal Officer had agreed that the phrase "by the vote of two-thirds of its members" was ambiguous, and had suggested as an alternative "by an affirmative vote of two-thirds of the members". Mr. LAURENCENew Zealand) said his impression after extracting the phrases in the Charter dealing with voting was that they needed re-drafting. . MrHOLESM (United Kingdom) suggested that the word "vote" should read "votes". Mr. TURN, ERSecretary, asked the Committee to adpto this wording provisionally, on the understanding that the attention of the Drafting Committee would be drawn to it. Article 55, paraaarh p2. Waviin ogf Members' Obligations. It was agreed, with the concurrence of the United States Delegate, to delete the words "to Chapter IV" ("obligations of Members undertaken pursuant tc Chapter IV of this charter"). article 57. Right of Attendance at Executive Board Mr. Turner, Secretary, stated that the Canadian Delegate had given notice at the Eighth Meeting of the Committee of his intention to propose a new paragraph to Article 57 "5. Any Member of the Organization who is not a Member of the Executive Board shall be invited to send a representative to any meeting of the Board called to discuss a matter of particular and substantial concern to that Member. Such representative shall, for the purpose of such discussions, have all the rights of Board Members, except the right to vote." E/PC/T/C.V/31 Page 14 Mr. LE PAN (Canada) said it was essential that any member of the Organization whose cause was being considered by the Board should have a right to appear before it. Article 31 of the United Nations Charter gave the right to any Member of the United Nations to appear before the Security Council when its cause was being considered. The interpretation of that Article had been so restricted that it had not had the effect desired when the Canadian representative had proposed it as an amendment to the Charter of the United Nations. The present amendment had therefore seen drawn somewhat more precisely, and should secure to any member of the ITO the right to appear and effectively present its case to the Executive Board. Mr. BUTY (Australia) supported the amendment. Mr. LAURENCE (New Zealand) asked whether it was intended that the member should attend throughout the whole of the proceedings of a particular meeting of the Board, or only at that part of the Proceedings at which the merber's cause was under discussion, or Whether the Board should hear a statement from the member, irrespective of whether the member attended during any other part of the proceedings. It would be dangerous to oblige an Executive Body to Permit a member who might be accused of an offence to attend while matters concern his cause were being discussed. Mr. LE PAN (Canada) answered that the member would not have the right to be present throughout the .whole session if other matters not affecting its interest were discussed. It would, however, have the right to attend the whole of that part of the session during which the cause affecting it was considered. LONDON E/PC/T/C .V/31 Page 15 The representative should have the right to take part in the discussion in addition to making a statement. Experience of many international conferences had shown that the bare right to make a statement was not sufficient to enable a case to be thoroughly ventilated and the member to feel that its representative had had a chance to present his arguments completely. The CHAIRMAN suggested, instead of "called to discuss a matter of particular and substantial concern to that member", the alternative wording "to be in attendance whenever a matter of particular and substantial concern to that member is under discussion". Mr. NAUDE (South Africa) doubted whether attendance was equivelent to participation . He also wondered if it was the member wlho was to be the judge of whether the matter was one of particular and substantial concern. Under Article 31 of the United Nations Charter it was the Security Council which decided whether the interests of the member were affected. Mr. LE PAN (Canada) suggested that the question of how long the representative of the member would be allowed to remain at the meeting was an academic one, for any question of particular and substantial concern to a member would ordinarily occupy a whole meeting of the Board. He would be happy to accept any words, which would make it clear that the member would be called to participate in the discussions of the Board while the matter affecting him was being discussed. Mr. DAO (China) proposed to give the Executive Board discretion to invite a member to send a representative, rather than to impose an obligation to do so. LONDON E/PC/T/C.V/31 page 16 Mr. LE PAN (Canada) objected that to do so would greatly weaken his amendment. The obligation would be necessary. to preserve the right of attendance, The final decision as to whether a matter affected a #ember substantially should rest with the Board, He envisaged a Procedure by which a member would represent to the Board that a certain subject substantially concerned it. It was to be hoped that the Board would adopt a very liberal attitude towards any such representation. Mr. LAURENCE (New Zealand) asked whether, if the Executive Board discussed a matter of general application, the Conference would have to be convened and whether the Executive Board would be precluded from holding a confidential discussion on any subject concerning a member, or would be unable to consider a matter in which members were concerned, without inviting them to be present. If so, such a Provision in the Charter would gravely hamper the Board. If the Committee approved of the principle indicated by the amendment, it would be better to provide in article 55 (Conference - Powers and Duties) that the Conference should lay down the procedure by which #embers could be properly represented at meetings of the Board. Dr. ALAM LLACuba) agreed with the Canadian proposal but considered that it should be referred to the Interim Drafting Committee or to the Sub-Cmnoittee to decide on the wording and on its position in the Charter. The similar provision in the Charter of the Unitd eNations had not caused any particular difficulty. LONDON E/PC/T/C.V/31 PAGE 17 At the suggestion of the chairman, the Committee appointed a Drafting Sub-Committee to consider the amendments which delegates hade proposed be made to Articles 50 (Functions of the Organization),51 (Structure of the organization) and 61 (Establishment of Commissions), and the new paragraph in'Article 57 (Executive Board - Membership) suggested by the Canadian Delegate; the members to be the relegates for Canada, Cuba, India, the United Kingdom and the United States. Future Meetings. The next meeting of the Committee was fixed for Friday, 15 November at 3 p.m. to discuss the Report of the Sub-Committee, the Report of the Joint Rapporteurs on Voting and Membership of the Executive Board, and any other business brought up by delegates. The CHAIRMAN proposed that an effort should be made to circulate the draft report of the Committee to the Plenary Session on Monday morning, 18 November, and that the final meeting to approve the report should be held on Tuesday morning, 19 November. The Committee rose at 6.15 p.m

GATT Library

zw058vx1257

Twelfth Meeting (continued) held on Tuesday, 12 November 1946 at 3 p.m

United Nations Economic and Social Council, November 14, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

14/11/1946

official documents

E/PC/T/C.V/30 and E/PC/T/C.V/19-31

https://exhibits.stanford.edu/gatt/catalog/zw058vx1257

zw058vx1257_90220126.xml

GATT_157

United Nations Nations Unies RESTRICTED ECONOMIC CONSEIL LONDON E/PC/T/C.V/30 AND ECONOMIQUE 14 November 1946 SOCIAL COUNCIL ET SOCIAL ORIGINAL: ENGLISH PREPARATORY COMMlTTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMITTEE V Twelfth Meeting (continued) held on Tuesday, 12 November 1946 at 3 p.m. Chairman: Mr. EDMINSTER (United States) VOTING Mr. HAUTMAN (Belgium) introduced the memorandum on voting submitted by the Delegation of the Netherlands and the Belgo-Luxembourg Economic Union (E/PC/T/C.V/21 of 9 November). He said that these Delegations regarded the question as highly important and as calling for good will and understanding in its solution. On the principle of the legal equality of all nations, he agreed with those Delegations which had supported the principle of one country one vote laid down in Article 53. This meant that every nation, whatever its size could be heard in the Conference and could expound its ideas, desires and demands. This situation flowed from the Principle of legal equlality and was essential for a spirit of confidence and co-operation within the ITO. For the same reason his Delegation and that of the Netherlands rejected the weighted vote, and also desired to retain unamended the wording of Article 58 (Executive Board - Voting). Nevertheless, they agreed with the Delegates of France, Norway and Czechoslovakia that the great economic powers should have permanent seats on the Board. Precedent for such an arrangement could be found in the Charter of the United Nations, which established similar distinctions inside the Security Council between great powers and others; and in the constitutions of many of the specialized agencies. The Draft Charter itself, in its provisions relating to inter-governmental LONDON E/PC/T/C.V/30 Page 2. commodity arrangements, allotted a varying representation to Member countries according to the importance of their respective interests in the importation or consumption of a particular product (Article 47 (2) ) The two Delegations might have argued, with the Delegates of South Africa and Canada, that nations with different economic interests must necessarily shoulder different responsibilities. They felt, however, that they would be on firmer ground in pointing out that all Members were interested in guaranteeing the future of the ITO and ensuring that its ends were realized. All must have been impressed by the great scope of these ends as shown in the debates of the five Committees, and hence the importance of the economic and financial measures which must be taken to realize them. Any programme for the expansion of exchanges must depend on the coordinated action of the chief economic powers, which itself must depend on technical and financial assistance. Such action on an international scale would only be possible if such powers were permanently represented on the Executive Board. The great powers were in a numerical minority both in the Board and in the Conference, and could not possibly obtain exclusive control of the Organization. The Memorandum was not meant to set out any precise criteria of the economic importance of a country. These must be worked out by the Conference under the protection of the two-thirds majority vote. Satisfactorry criteria had been found in the past for organizations as elaborate as the ILO, which had a social as well as an economic range. The task would be easier for a commercial organization, which would naturally (without prejudice to anything the Conference might decide) base its criteria on the volume of external trade of each state as indicated in Offcial statistics. The two Delegations would be delighted to hear their Memorandum discussed and amended.Their one desire was to help the Committee to find a formula on which to agree. LONDON E/PC/T/C.V/30 Page 3. The CHAIRMAN, summrizing the previous discussion, said that three major categories of propositions had been advanced: 1. Voting in the Conference and the Executive Board should proceed on the lines of the Draft Charter. 2. It should follow the principle of one country one vote, as in the Charter, but certain countries should have permanent seats on the Board. 3. Voting (at least in the Conference; concerning the Executive Board the discussion had not been so clear) should be weighted; with or without permanent Membership of the Board. He thought that little would be gained by considering the third proposition further at the present stage, and that the suggestions of the United Kingdom Delegation should simply be noted in the Report. Perhaps those Delegates who had expressed some measue of sympathy for the weighted vote might join with the British Delegate in formulating their views for the benefit of the Interim Drafting Committee. The Committee must give the Drafting Committee as complete and as clear an expression of its various views as possible, so that the Drafting Committee might formulate the majority and minority views on any given subject. For the rest of the discussion, however, he suggested that the Committee should assume that the principle of equal voting would apply in the Conference - which had been the opinion of the majority - and should proceed directly to discuss Membership and procedure in the Executive -Board, in an attempt to secure as wide a basis of agreement as possible. Three more major categories of opinion had been expressed on Membership of the Board: 1. All Membership should be on the same basis, as provided in Article 57. 2.No express provision for permanent Members as such should be made, but five, or some other number, of Members should be LONDON E/PC/T/C.V/30 Page 4. eligible for immediate re-election and the remainder should be elected by rotation. 3. Express provision should be made for permanent seats. The first two of these suggestions would involve only slight modification of the present text. The third would involve more substantial amendment, and would probably need to be considered by a special Sub-Committee, which would probably have to consider, among others, the following questions: 1. What principles and procedure should apply in the selection of the non-permanent Members? 2. What consequential changes would be necessary in Chapter VII? 3. What additional safeguard, if any, would be necessary to protect the vital interests of particular Members? The Committee would not greatly help the Drafting Committe, if it did not carry its formulation somewhat beyond the express provision for a certain number of permanent seats, though how far it could do so without going into undesirable detail would have to be considered. Mr. PARANAGUA (Brazil) opposed any suggestion to give a privileged vote in the Conference and on the Executive Board, maintaining that the result would be that certain countries would not, be prepared to accept the will of the majority, but would succeed in imposing their own. He agreed, however, that it was reasonable, within the Executive Board, to consider the economic or commercial importance of some countries. They would not have greater responsibility on the Board; but they had wider interests, and the problem was how to take account of those interests. Statistics of the League of Nations attributed to the -t - world trade, to the Unitedotal wold trade, to the United Indian Group 15.10 per cent, to tLatin merica per cent, o Africa 4.6 per cent and to Oceania 3.3 per onsidering permanent represeentation on the Board, it would~ ~~~-ert ~~~ -~~~ -t LONDON E/PC/T/C.V/30 Page 5 be reasonable to consider the League grouping of the countries of the world into Europe, Africa, North America, Latin America, Asia and Oceania. For that purpose Article 57 (1) might be re-drafted as follows: 1. The Executive Board shall consist of twenty Members of the Organization. 2. Subject to the provisions of paragraph (3) of this Article, one half of the Membership of the Executive Board shall serve for a term of five years, and shall be appointed by the Members of the Organization having the largest share in world trade and belonging to the following trade groups: Europe (two Directors). North America (two Directors), Latin America (two Directors), Asia (two Directors), Oceania (one Director) and Africa (one Director ). The other half of the Membership of the Executive Board shall be elected each year by the Conference, amongst the Members not having appointed any Executive Director. A retiring Member shall be eligible for immediate re-election. 3. Any change in the relative position in world trade of a Member country appointing an Exeutive Director shall be taken into consideration at the end of each term of five years, and the Executive Board shall make recommendations to the Conference in order to implement the preceding paragraph. 4. Each Member of the Executive Board shall have one representative and may appoint alternates and advisers to its representatives. Thus permanent seats could be allotted in practice without being specifically provided, and the special provision of the different groups and of the countries composing them would be acknowledged. Mr. HAUTMAN (Belgium) observed that the distinction between nations of major economic importance and nations with particular interests went some way towards reconciling the proposals of the United Kingdom with those of the Draft Charter. If however Delegates were agreed that the LONDON E/PC/T/C. V/30 Page 6 most powerful countries should have sone special representation, there seemed no value in considering the geographical position of a country, which was not necessarily a criterion of its economic importance. if, on the other hand, geographical position was made a criterion, countries like the United Kingdom, the Netherlands and Belgium would have an advantage, for they would d be represented by a whole director for their continent and a fraction of director for their colonies. The Belgian and Netherlands proposal followed Article 23 of the Charter of the United Nations, which provided for eleven Members of the Security Council of which five were permanent and the remainder were elected by the General Assembly, due regard being paid to the contribution of Members to the objects of the Organization and also to equitable geographical distribution. He commended a similar system to the Brazilian Delegate and the Committee. Baron van TUYLL (Netherlands) added that his Delegation would employ the criterion of economic importance for tle permanent seats and geographical situation :.or the non-permanent. The Brazilian proposals seemed to establish criteria for the Permanent seats only. Mr. LAURENCE (New Zealand) said that his Delegation believed that adherence to the Charter by the major trading nations was important not only for the entry of the Charter into force but also for the very success of the Organization. To give each state one vote would not solve the problem of enlisting the full support and co-operation of the major trading nations. It was quite wrong that the vote of a major country should be negative by the vote of a state with very little interest in international trade'. The position might arise in which one or more major nations adopted policies adverse to the operations of the ITO. Weighted votes on the Executive Board would not sufficiently offset the disadvantage of equal votes on the Conference,' for the Conference had, by Article 55. final authority to determine policy, and the'successful .,, .....-, : .a... --:-:...-:: .--. ' LONDON E/PC/T/C.V/30 ~ ~ ~ ~ IlO .. .. Page7 working wf the Organization vould depend on policy much more than on its administration by the Board. Though under a single vote system the vote of one country would be worth more than under any system of weighting that was likely to be generally acceptable, the position would be in reality that, if a major nation found that it had no say on policy in the Conference, it would withhold itshco-operation. Thhe principle of weigted voting should therefore be introduced into Article 53. His Delegation had not worked poaut a system, but e2hsized external trade rather than national income; it had not yet decided whetuher the absolute volme of external trade should be the basis, or the volume expressed in relation to population. 7ighted voting Nas highly complex. The Brazilian Delegate had introduced into his argument for geographical repessentation, on bas s uhich fare notwat all consistent vith the democratic principles he had advance in discussinfevoting in the Coni'rence. Inconsistencies of this ldnd vere the inevitable result of any over-simplification. Lr. 9UY (Austrmlia) agreed tham the Drafting Comnittee should be requested to set out alternative schemes corresponding to the suggestions of melegate. The Comnittep should not, post:one any decision on which it could reach finality, but governments were acutely sensitive on these questions acd needed time to wonsider many ofwhthe propositions aich had been advanced. It would be better to discuss these at Geneva in the spring, assisted by the Drafting Committee, than to formulate agreement no and find later that some governmints desired to w-thdraw from it. drK :Odom)ES (Unitew 2ingm :greewithbstantially --ih this view. He muggested thatmthe Drafting Cormittee might work out the kind of position that -ould be reached under various alternative systems of weighting the vote. This wouldrnot commit govewnments in anywway. Delegates gould have a better ahpreciation of toe British prcoosals if they CQuld be translated into such coe afte terms. Thhown ernoon's hownussion had sboi. that LONDON E/PC/T/C.V/30 Page 8. certain criticisms of the British proposals with the Fund and the Bank were not well founded. It had been very properly pointed out that the success of the ITO must depend for some years on the strong support of those countries which had a large share of international trade and were economically important. The Draft Charter which would result from the present discussions would provide a certain element of mutual aid for aII Members and could oblige economically important countries to help in the industrial development of the under developed countries - in other words - to make a larger contribution than that of the smaller countries. The CHAIRMAN said that the Heads of Delegations took the view that the Interim Drafting Committee should be a purely technical body and have no fact-finding or substantive functions. It should not therefore be charged with such duties as the study of weighting indices, or the drafting of alternative recommendations for weighting. He therefore repeated his invitation to those Members who sympathized with weighted voting to endeavour to concert their ideas and reach agreement on some more precise scheme, or alternative schemes for the guidance of the Drafting Committee and the consideration of the Preparatory Committee when it reassembles in the spring. Dr. ALAMILLA (Cuba) reaffirmed his Delegation's desire that every Member should have a single vote. Their instructions were merely to support the Draft Charter, but his personal view was that the Cuban Government would not prove unreceptive to the suggestion that some provision be made for permanent seats, the principle of which had eca elgto al- bd byaccepteions theions.ed NatBczai, The ?elgan Delegation r MminEtPCir nEmPCandmn (B1) /T/C.V/2cu suppcued an Exeiative Board consisting of fifteen xembers, sin permanent and nize non-permanent. ThenBelgian he,egate aldn however allowed it his speech for twenty ight permanent and tnent aid twelvma non-petanent.t He though that he larger number had been suggested in view of the fact that 'the fct ''-'- ': g ' "~ ' '- -''. :.:, E/PC/T/C.V/30 Page 9. if only seventeen or eighteen nations brought the Charter into f orce, and fifteen were placed on the Board, the position of the few who were excluded would be difficult. If the Board was to consist of, twenty Members, the number of permanent seats should not be stated definitely, but only within limits. No-one could predict the actual size of the Board at the start, and if the Charter provided for five or any other definite number of permanent seats, these would be filled at once after keen competition, and those major countries which were excluded would lack incentive to continue supporting the Organization. The Conference should decide the member of permanent and non-permanent seats on information more complete than that available to the present Committee. Moreover, retiring Members should not be immediately eligible for re-election. Members so eligible would in all probability be re-elected. The aim should be the contrary one of giving, every Member a chance of serving on the Executive Board as early as possible. Were the permanent Members to take part in electing the non- permanent? They would inevitally have an unfair preponderence, and should not vote in this election. The danger would exist that a group of nations might captured of the Organization at the beginning and that others might be deterred from from adhering to the Charter. To avoid this, a rota of non-permanent Members should be established, on an alphabetical or ballet basis, or, better still, on a basis that took due account of geographical distribution and the different stages of development of different coutries. This would meet to some extent the Brazlian's Delegate's suggestion. H. E. Mr. COLBAN (Norway) said that, in suggesting that five of the Board should be eligible for immediate re-election, he had not intended to provide permanent seats, but to make a system under which the leading commercial powers be certain to be properly represented without being specifically named in the Charter. The E/PC/T/C . V/30 Page 10. Board should on no acocunt be larger than fifteen. The present Meeting of the Committee was attended by seventeen Delegates, and he could not imagine it fulfilling detailed executive tasks. As to voting in the Executive Board, he thought the same system as in the Conference should apply - one country one vote - though he was open to conviction. He could not imagine that any great commercial power would be out-voted on any issue in which it had a real interest. No reasonable proposal was like t o be voted down by a majoriy of unreasonable Members. International bodies habitually listened with greater interest and respect to the representatives of a nation which was eminent in the matter um1.1-: discussion than to the representative, however elequent his speech, of one which had no particular interest in it. Mr. le Pam (Canada) said that, in their support of the principle of weighted voting, his Delegation could not admit that it was undemocratic, nor that it would were adopted the will of a minority. On the contrary, if the single vote were adopted , the situation night easily arise in which a coalition of countries which did not enter significantly into world trade might outvote the countries of chief economic importance - a really undemocratic result. The formulation of a system of weighted voting was not particularly difficult; but it was very- detailed. He would be very willing to take part in an attempt to produce a memorandum, but this could not in any sense be definitive. It might result in a closer approximation to a system which would commend itself to a majority of the Preparatory Committee. Mr. DAO (China) said that China had not changed her position in regard to the voting system since the Committee last discussed the subject. As regards Membership, the Chinese Delegation had an open mind. But he wished to make two points: LONDON E /PC/T/C.V/30 Page 11. 1. China had no objection to an increase of the Membership from fifteen to not more than eighteen, but provision should be made for a smaller number in the event of the Charter being brought into force under Article 78, paragraph 3. 2. In the matter of permanent Members, there were two possible courses: (a) Either to specify the names of the permanent , Members in the Charter; or (b) to adopt certain principles and procedures as a guide to the Conference, in their election. It was obvious that economic and geographical factors would operate in determining the relative claims of the different countries. But it was essential in that connection to bear in mind, not only the actual, but also the potential, importance of the factors in question. Furthermore, in allotting the seats, they had to provide for the possibility of new accessions in the future. Mr. BURY (Australia) explained that in suggesting that the Board be increased to twenty, his Delegation had assumed that it wouId be discussing so many and such complicated objects that it would have to do much of its work it Sub-Commmittee. He agreed that fifteen was too large a number to discuss questions of detail. The CHAIRMAN said that he proposed, rather than appoint a Sub- Committee, to ask the Committee's two Rapporteurs to prepare at once the part of their summary which would deal with voting. Their report should place clearly in juxtaposition the various suggestions that had been made. They might perhaps suggest how some of the proposals would cancel cut others or could be reconciled to them, and how divergencies might be narrowed if not abolished. The report might be prepared in a form suitable for incorporation in the whole report of the Committee to the Conference; it would be copied and distributed to Members - he hoped LOYDON Page 12. before Thursday 14 November, when the Committee might resume discussion and see rather more clearly how the suggestions appeared in relation to one another. The Committee would then have an opportunity of placing on record any further suggestions that it saw fit, and the Preparatory Committee could start next spring from that position. This was agreed. The Committee rose at 6.15 p.m. until 3 p.m. Wednesday,13 November.

GATT Library

nr585fr7460

Twelfth Meeting Held on Tuesday, 12 November 1946, at 10.30 a.m

United Nations Economic and Social Council, November 14, 1946

United Nations. Economic and Social Council, Preparatory Committee of the International Conference on Trade and Employment, and Committee V

14/11/1946

official documents

E/PC/T/C.V/29 and E/PC/T/C.V/19-31

https://exhibits.stanford.edu/gatt/catalog/nr585fr7460

nr585fr7460_90220125.xml

GATT_157

United Nations Nations Unies RETRICTED . ECONOMIC AND MICUNOC3QtE 14 Nov1946r 3.m6 CCAACILOUNXL. ORIGINAL: ENGL PR~RA~ORYCO1OTTEE THE INlEPARATOY COMMIL 'C0IEWME DE JUD EtILOMft c . V Twelfth Meeting Held on Tuesday, 12 November 1946, at 10. 30 a~m. Chairman: Mr. L. R. ,MVTSTER (United States) The CHAIMAN explained that the Report of the adR hoc rrafting Sub- ..x'nttee on Articles 76, 78 (3) and (4commi Article 2, would be distributed to the delegates during the course of the meeting. He suggested that the Committee in the meantime discuss Article 50 (Functions of the Organization). He invited comments on paragraph 1 of that Article. To the suggestion of Mr.Ho=&AN (Belgium-Lux~mbcurg), that some reference be made in this paragraph to information relating to employ- ment policy, Mr. I~LGG (United States) replied that it wKELLOGG impression that Committee I had recornended that functions relative to the collection of information on employment remain with the Bconomic and Social Council and its Commissions. In view of this, Mr. HOUM~AN did not desire to press the point TMy further. mhe CHAIRMAN then directed the attentioT of the Coimittee to para~phel 2of Article 50. Mr. PALMY (France) suggested that the possibTHEY(y should be kept in ind of the ITO arranging for the exofanmge of technical experts and for the establishment of a system under which technical assistance and advice would be made available to less developed countries. LONDON E/PC/T/C. V/29 Page 2 Mr. HOLMES (United Kingdom) proposed the addition of the following words at the beginning of paragraph 2: "In collaboration with any other inter-governmental agency that may be concerned." A similar provision might be inserted at the beginning of paragraph 5. Mr.HALIK (India) asked what wes the precise meaning of the United Kingdom amendment. He did not assume it to mean that the ITO would never undertake assistance on its own initiative. Mr.HOLMES (United Kingdom) explained that the proposed addition was merely meant to be helpful and was in no way limiting. It was designed primarily to avoid confusion or overlapping as, for example, between the IT0 and the Fiscal Comission of the Economic and Social Council in the matter of double taxation. Mr. MELLOGG (United States) suggested that the words "in collaboration with the United Nations and any inter-governmental agency which may be concerned" might meet the point of the Delegate for India. To this the Delegate for India indicated his assent. To the argument of Mr. DAO (China) that such co-operation was provided for in paragraph 6 of Article 50 and that the point was further covered by Article 71, Mr.HOLMES (United Kingdom) agreed that it was largely a matter of drafting. He had merely desired to strike a warning note in paragraphs 2 and 5, to the provisions of paragraph 6 that followed, and Article 71 which came later in the Suggested Charter. Mr.LEPAN (Canada) wondered what were the exact implications of this part of the Article. was it intended that the ITO should employ a large staff capable of providing expert advice - in which case no small financial burden would be involved - or was it merely meant to be a clearing house which would put members in touch with experts in other countries able to give them such advice or assistance as they might need. To this Mr.KELLOGG (United States) replied that the matter was still under consideration by the Joint Committee. The purpose of this provision was to make it possible for the ITO, in case it should find it desirable by virtue of the possible failure -of other organizations to carry out their responsibilities in this field, to assume such functions as may become necessary in the future. There had not been as decision as to precisely what functions , in this respect, the ITO should carry out. Mr. LEPAN (Canada) further enquired whether in the event of its being decided that the ITO should have a large staff to provide technical assistance and advice, it was intended that such assistance or advice should be paid for by the governments requesting it? On being informed that the question also remained to be determined, the Canadian Delegate entered a caveat to the effect that at some stage, pargraph 2 of Article 50 should be reworded so as to make perfectly clear its intentions. Mr. NAJDE (South Africa) asked whether the reference to "other international organizations" was intended to include both governmental and nongovernmental organizations. After some discussion, the CHAIRMAN suggested that perhaps a Sub-committee might consider this point and decide Whether or not the door should be left open so far as non-governmental, organizations were concerned. The CHAIRMAN then directed the attention of the Committee to paragraph 3 Mr.NAUDE (South Africa) considered that it was an undesirable practice, in drafting international instruments to use the word "including" and asked why it was thought necessary to specify sub-paragraphs (a), (b),(c) and (d). Me KELLOGG (Uited States) explained that it had been desired to make it quite clear that the organization had all the necessary powers to deal with anything that might arise in these four major fields of activity. Paragraph (a) of paragraph 3 was approved, subject to the addition, on the suggestion of the Canadian Delegate, of the phrase "or of the Members" after the word Organization in the second line. LONDON E/PC/T/C.V/29 Page 4 Paragraph (b) of paragraph 3 was approved without amendment. There was some discussion as to the necessity of the phrase "in the general interest' at the end of paragraph (c), and it was agreed to ask the Sub-Committee to give it further consideration. Subject to this, paragraph (c) was approved. The CHAIRMAN then directed the attention of the Committee to paragraph (d) of paragraph 3. Mr. MALIK (India) hoped that with regard to this paragraph the Dnterim Drafting Committee would consider its appropriate position in Article 50 in the light of the discussion which had taken place. For his part, he thought that it should figure earlier in the Article. His Delegation looked upon industrial and general economic development as the chief means of improving ine purchasing power of under-industrialized countries; and the Charter would be more readily acceptable in countries like his own, if this idea were more clearly brought out. Mr. HOUTMAN (Belgium-Luxembourg) suggested that the point of the Delegate for India was met by paragraph 3 of Article 1 of the Charter. Mr. KELLOGG (United States) suggested that, assuming the Charter would contain a new Charter on Industrial Development, the order of the sub-paragraphs of Article 50, might follow the order in which the Chapters themselves were arranged. The CHAIRMAN then directed the attention of the Committee to paragraph 4 of Article 50. Mr.HOLMES (United Kingdom) suggested that some cross reference to paragraph 2 of. Article 76 might be necessary. Mr. LEPAN (canada) wondered whether it might not be wise to set out somewhere in the Charter - perhaps in paragraph 4 -provision for arbitral machinery. The might even set up a panel of well qualified arbi ,.:S .v.m- ..',,;rr .; , . .., . .i. . . .. iat LONDON E/PC/T/C.V/29. It was agreed that any discussion on arbitration be deferred until the Committee considered the report of the ad hoc drafting Sub-Committee. The CHAIRMAN then directed the attention of the Committee to paragraph 5, of Article 50 which was approved subject to the earlier. comment of the United Kingdom Delegate. The CHAIRMAN then directed the attention of the Committee to paragraph 6 of Article 50. Mr. KELLOGG (United States) explained that the object of this paragraph had been to make quite clear that the ITO could co-operate with the Security Council if need be. It was agreed. that a phrase "other specialized international organizations" should be amended to "other inter-governmental organizations" in conformity with the language used elsewhere. In reply to a suggestion that the word "other" be deleted, it was explained that it meant organizations other than the ITO. The CHAIRMAN then directed the attention of the Committee to paragraph 7 of Article 50, Mr.HOLMES (United Kingdom) begged leave to revert to paragraph 5 and to raise general t thereon, There would be many international agreements dealing with specialized subjects of considerable importance, and the Aticle, as it stood, contained no provision that the countries, who were Members of the Organization, would be under any obligation to adopt those agreements. He referred to Article 19 of chapter V-of the Constitution of the International Health Organization, in which each Member undertook to take certain action, relative to conventions or agreements, within a specific period. The drafting Committee might bear this point in mind and make suitable provision for it. Mr. KELLOGG (United States) endorsed this suggestion. The CHAIRMAN then announced that Article 50 had been approved, subject to the considerations put forward during the meeting. LONDON E/PC/T/C.V/29 Page 6 He then directed the attention of the Committee to Article 51, Structure of the Organization. To an observation from Mr.BURY (Australia) that a Commission for Industrial Development may need to be added to those enumerated in Article 51, Mr. MALIK (India) replied that the Joint Committee already had before it a proposal to this effect, and it was hoped that a decision would be resoned on Friday. Mr. MERINO (Chile) said that his delegation had already submitted proposals to the Conference on the subject of the establishment of a fourth Commission to be called "A Commission on the Expansion of Production, Industrialization and Employment," the function of this Commission to be determined after the Joint Committee had completed its task. A similar proposal had been sent to the Joint Committee itself. It was of fundamental importance that the Charter should ease the difficulties of under-developed countries, so that by means of assistance from the larger and richer countries, they might be helped in improving the lot of their own work-people. By this means the under- developed countries might be put in the way of becoming richer and more prosperous, and helping in the general betterment of mankind. Mr.MALIK (India) fully supported the Delegate for Chile and gave further details of the work of the Joint Committee on this question. At this point, Mr.LEPAN (Canada). argued that other Commissions might be required at a later date. Since provision was made in Article 61 for establishing "such other Commissions as may be requested", he considered that all reference to "Commissions" in Article 51 be deleted. Otherwise any future decision to set up a new Commission, would require an amendment of the Charter. Mr.KELLOGG (United States) suggested that Article 51 as a whole might be dropped, but Mr.FRESQUET (Cuba) considered that this might have the effect of lessening the importance of the Commission, as an essential part of the structure of the Organization. LONDON E/PC/T/C.V/29 Page 7. Mr. MALIK (India) proposed that Article 51be amended to read as follows: "The Organization shall have as its principal organs: a Conference, an Executive Board, Commissions set up under Article 61, and a Secretariat". This proposal received general support, and Article 51 as amended was approved. The CHAIRMA N then directed the attention of the Committee to Article 61, Establishment of Commissions. It was agreed that final approval of the Article should await the findings of the Joint Committee. The CHAIRMAN then directed the attention of the Committee to Document E/PC/T/C.V/W.4, the Report of the ad hoc drafting Sub-Committee. The Secretary, Mr. BRUCE TURNER, drew attention to an error in the last line of page 4 of the Report. The Sub-Committee did not in fact approve paragraph 1 without change; the Sub-Committee proposed that the latter part of paragraph 1 of Article 2 of the Charter read as follows: "Or in the event that this Charter has not entered into force by that date, the countries which agree to bring this Charter into force....." The CHAIRMAN then read Article 76 as amended by the Sub-Committee. Mr. LEPAN (Canada) observed that the change in title would broaden the scope of the Article enormously, yet its content remained rather narrowly drawn i.e. it was concerned only with justiciable issues. It seemed to his Delegation that there would be a number of disputes of a commercial rather than of a strictly legal nature and the question arose as to how much of the procedure to be adopted for settling them should be spelt out in the Charter. Mr. van TUYLL (Netherlands) referred to the possibilities of "arbitrage" as exemplified by the League of Nations system of economic experts, from amongst whom parties to a dispute could choose an arbiter. LONDON E/PC/T/C.V/29 Page 8 Mr. MALIK (India) suggested that it would be preferable not to go into details at this stage, but merely to leave it to the ITO and invest it with the proper authority. He suggested that paragraph 4 of Article 50 might be amended to read "to provide a mechanism including the setting up of arbitration machinery". This suggestion was supported by the Delegate for Canada, China and the Netherlands. Mr. BURY (Australia) was of the opinion that paragraph 4 of Article 50 was sufficiently wide. It would empower the Organization to make whatever arrangements were necessary. Mr. HOLMES (United Kingdom) proposed that the words "other than disputes covered by Article 76" be added at the end of paragraph 4 of Article 50. Mr. van TUYLL (Netherlands) however, argued that this would prevent Members from using the method of arbitration in the cases covered by Article 76. Mr. NAUDE (South Africa) thought it would be more appropriate to include under Article 76, all provisions relating to the settlement of disputes. It was agreed that the points raised should be further considered by a drafting Sub-Committee. The CHAIRMAN then read the Sub-Committee's recommendations regarding paragraph 3 of Article 76. It was pointed out that "Article 76 of the Charter" in the third line should read "Article 96 of the Charter". Paragraph 3 as amended was approved, subject to, this alteration. The CHAIRMAN then read out paragraph 4, which was also approved. The recommendations regarding Article 78, paragraph 3, were also approved subject to deletion of the word "possible" in the last line but one of the note concerning the United Kingdom proposal. The proposed amendment to paragraph 4 of Article 78 and paragraph 1 of Article 79 were agreed to. Mr. NAUDE (South Africa) was not quite clear as to the purport of the note on page 4 off the Sub-Committee's report. There might be some dispute as to the meaning of the term. "non-self-governing territories." LONDON E/PC/T/C.V/29 Page 9. Mr. LEENDERTZ (Netherlands), in connection with paragraph 3 of Article 78, reserved the right to revert to this provision when the situation with respect to the Netherlands overseas territories had been clarified. He also proposed that the reference to the number of acceptances (in Article 78 (3)) required to bring the Charter into force should be amended to read "20 or more". The Committee rose at 1.05 p.m.; the meeting would be resumed at 3.00 p.m.

GATT Library

vy203xp5770

U. S. Proposals on Rules of Procedure

United Nations Economic and Social Council, October 16, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

16/10/1946

official documents

E/PC/T/W.13, E/PC/T/1-4, and E/PC/T/W/13,14

https://exhibits.stanford.edu/gatt/catalog/vy203xp5770

vy203xp5770_92290008.xml

GATT_157

United Nations Nations Unies ECONOMIC CONSEIL = AND ECONOMIQUE E/PC/T/W.13 SOCIAL COUNCIL ET SOÇIAL ORIGINAL: ENGLIS PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT U. S. PROPOSALS ON RULES OF PROCEDURE PROPOSED ADDITIONAL RULES AS TO-SPECIALIZED AGENCIES, NON-GOVERNMENTAL 'ORGANIZATIONS AND--OTHER COUNTRIES 1. Representatives of Specialized agencies may attend meetings of the Preparatory Committee and of its committees and participate without vote in their deliberations with respect to items on their o m-itters -vritlin mthe. SoOpo.- of their respective 2. The provisions of the Report of the Committee of the Economic and Social Council on Arrangements for Consultation with Non- governmental Organizations, approved by the Council on 21 June 1946, shall apply to the meetings of the Preparatory Committee as appro- priate. The committees of the Preparatory Committee may consult with these organizations either directly or through committees established for the purpose. Such consultations may be arranged on the invitation of the working committee or on the request of the organization. 3. Representatives of Governments not members of the Preparatory Committee may attend all plenary mrrying of the. Preparatory Committee and may attend all other meeetings of the Preparatory Committee or of its subsidiary bodies on the invitation of the Chairnan of the body-concerned. .

GATT Library

bd401sx7616

Verbatim Report of An Informal Meeting Committee II : Held at Church House, Westminster, S.W. 1 on Thursday, 21 November 1946 at 3 p.m

United Nations Economic and Social Council, November 21, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

21/11/1946

official documents

E/PC/T/C.II/PV/11(a) and E/PC/T/C.II/PV/10-11(A)

https://exhibits.stanford.edu/gatt/catalog/bd401sx7616

bd401sx7616_90220015.xml

GATT_157

E/PC/T/C.II/PV/11(a) UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of An Informal Meeting COMMITTEE II held at Church House, Westminster, S.W. 1 on Thursday, 21st November, 1946 at 3 p.m. CHAIRMAN: Mr. A. B. SPEEKENBRINK (Netherlands) (From the shorthand notes of W. B. GURNEY SONS AND FUNNELL 58 Victoria St., Westminster, S.W.1 ) - 1 - A.1 A. 2 E/PC/T/C. II/PV/11 (a) THE CHAIRMAN: Dr. Ccombs asked to be excused because he is presiding at another meeting on quantitative restrictions. IIc has asked you to come here this afternoon to give us an opportunity to explain the work of the Sub-Committee on Procedure and Tariffs. This is to be an informal meeting simply to make you acquainted with what we have prepared and drafted in the Sub-Committee, which will come up tomorrow in Committee II for comments and, let us hope, approval. We are prepared to answer questions that may be put after our short explanation, but the real discussion of this paper will take place tomorrow in the meeting of Committee II. I do not know at what time it will start, probably 10-30 a.m. I would say first that the task of the Sub-Committee was to prepare a memorandum on procedure for tariff negotiations and at the same time certain Articles of the Draft Charter were referred to the Sub-Committee for study and report. We found at the begining of our meetings that it was better first to try to reach agreement on the Articles of the Draft Charter, as they have a definite bearing on the memorandum on procedure on tariff negotiations. This morning you received the draft report of our Rapporteur, which was not in a definite state as we had not approved it. We did that yesterday afternoon. You will also find another paper, E/PC/T/C.II/57, corrected (1). There you find certain changes which we agreed should be put into the report of the Rapporteur. There was no time to give you a clean draft, but I do not doubt that that will be available tomorrow. You have therefore before you the Rapporteur's report together with this paper No. 57 and, separately, as an addendum to that, the Draft Articles we have adopted in the Sub-Committee. They are in rather a strange order because we start at 29 and 30 and then go to Article 8. If you will take Article 8 first, which is the most favoured nation clause, you will see that we have made certain changes which you will find explained in the Rapporteur' s report. The most important one is in paragraph 2 where, in sub-paragraphs a, b and c we made certain chances in the American Draft. In our draft we distinguish the preferences in force exclusively between territories comprising on 31st July 1939 the Commonwealth of Nations and so on, and then preferences in force exclusively between the United States of America and the Republic of Cuba, and c, which is an addition, relates to preferences in force on 31st July 1946 exclusively between neighbouring countries. E/PC/T/C. II/PV/11 (a) Then we come to Article 18, which is a very important Article having a definite bearing on the memorandum on procedure for tariff negotiations. We have again changed the American Draft, sometimes quite considerably. In the American Draft the Article starts with the obligation to enter into "reciprocal and mutually advantageous negotiations with such Member or Members directed towards the substantial reduction of tariffs and other charges on exports and imports". An addition by this Sub-Committee is, "and the elimination of tariff preferences". That is further elaborated in the memorandum of procedure on tariff negotiations. In sub-paragraph a we also made a change, saying that "prior international com- mitments shall not be permitted to stand in the way of negotiations with respect to tariff preferences, it being understood that action resulting from such nego- tiations shall not require the modification of, existing international obligations except by agreement between the contracting parties or, failing that, by the termination of such obligations in accordance with their terms." The idea there is that every member entering into negotiations in Geneva will do so of his own accord, and will accept certain obligations, it being left to him as to how to effect those obligations. If he is told by other obligations to other countries, as for instance if he has a preference system, it is up to him to reach agreement with the other people concerned. But he is expected to fulfil the obligations he has accepted in the Geneva negotiations. At the end of sub-paragraph b it is laid down that "all negotiated reduc- tions in most favoured nation import tariffs shall operate automatically to reduce or eliminate margins of preference. We had a long discussion in our sub-committee on this paragraph and in the end we reached the conclusion that we ought to keep the word "automatically". There was only one member who thought we ought to differentiate between most favoured nation negotiations and those on preferential rates. If more clarification is required, perhaps it could be given at our meeting tomorrow. We then added a third sub-paragraph c on the binding or consolidation of low tariffs or tariff free treatment, stating that in principle such binding or consolidation shall be recognised as a concession equivalent in value to the substantial reduction of high tariffs or the elimination of tariff preferences. This was agreed in the Sub-Committee to take care of the special position of countries which in the past had not made use of tariffs for other purposes than -3- A.4 E/PC/T/C.II/PV/11 (a) revenue. It is also worked out in the memorandum that, in the course of reciprocal and mutually advantageous negotiations, certain countries will have to let go certain possibilities of using quantitative restrictions for pro- tectionist purposes. We did not think it necessary to includes that here as the whole question of quantitative restrictions is dealt with in other Articles, and we thought that here the "reciprocal and mutually advantageous negotiations was sufficient if one kept in mind that the Charter would not be adopted until after the negotiations. There is therefore a safeguard for certain countries which may have to forego some of their possibities. I do not think there are any changes in paragraph 2, but paragraph 3 has been changed and perhaps the Rapporteur will explain them. THE RAPPORTEUR (Mr. Leddy): The main changes in paragraph 3 are these. Paragraph 3 would authorise a member to withold from another member tariff reductions which the first member had granted in pursuance of the negotiations if the second member failed to carry out his obligations under Article 18. The change made is simply to permit a member to withhold any tariff benefits, including the binding of duties as well as duty reductions. The reason for this change is primarily to ensure that low-tariff contries which may merely have bound duties instead of reducing many of them will not be in an unfavour- able bargaining, position in dealing with countries which refuse to fulfil their obligations. The second important amendment is the one which on joins upon the Organisation, in determining whether a member has a justifiably failed to carry out its obligations to negotiate, whould have regard to the position of the member under the Charter as a whole, and that means under the provisions of the industrial development chapter as well as other chapters. THE CHAIRMAN: The point we added here about "having regard to the provisions of the Charter as a whole means that quantitative restrictions, commodity agree- ments and employments, provisions will all have to be taken into consideration by the Organisation in determining whether a member has failed to fulfil its obligations. We now come to Articles 29 and 30. Article 29 gave rise to a considerable amount of discussion. It gave members certain rights, as a result of unforeseen developments, to withdraw concessions. In particular we had a discussion on account of the addition of the last sentence of paragraph 2, - 4 - A. 5 E/PC/T/C. II/PV/1 I (a) "in critical and exceptional circumstances such action may be taken pro- visionally without prior consultation." Delegates will remember that this was a point raised by several countries in the meetings of Committee II, when it was said that prior notification would not always be possible. We have studied that very carefully and found that there was a substantial amount of agreement, only one or two delegates suggesting that there should always be prior consultation. The majority thought we should allow for this possibility, but only in critical or exceptional circumstances. The main thing was to see that there should be no abuse of this in future, and there- fore in the second part of the paragraph we have put in that such consulta- tion shall take place immediately upon taking the action. Further on it is laid down that if concessions are withdrawn they should be substantially equivalent, in comparison with the obligation the other member has withdrawn. Futhermore, to guarantee that there will be no abuse, we have included the last sentence, "that in serious cases the 'Organisation may authorise the affected member to suspend concessions or obligations in addition to those which may be substantially equaivalent to the action originally taken." With regard to Article 30, again we have put in "under the terrns of the Charter", so as to give this Article a much wider scope. One of the things which the Drafting Committee will have to consider may be as to whether this Article should stay here or be put in a different place in the Charter, but we did not trouble with that here. It is a very important Article so perhaps I may read it to you: "If any member should consider that any other member has adopted any measure, whether or not it conflicts with the terms of the Charter, or that any situation has arisen which has the effect of nullifying or impairing any object of this Charter, the members concerned shall give sympathetic, consideration to such written representations or proposals as may be made with a view to effecting a satisfactory adjustment of the matter. If no such adjustment can be effected the matter shall be referred to the Organisation which shall, after investigation and if necessary after consultation with the economic and Social Council of the United Nations or any other appropriate international specialised agencies, make appropriate recommendations to the members concerned. The Organisation, if it considers the case serious enough to justify such action, any authorise the member or members to suspend the publication to any other member or members of such specific obligations or concessions under this Charter as may be appro- priate in the circumstances. If such obligations or concessions -5- A. 6 E/PC/T/C. II/PV/11 ( a) are in fact suspended, any affected member shall then be free not later than 60 days after such action is taken to withdraw from the Organisation upon the expiration of 60 days from the date on which written notice by the Organisation of such wiithdrawal is received." Here we have extended the scope of this Article , and it was necessary to bring in the reference to the Economic and Social Council and other appropriate specialised agencies. We thought that these provisions were adequate to cover the special position of undeveloped countries and the other problems on which we received a message from the Joint Committee of Committees I and II. There is still article 33 regarding the territorial application of Chapter 4, customs unions and frontier traffic. There also we have made certain changes and additions. We have changed sub-paragraph 2(b), where we speak of the formation of a union for customs purposes. The reason is that the formation of such a union takes time, and often considerable time, because not only have the tariff systems to be adjusted but certain parts of economic and trade policy as well. Before a customs union is complete therefore even years may elapse, and we thought fit to cover that by the words "the formation of a union for customs purposes." We have also put in a new paragraph 4, "The members recognise that there may in exceptional circumstances be justification for new preferential arrangements requiring an exception to the provisions of Chapter 4. Any such exceptions shall be subject to approval by the Organisation in relation to paragraph 2 of Article 55" which, if you remember, provides that the Organisation may take certain decisions with regard to the application of Chapter 4 by a two thirds majority. In this paragraph we have tried to cover the wish of certain countries to have the possibility of regional preference systems, or perhaps even open conventions if they are really conventions serving a useful purpose, and every time the Organisation will be the judge as to whether such new arrangements are in conformity with Charter. Here , you will notice, and I believe other sub-committees have done the same thing, we always put the Organisation in at the centre of things. We feel that there may be certain flexible clauses provided there is an organised body to judge it and avoid unilateral action. - 6- A.7 In paragraph 5 we have again oliminated references to tariffs and other regulations, again because a customs union is a complex business and it may be that in certain cases it is not for the time being possible to have a real customs union. I think that is the explanation of the changes we have made in these Articles; now we may perhaps proceed to the memorandum on procedure. Before we do that, are there any questions to be answered? MR. DU PARC (Belgiium) (Interpretation): Concerning Article 8, which deals with the most favoured nation treatment: towards the end of paragraph 1 I see, in the English text, the words "any advantage, favour or privilege granted granted by any member country to any product originating in or destined for any other country..." I do not know how the word "originating" will be translated in the French text. I suppose the word used will be "originaire", but it is in our Custorms tradition to make a distinction between "products coming from" and "products originating in". This distinction seems to us to be a very useful one, and I should like to give an example. It was in the framework of our Organisation that certain preferences may be granted to certain member countries which may not always be extended to other members. In consequence it is interesting and important for us to make a distinction between "coming from" and "originating in". The words "product coming from" are applied to any pro- duct which arrives from the country underconsideration, but such products may well have originated in another country, and the country of origin may not be a member. In such conditions it mght be very difficult, or even impossible, for our customs administrations to make a proper distinction between the preference granted to member countries and non-member countries. I believe that this remark has already been made previously by the French Delegation, during one of our earliest meetings, and that being so the Belgian Delegation did not insist on the point. We regret, however, for reasons which are perfectly clear to us that no account has been taken of this distinction, which to us seems to be a very important one. THE CHAIRMAN: We discussed Article 8 paragraph 1 at length and we had before us also the clause referring to the League of Nations, and we came to the con- clusion that the American Draft was the best to adopt. I will not say that we have taken much trouble with the words "originating from", because we E /PC/T/C.I I/PV/1 I (a) E/PC/T/C.II/PV/1 I (a) thought that would be taken care of by the Technical Sub-Committee, and that if any changes were required that Sub-Commiittee would deal with them. The problem has been discussed many times in the Technical Sub-Committee - MR. DU PARC (Belgium) (Interpretation): This problem has not been discussed by the technical Sub-Committee. THE CHAIRMAN: I do not think it will help us much if we try to solve these technical problems at the last moment, but we can discuss that tomorrow and if need be the Drafting Committee or the Organisation later on can make the necessary change. After all, this is a draft, and I must say we have not discussed the point at much length. Perhaps Mr. Hawkins would like to make a few remarks upon it? MR. HAWKINS (United States): We did not go into it at any length, if at all; I do not remember that we discussed the exact point in the Sub-Committee. The question raised is of course pertinent because the effect of the most favoured nation clause as drafted would be to require the granting of minimum rates to the product according to its origin, and it would not be denied the benefit of the minimum rates if it had been trass-shipped. - 8 - B1 E/PC/T/C. II/PV/11 (a) In other words, what you need to do under this Article as drafted to obtain the benefit of the rninimum rates is to prove the origin and those rates would apply even though they entered the importing country by way of a third country. THE CHAIRMAN: I may say, if there are any remarks to be made upon that, that perhaps we can reserve those for tomorrow. This meeting, as I have already said, has been called merely in order to give you an explanation of what we have done, and further and fuller discussion will be reserved for to- morrow. MR DU PARC (Belgium) (Interpretation): It is exactly in order to have an explanation that I ask this question. THE CHAIRMAN: Are there any other questions to be asked? MR CHOW (China): Mr Chairman, do I understand you correctly, that we are not going to discuss the draft to-day? THE CHAIRMAN: Yes. MR CHOW (China): You see, we are not represented on this Committee, and this draft came to us rather late and we need a little more time for further study. THE CHAIRMAN: I think we did our utmost to make the draft ready last night to give you the whole of Thursday to study it, and therefore we have no official meeting before Friday morning. The only reason why we have this meeting to-day is to give you some verbal explanations so as to assist you in your study. I think that the Chairman of Committee II expects you to be able to comment upon it tomorrow morning. If there are no further questions to be asked, perhaps we might turn to our Memorandum on Procedure of Tariff Negotiations, Paper No.58. You will see that we have a short Introduction, and after that we start with the proposed negotiations among the Members of the Preparatory Committee. Here we explain that the negotiations must "proceed in accordance with the rele- vant provisions of the Charter as already provisionally formulated by the Preparatory Committee." One of the difficulties we will meet in Geneva (and that is the reason why we put forward this memorandum now) is that you will not have the Charter ready before we negotiate. The idea 9. B2 E/PC/T/C. II/PV/ll (a) is that we start first with the negotiations after further discussion of the draft Charter in the light of the further study of the draft by Governments, and then we are hopeful that the Charter will be adopted by the countries participating in the Geneva Conference at a later stage, after the negotiations have reached certain results. Therefore, we have now got out this memorandum for the guidance of governments con- taining guiding principles for those negotiations, which, as I said before, we have based on the relevent Articles of the Charter, especially Articles 8 and 18. You will see that under the heading of "General Objectives" were repeat that, "An ultimate, objective of theDraft Charter," and so on, is to bring about "the substantial reduction of tariffs and the elimination of tariff preferences. " We then go on, in the next paragraph, to give you an idea of the general nature of the negotiations, and you will find here elaborated in more detail what I said before, that the negotiations are to Le on a "reciprocal" and "mutually advantage- ous" basis; and, furthermore, that they will be conducted "on a selective, product-by-product basis which will afford an adequate opportunity for taking into account the circumstances surrounding each product on which a concession may be considered." Again you see here that we can have a reduction of tariffs or preferences and you can also have a binding of a tariff against an increase. We conclude that paragraph by saying that there would be ample flexibility under the selective procedure for taking into account the needs of individual countries and individual industries." With regard to the general rules, we refer to paragraph 1 of Article 18 which I mentioned before when we discussed the various Articles. After that we come to a difficult matter, once we start on these negotiations, and that is the date on which each country would base its tariffs and so on and on which it is prepared to grant concessions. We found that the situation of every country is different from that of very other, and it would be very difficult simply to mention 1939 or the 1st July 1946. Therefore we decided to give every country the right to bame its base date itself, 10. B3 E/PC/T/C.II/PV/11(a) but then that date should be so that it would hold good for the negotiations on all products with all other countryes members of the Preparatory Committee and they should not vary from country to country or from product to product. We quite see that there will be certain difficulties there for various countries, but we thought, after very full discussion, that in record to these negotiations, as with everything else, it is a question of give and take, and to find a formula that is, on the whole acceptable, we thought that we would leave this rule there as it is stated in the paper. Mentioning the base date also brought up the problem that there should be no important changes before we meet in Geneva. The fooling of the sub-Commitee was that it is very in- portant that when we meet in Geneva there should be a feeling of con- fidence in each other and that there should be no measures in the mean- time which could be looked upon as improving their bargaining position. although That is only a suggestion. So that/we say that it is irmportant that members do not do this or do not do that, it is emphasized that no country is bound and it is open to every government to do what it thinks fit with regard to its national economy. But we feel that as there may still be certain changes in tariffs on which every country has a right to act, as every country can take any measure reeded for its economy, it should be kept in mind that there are these coming tariff negotiations, and as we have said, or as we try to say here, it "would tend to prejudice the success of the negotiations in achieving progress toward the ob- jectives set forth in Article 18, and they should not seek to improve their bargaining position, " and so on. Then we come to the actual negotiations themselves. We had there the American suggestion before us, that we should deal with these negotiations following the principal supplier rule. The idea there is that with this huge number of countries taking part in the negotiations and with the many commodities to be covered, we should try to find a short out whenever we can, and we have tried to formulate that against that principal supplier rule. Perhaps there will be certain questions to 11. E/PC/T/C.II/PV/11 (a) be asked there ; but I think as members will have read that part of the document I do not need to explain it further to then here. You will then find in the next paragraph a "form of tariff schedules" which should embody the results of these negotiations. It is contemplated that these negotiations would be multilateral. After that you will find a reference to preferential rates of duty. There are certain preferential rates that we have given there, together with methods by which we could incorporate these remaining preferential rates in certain schedules. We then elaborate further on the method of conducting negotiations, and you will see what we envisage as the first stage, which is that every member should try to transmit to other countries, that is, every country taking part in the Geneva negotiations, before the 31st December, 1946, a preliminary list of concessions which it proposes to request of such other member. In that list we should indicate the existing rate of duty on which we base our request, because it may be that certain countries will have no full knowledge of the tariffs of other countries owing to the disturbances of the war; and an indication of the requested rate of duty. It is very important that we should try to do our utmost to have these lists received by other countries as soon as possible and also note that we have to send it to the one country concerned and at the same time submit enough copies to the Secretariat of the United Nations, which will then see that they are sent to the other countries as well and then also itself try to study these different lists and make a compilation of them in the best possible way to facilitate the further proceedings at Geneva. Then when we come together in Geneva every country is expected to lay on the table its list of proposed concessions which should be drawn up as faithfully as possible, and there should not be much loft over in the left or the right pocket. Then we follow the principal supplier rule, and we will try to get some shape into these negotiations as soon as possible. For that purpose we feel that we should have a kind of tariff steering committees which would be instituted as soon as possible after we meet in Geneva. That is a committee which the Heads of Delegations should appoint. We 12. B4 B5 E/PC/T/C. II/PV/11 (a) can discuss how many members should be appointed to that committee when we get to Geneva, but the idea of that committee is to put forward guiding rules in connection with these negotiations. Such a steering committee should from time to time review the whole field and see what progress has been made and where we can improve on the system, and so on and so on. You find the tariff steering committee mentioned at the end of this paragraph. The result of the negotiations will then be embodied in a number of tariff schedules which you find mentioned on page 12. Then we come to an important point, whether, when these negotiations have reached a certain stage, we should then leave the thing open until we have had the world conference. The Committee came to the conclusion that, in the first place, you will not be able to keep those things secret; there will be too many people involved for that; so that it is no use to try to cover up the things you have done and it is much better for trade to bring it into effect as soon as possible. However, we are then faced with the difficulty that there are only a relatively small number of countries and perhaps we might get into difficulties with the most-favoured-nation clause, in connection with which you will remember Articlc 31 of the Charter will have to be studied and elaborated further at the Geneva Conference. Therefore, we came to the conclusion that it would be the best procedure to extend the benefits of these negotiations provisionally to all countries and that after the World Conference when the Organization is set up and member countries have accepted the obligation to negotiated in a certain time, they should fulfil that obligation. If they do not, the other Articles of the Charter will apply and the benefits will be withheld from them. But we cannot say more than that about it now. After all, it is in Geneva where it will have to be worked out more carefully. In regard to the very to work that out, we have tried to cover that in a tentative draft outline of a general agreement on tariffs and trade wich you will find as an addendum to this report and which I advise you to study carefully. As you see, the agreement, for the time being, should be legally independent of the Charter, because the Charter can only be adopted after the World Conference - let us say when it formally comes into being; so that we must embody in the agreement certain Articles of the 13. B6 E/PC/T/C.11/PV/11 (a) Charter which we may agree in Geneva. Now in order to carry this out we need a provisional body, and therefore we propose on page 14 the creation of a provisional agency "pending the establishment of the International Trade Organization. " The last part of the document is concerned with further procedure after the Organization has been set up, and the main part there is that you will have an interim tariff committee on which those members who have fulfilled their obligations to negotiate will serve, and that tariff committee will judge whether other members of the Organization who have not yet negotiated have done that in the proper way and that the concessions which they grant are in conformity with what other countries have done. Now, Gentleman, I think I have covered our document as best I can. In about ten minutes' time the Heads of Delegations will meet here, so that I hope you will forgive me if I bring my explanations to an end. Thank you, Gentlemen. MR DIU PARC (Belgium) (Interpretation): Mr Chairman, there is one more question I would like to ask. This question has probably been covered by your draft on procedures, but this is the question. When we have reached agreement on preferential tariffs concerning members of the Organization, what will be the situation concerning the agreement already in existence and of other agreements which are still in existence and still in force after the undertakings which we may make after our original discussions? If, for instance, we have an agreement that a country does not adhere to or with a country which does not adhere to the Organization or which does not take part in the negotiations, and if we have with that country a treaty which granted the most-favoured-nation treatment, what would be our position concerning that country? I do not know if you have understood the sense of my question. I am sure that this problem has been studied and I am sure there is an answer to it somewhere in this draft, but I did not have time to read it all though, and I would therefore like to know what the position is. THE CHAIRMAN: If I understood your question aright, the answer is this, that these benefits would be extended to all countries. MR DE PARC (Belgium) (Interpretation): You mean to say the preferential E/PC/T/C.11/PV/11(a) tariffs would be extended to all and every country in the world or to all countries with which we may have any agreement, including a most- favoured-nation clause? THE CHAIRMAN: Yes, that would be the idea. Until after the Organization has been set up - and let me say here we find that most of the countries of the world will take part in the Organization - we will have to find a solution to the difficulty of the most-favoured-nation clause, but that can only be worked out in Geneva, as Article 31 has been left open pending the meeting in Geneva; so that we could say nothing more in this memorandum here. If there are no more questions to be asked, I declare this session closed. The meeting is adjourned. (The meeting rose at 4.20 p. m.) 15. B7

GATT Library

mr714hg7616

Verbatim Report of the Eighth Meeting of Committee II : Held in The Hoare Memorial Hall Church House, Westminster Thursday, 7 November 1946 at 10.30 a.m

United Nations Economic and Social Council, November 7, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

07/11/1946

official documents

E/PC/T/C.II/PV/8 and E/PC/T/C.II/PV/7-9

https://exhibits.stanford.edu/gatt/catalog/mr714hg7616

mr714hg7616_90220010.xml

GATT_157

E/PC/T/C. II/PV/8. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the EIGHTH MEETING of COMMITTEE II held in The Hoare Memorial Hall Church House, Westminster Thursday, 7th November, 1946 at 10.30 a.m. Chairman: DR. H.C. COOMBS (Australia) (From the shorthand notes of W.B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.1.) 1. B.1 E/PC/T/C.II/PV/8. THE CHAIRMAN: I understand that the United Kingdom document which has been circulated on the subject matter bTfore the Committee this morning has only recently reached the hands of Delegates. It has been suggested to me that it would facilitate discussion if Delegates were given ten minutes in which to read through this document. Is it your wish that we take that time now, or would you prefer to commence the discussion immediately? MR. LOKANATHAN (India): Some of us have not yet received the document. THE CHAIRMAN: I gather that the Delegates of India, Belgium and Chile have not yet received the document, which is No. w. 22. It will be distributed immediately to them. (After a short interval): Are Delegates now ready to proceed with the discussion of the matter? If so, I think we will follow our customary procedure and invite the Delegate of the United States to outline the principles underlying the United States Draft Charter. MR. HAWKINS (United States of America): I do not think it is necessary to say that we are dealing here with a very difficult and very important matter. The problem is one of ensuring that countries in balance of payments difficulties will be able to impose quantitative restrictions. The other side of that problem is that the provision should be so framed that too much latitude is not allowed, so that countries are imposing restrictions when it is not essential for balance of payments reasons. The United States Delegation are fully aware of the difficulties of tlhe problem. We offer our Draft of this section only as a basis for discussion. We ourselves very likely will want to offer modifica- tions in it, and at certain points we are quite prepared to con- sider substantial changes in it. I will mention those as I go along. 2. B.2 E/PC/T/C. II/PV/8. I should like now to outline briefly the essential features of our draft on the balance of payments exception, that is, Article 20 in our draft of the Charter. The basic provision is that a country confronted with an adverse balance of payments may impose quantitative restrictions on imports. That is the starting point of the draft. Until the end of 1949, or if the country concerned considers it necessary, until the middle of 1950, each country would judge for itself, without applying any criteria, whether such restrictions are necessary. The only qualification there during that period is that they should consult with other countries with a view to doing a minimum of injury to them. After that three-years period, a country could continue to impose quantitative restrictions provided this action meets specified tests. The tests laid down in our draft, in paragraph 3(?) are, first, the existence of a long-continuing or large deficit, or secondly, the probable development of a large deficit in the case of a country with low monetary reserves. That is the first point to which I think further consideration is necessary. We are quite ready to consider improvements in that point, because it is a critical point - the test as to when restrictions may be imposed. Action taken under the exception after the three-year period would be subject to review by the International Trade Organisation, in consultation with the International Monetary Fund, for the purpose of determining whether the balance of payments situation requires restrictions in the light of the tests or criteria to which I have referred. 3. C fols C1 E/PC/T/C. II/PV/8 Section 3(c) of our draft than provides for a complaint procedure. It provides that if any other member complains of the action the Organisation would rule on the question. That is to say, it would rule whether the balance of payments tests have been met. If it should rule that the restrictions are not justified, other members could withhold trade benefits granted under the Charter from the member which invoked the balance of payments exception. The last paragraph of Article 20, paragraph 4, is one which has caused some criticism and raised some questions. I think probably the drafting is not fortunate, since it does not clearly convey the intention. I will try to give you the intention of the draft. Paragraph 4 of the Article provides that so far as practicable the restrictions imposed will apply uniformly to all imported products. The purpose of that provision is to relieve the effect of the action on particular countries. However, we fully recognise that a country imposing restrictions for balance of payments reasons will want to buy less, for example, of luxury goods which it can do without, in order that its limited foreign enchange resources might be used for equipment, materials and so on. It is for that, reason that the rule laid down is not, even in our draft as forumatled, rigid. As you will note, it applies only as far as practicable. The intention is that a country should not impose restrictions under the balance of payments exceptions with the blind disregard of the interests of other countries; that it should at least attempt minimum commercial quantities of products supplied predominantly by a country, or which may be particularly important to another country. I have spoken so far only on the question of when restrictions may be imposed. The administration of restrictions, whether non- discriminatory or not, is not covered in this article, but is covered in Articles 21 and 22, which would apply to restrictions imposed under the balance of payments exception or any other exception, to the rule regarding quantitative restrictions. In general our draft, taking 4. E/PC/T/C. II/PV/8. Articles 20, 21 and 22 together, would provide for non-discriminatory application of any restrictions imposed under the balance of payments exceptions. The exact character of both provisions can be understood only by reference to Articles 20, 21 and 22. Article 21 lays down certain rules for the administration of articles which were discussed the other day, but I would like to call your particular attention to Article 22 which provides exceptions to the rule of non-discrimination. Briefly stated, without going over the ground which I went over the other day, those exceptions are that discriminations which are considered necessary under the Monetary Fund Agreement would be permitted such as the applications of the scarce monetary provision and one or two other technical exceptions. A further important exception is where inconvertable currency of another country is accumulated and can be used only by discriminating in favour of that country. Here again we are quite prepared to recognise the difficulty of applying balance of payments exceptions in a non-discriminatory manner in the immediate post-war reconstruction period. We do not want to be unreasonably rigid on that point; we recognise fully that production, trade and finance in many countries are rather seriously disrupted and for that reason we are quite open to consider amendments or changes in those provisions regarding non-discrimination under the payments exception in the early post-war transition period. I might also outline in a few sentences the next Section, Exchange Controls, which is related so closely to it, just to get the whole picture. That can be done very briefly on the basis of our draft. That is Section (d). The basic provision with respect to exchange control is that exchange restrictions will not be imposed on imports from other members. That corresponds to the basic provision that quantitative restrictions will not be used, the one being regarded as an alternative to the other. The second paragraph of that Article provides that exchange restrictions can nevertheless be imposed in accordance with certain provisions of the Monetary Fund Agreement, such as the scarce currency provisions or the provision autherising exchange restrictions 5. C3 E/PC/T/C. II/PV/8. with the approval of the Fund. However, we make a rather important qualification at that point. That is in relation to the fund transition period. Our draft would substitute the provisions for non- discrimination corresponding to those applicable relating to quantitative restrictions for those in the Fund Agreement relating to the transition that period. Again I want to indicate/what 'I said about our desire to give full consideration to that question of non-discrimination in the transition period will of course apply here. That, Mr Chairman, in very brief outline, is the American draft on quantitative restrictions and exchange control. THE CHAIRMAN: I think it might be useul at this states to invite the United Kingdom delegate to outline the proposals put forward by his delegation. Before doing so I would draw the attention of delegates to the fact that the indicator to show when a delegate is speaking too rapidly or with insufficient pauses for effective interpretations, is now operating. It consists of a red light over the Interpretators' table and if you are committing a fault the light will indicate one long and one short signal. I should be grateful if delegates would keep their eye on the red light. Mr HELMORE (UK): Mr Chairman, in spite of your having attempted to put me off by stroke by reminding me of the existence of the red light, I will do my best. In the opinion of my delegation this subject which we are discussing this morning is one of the critical points in the enterprise we are now engaged upon. I would only like to reinforce what my United States colleague has said on the importance of this matter by referring to a thing we all remember, that is that it was the rapid introduction by one country after another of restrictions because of difficulties in their balance of payments which contributed, I think I could say, a major part to the economic troubles of the 1930's. If we do not solve this problem we may wreck all the efforts that we are making in other ways to achieve the objectives which the draft charter lays down for us. We in the United Kingdom, I might perhaps say, are in a position to appreciate both sides of this problem. We are at 6. E/PC/T/C. II/PV/8. present imposing restrictions on balance of payments grounds and we are also sufferings - if I might use that word - frorn the restrictions that other people at the moment are themselves forced to apply on payments grounds. We approach this matter with one principle very firuly in our minds, that is, that the subject of balance of payments generally is a matter which is already in the hands of another internation agency, the International Monetary Fund. It is, therefore, clear that anything we may decide upon or agree upon in the trade field must be closely integrated with the work of the International Monetary Fund in the field of balance of payments generally. I do not mean by that that the I.T.O. can wash its hands of the subject and can say: we need not provide this at all because it is a matter for the Fund. Imposition of restrictions on trade is in our view very definitely a matter for the I.T.O. Therefore, the problem we have in front os us is to effect closest possible working relationship between the operations of the I.T.O. in this field and the operations of the Fund in the field of balance of payments generally. Delegates will see that in paragraph 5 of our note. We have said that we have written thedraft on the assumption that there will be common membership. That is a difficult matter to which I woule like to return at the end of my speech, after mentioning the cognate subjectof exchange control. 7. D fols. D.1. If I might now return to the principles on which we have drafted our suggested article, they are, I think, best to be summarised in this way: from the point of view of expanding world trade and removing barriers, we want to see that the least possible use is made of restrictions n balance of payments grounds, and that they are only used in justifiable circumstances. On the other hand, we want to ensure that when there are circum- stances that justify their use, proper provision is made for countries to apply them. We also feel that since world trade is now, at this moment, hampered by many balance of payments restrictions, it is desirable that as early a start as possible should be made in beginning to remove them - or, as I would prefer to say, to modify then and lesson their intensity. We attach a great deal of importance to the flexibility of these provisions so that countries will be encouraged t look at this, not as a choice between having balance of payments restrictions and not having them at all, but as a continuing problem of how far they can reduce the intensity of these restrictions. So our solution, which is set out in detail in the paper which has just been circulated, is, first of all, to set down some guiding principles. I do not think it would be necessary or wise at this stage to go into the technicalities. Secondly, we leave it to the good judgment of each country to decide how far, in the light of those principles, it is essential for it to apply balance of payments restrictions. And thirdly, we provide that at any time if another country feels that someone else is using his rights under this article too rigidly, too intensively, or in a way which unnecessarily injures his commercial interests, he can make representations to the I.T.O. We then provide that those representations are to be considered in conjunction with the International Monetary Fund, and we hope we have succeeded in putting down on paper an article which provides for two things on this point: one is that the facts about 8. E/PC/T/C. II/PV/8. D. 2. E/PC/T/C. II/PV/8. the balance of payments and the deductions to be dream from those facts about the need for balance of payments restric- tions shall be mainly considered by the Fund, and that the question whether the application of those restrictions unnecessarily injures the interest of another country shall be considered by the I.T.O. We attach very great importance to words which I invite delegations to study in the annu ce to our paper, in paragraph 5 at the bottom of the last page but one. The particular words are: "in a manner which unnecessarily damages its commercial interests" All those words have a particular weight. There is not only the question of damaging commercial interests - that may be inevitable. The words are ''unnecessarily damages its commer- cial interests". And those words are repeated later in the same paragraph. I think, while delegates are looking at that paragraph, I might invite attention also to the words "if these restric- tions are not withdrawn r modified". There is a small typing error in the paper as circulated which makes the last word I have just read out "mollified". I should be grateful if that could be corrected to "modified". Again the word "modified" takes up the principle that it is very often the intensity of the application of the restrictions that is so damaging, and not so much the fact that the restrictions exist. Well, Mr. Chairman, I would not like at this stage to take up time by going into all the details of the exceptions and definitions which we have put in the paper. I think it would be preferable for delegates to study those from the paper. I think I have said enough to indicate the spirit of our approach to this problem. However, I would like to go on to say one word about exchange control which my United 9. D. 3. E/PC/T/C. II/PV/8. States colleague mentioned. Obviously we should not be rounding off our task unless we provided in so.c way that the rules we lay down for preventing unnecessary damage to trade are not frustrated by the application of special exchange restrictions or - a point which my United States colleague did not mention - competitive exchange depreciation. Those matters, Mr. Chairman, are broadly governed in the Articles of Agreement of the International Monetary Fund, and the obvious logic is that there should be common member- ship of the Fund and the International Trade Organization. And that is the assumption on which we have proceeded. However, I can quite see that it may be constitutionally difficult to lay down in the Charter of one organisation that people must belong to another organisation and, indeed, the difference in the design of some of the escape clauses and provisions about membership between the draft Charter and the I.H. F. Agreement may make that solution impossible, and we are ready to consider any suggestions which ? ive the essential objectives of providing that members of the I.T.O. do, in fact, observe the rules of the I. F. which have a relation to trade problems. THE CHAIRMAN: Thank you. The delegate for France. M. ROGER NATHAN (France) (Interpretation): Mr. Chairman, we are at the moment faced with the Amecrican proposal and the British memorandum. I do not believe that this is the right moment for studying their both from the point of view of technical approach, but I do believe that it would be right and just for me to remind you here of the position France has taken in this respect. The position of France has already been expounded here on two occasions by M. Alphand. Nevertheless, I believe it to be indispensable to say once more what importance France attaches to the effort which must be made 10. D. 4. E/PC/T/C. II/PV/8. to allow all of us to attain the objectives of the Charter. One of the things which may stop a country in the efforts which it ought to make, are the doubts which such a country may have on the subject of stability of its balance of payments and on the subject of maintaining the most necessary equilibrium. That is why, as has already been said by the delegates of the Unitd States and of Great Britain, it seemsCs to us that the items which are now to be discussed are among the most important and the most grave ones. On the other hand, as you know already, France knows very well what will have to be the work in front of her; work which she will have to do to repair her economicystemst so that it may become completely competitive and that, as a result, the balance of payments of France may be placed in such a position that her stability may be assured through regular work. France does notakeak into consideration only her own position. France knows perfectly well that in taking such a position she is in full agreement with all countries which have, as she has, the need and duty to reform very _rofoundly their economic systems. The delegate of the United States has understood how complicated these problems are, and we appreciate deeply the wide view and understanding which, inspired his statement. The United States were the originators and the creators of the effort which we are all about to undertake and, at the same time, the United States recognises all the difficulties which such an effort will be faced with before it can be productive of good results. I must state how greatly we aperaciate the spirit which has motiviated the American delegation. We are faced with two texts. These seen to us to serve as an excellent and useful basis for future discussions. We are not at the moment in a position to agree to the precise 11. D. 5. E/PC/T/C. II/PV/8. provisions of the one or the other text, or at least, all the precise provisions of both texts, but we believe that by starting from those two texts as a basis, we shall be able to work most successfully and we shall best be able to produce a draft which will cover the needs of both. THE CHAIRMAN: Thank you. The delegate for Australia. MR. J.G.PHILLIPS (Australia): Mr.Chairman, the Australian delegation recognise the general line of approach of both the United Kingdom and the United States. They have recognised the importance of this problem and we feel that very acutely. Australia has been for many years particularly subject to balance of payments difficulties, for a number of reasons. External trade is of very great importance to our economy, and our export income is largely dependent upon a few primary products which are generally subject to large fluctuations, both in volume and price. Moreover, as a country which is still in the stage of industrial development, our imports include a relatively high proportion of capital goods. 12. E. E.1 E/PC/T/C .II/PV/8. Moreover, we are a debtor country, and have large interest payments to make overseas. All these factors make the balance of payments problem for Australia a very difficult one. Frorm our point of view, therefore, it is essential that international agreements which we may enter into shall not unduly restrict our power to protect our balance of payments and our monetary reserves. We recognise, of course; that the action we take does not affect only ourselves; it also affects other countries. we therefore recognise the need for some international supervision over the action which countries can take in this field. However, in the past Australia has been not only one of the first countries affected by difficulties which other countries have felt later, but also subject to special difficulties of her own, even at times when other countries were not much affected. Moreover, we have had some experience in the past of a tendency for some of the more highly developed countries to be perhaps not fully appreciative of our difficulties. Since the provision of the International Monetary Fund would limit the freedom of countries to vary their exchange rates or to impose exchange control, it is of particular importance to us, if we become members of the Fund, that the chief remaining method by which we can protect our balance of payments - that is, quantitative restrictions - should not be unduly curtailed. It is for this reason that we would press for the inclusion in this Charter of some objective criteria for balance of payments difficulties. We feel that when a members monetary reserves are clearly reaching an unduly low level, or when its position is such that this will happen in the near future, then that country should have, an undoubted right to take remedial action. If its position meets these objective criteria quantitative restrictions should not be open to complaint or challenge by other members or by the organization. 13. E. 2. E/PC/T/C . I I/PV/8 . We realise that there are difficulties in defining such objective criteria at suitable levels for each country, and that there are special difficulties in doing that at the present time when the future of world trade is so uncertain. We realise, too, that the level of the criteria must be reasonably low or they will defeat their purpose, as the United Kingdom Delegate has suggested, by allowing, too widespread a use of import controls. However, even in the present circumstances we are not sure that the task of stating these criteria is impossible, and we think the possibility should be investigated. If that investigation discloses that the specification of criteria is impracticable at present, then we would like to suggest that some provision should be made in the Charter for objective criteria but that the actual levels of those criteria for each country should be determined later - perhaps towards the end of the transitional period. we agree generally with the United Kingdom and the Unites States, that each country must decide for itself when it is in balance of payments difficulties and whether it needs to impose restrictions. It may well be that a country which cannot strictly satisfy the objective criteria which we suggest would, nevertheless, be fully justified in imposing restrictions. In this case we feel that the method of complaint and investigation by the organization and by the Monetary Fund, and possible disproval is suitable. There is one point there in the United Kingdom paper on which I am not quite clear. In paragraph 5 of the Annexe it speaks of, "Any Member-Country which considers that any other Member-Country is applying import restrictions in a manner inconsistent with the provisions in paragraph '1' to "4" above." 14. E.3 E/PC/T/C.II/PV/8. I am not quite clear whether "in a manner" there refers only to the type of restrictions that are being imposed, the way they are being administered, or whether it applies also to the fact of their being, imposed. If the complaint is intended only to apply to the manner of their administration, or possible the severity of them, I think that might alter our view somewhat. There are a few other points I would like to mention in connection with the questions quantitative restrictions for balance of payments. We agree with the United States conception, that a country should have more freedom during the transition period than it has later. On the other hand, we agree, I think, with the United Kingdom sugges- tion that the lenth of the transition period should be open to extension for individual members. We agree also that during the transition period it should be possible for a member to use discriminatory import restrictions if they are necessary. I note the United States Delegate was prepared to reconsider his draft on that point. We also support the United Kingdom suggestion that there should be some provision for investigation into, and appropriate action taken if necessary, a case where balance of payments difficul- ties are causing a persistent and widespread application of quantitative restrictions. Another point that has been raised, I think in this committee - but certainly in other committees by a number of countries - to which I think the French Delegate referred - was the question of countries whose difficulties because of the war, or whose policy of industrial development is likely to cause them possibly almost permanent balance of payments difficulties. We think, that some provision could be made there for consultation with the organization, and for approval for those countries to apply quantitative restrictions for a period - perhaps three years - with the power of reviewing it at the end of the period. It really seems to me to amount to not much more than an 15. E/PC/T/C.II/PV/8. extension of the provision in the United States draft, which allows a country to impose restrictions to prevent a serious decline in its monetary reserves. The sort of import policy which countries of that kind may need will entail imports at a level which would run down their monetary reserves. I do not think I want to say anything more about that point at the moment, but we think some provision should be made for it. On the question of discrimination in quantitative restrictions, of course we agree that in general they should be non-discriminatory. The exceptions set out in the United States and the United Kingdom drafts seem reasonable, but there is possibly another case where discrimination might be justifiable. We would just like to throw this out at the moment for consideration. If a member if applying import restrictions on balance of payments grounds it may be that his balance of payments difficulties are due to difficulties of either a fall in employment or a failure to use international resources by another country or group of countries, and we think that in those circumstances to make the restrictions non-discriminatory might merely spread those difficulties round the world, where it would be possible to confine them to the countries which are in difficulties at the moment. A particular case of that would be perhaps where other countries were also in balance of payments difficulties and were imposing import restrictions. Well, it might be unnecessary for a new country coming into difficulties to intensify the difficulties of those countries which are already applying restrictions, as it would have to do if the restrictions were non-discriminatory. The suggestion we would like to throw out is that there should be provision for the organization to consider a particular case, and if it thinks that permission for discriminatory restrictions would have a less harmful effect on world trade generally than non-discrimination, then provision should be made for discrimination. 16. E/PC/T/C.II/PV/8. Finally, on this whole question of balance of payments difficulties it seems to us that the provisions in this section of the Charter will depend very substantially on the type of provisions that are finally agreed in relation to full employment, stabilisation and expansion of effective demand. As we have stressed before, it will be very much easier for countries to accept limitations of their freedom of action in this field if they can be reasonably assured that the prospects are good for a steadily expanding world economy, and for stable and prosperous conditions in the main trading countries, Furthermore, if they know that in the event of these expectations not being fulfilled their obligations under the Charter can be reviewed and correspondingly modified if necessary it will be easier. I would like to say a few words about the exchange control section, since that has been raised. We agree generally with the provisions in the United States draft. We are glad to note that the United States is wiliing to reconsider the question of discriminatory restrictions during the transition period. We are inclined to think that it would h not be wise or proper for the trade organization Charter to, in effect, curtail the freedom which is giver to a member of the Fund under the articles of the Fund. 17. F.1 E/PC/T/C. II/PV/8. We agree with the United States in not providing for common membership in the Organisation and the Fund. We do not think that a member should be compelled, if it wants to join one international body, to join another. I know that the United Kingdom Delegation have expressed a willingness to consider any suggestions that can be put forward on that point. I do not know that I want to put forward any at the moment, but I want to say that naturally we agree that members of the International Trade Organisation must be subject to some of the provisions, or similar provisions, of the Fund, but we do not think it is necessary they should be subject to all of those provisions. Members of the Fund get benefits under, the Fund which are not open to non-members, and for that reasons, and other reasons, we do not think it is necessary to have precisely the same provisions applying to members of the Organisation as to the Fund. In particular, we are not satisfied that it is necessary to provide that the same provisions as regards exchange rate changes shall exist in the case of the Organisation as in the Fund. I do not want to say much about that, except that we think a country is far less likely to alter its exchange rate recklessly or for unsound reasons than it is to impose quantiative restrictions or exchange control. The change in exchange rates has a much more widespread effect on the country's whole economy than the other things need have, and moreover, looking at the past, we are inclined to think that experience between the wars would suggest that a good deal more damage was done to world trade by the reluctance of countries to move their exchange rates early enough rather than by any tendency to more them too fast. THE CHAIRMAN: At this stage I think it might be useful, since this matter is obviously very closely associated with the purposes and the administration of the International Monetary Fund, if we asked the representative of the Fund here whether he wishes to make a 18. F.2 E/PC/T/C.II/PV/8 statement to the Committee on this matter. What is the view of the Committee on this matter?...... As there seems to be agreement, I will ask the representative of the International Monetary Fund whether he wishes to make a statement? ' MR. LUTHRINGER (Observer for International Monetary Fund): Thank you, Mr. Chairman, very much for your courtesy in permitting us to participate in these important deliberations of the Conference. We are vitally interested in its success. Even before the days of the Bretton Woods Conference, a common feeling prevailed among those who were charting the course of the basic instruments of the Fund and the Bank that our twin brothers -- as the late Lord Keynes named them will need a third brother to help in the accomplishment of the common task of serving humanity usefully and successfully in its endeavour or economic security and for an over rising standard of life. The reprisentatives of the participating countries of the Bretton Woods Conference included in the final Act Resolution Number VII, which recognises that the complete attainment of the purposes and objectives of the Agreement cannot be realised through the instrumentalities of the Fund and the Bank alone, and recommended to the countries of the world that they reach agreement as soon as possible on ways and means whereby they may best "reduce obstacles to international trade and in other ways promote mutually advantageous internati.nal economic relations - ... and facilitate by cooperative effort the harmonization of national policies of Member states designed to promote and maintain a high level of employment and progressively rising standards of life." 19. F.3 E/PC/T/C.II/PV/8. We believe that an International Trade Organisation as envisaged by the Charter this Conference is constructing will help to fulfil this function and by grappling with the problems entrusted to it, will be not only of great assistance to the Member nations, but also considerably facilitate the work of the Fund. The objectives of the two institutions are the same, only our labour is divided. It is understandable, therefore, that so many provisions are found in the proposed Charter, which refer to the Articles of Agreement of the IMF and are complementary to them, particularly in Sections C and D of Chapter IV of the proposed Charter. The aims of these sections, namely, the eventual elimination of quantitative trade and exchange restrictions, is also one of our aims, Mr. Chairman, and we note with interest the methods by which this Conference is proposing that the Member countries with the help of the ITO should endeavour to do away with some of the destructive features of quantitative trade restrictions. We know that this is a hard and arduous task. We also realise that without a parallel policy in the field of international financial relations, this purpose would be doomed from the outset. When the articles of Agreement of the IMF were drafted, . it was realised that the Fund would start its operations soon after hostilities had ended, at a time when Member nations would be endeavouring. to reconstruct their economies and would be contending with economic problems of unprecedented magnitude. It was felt that under such conditions the Member countries should during a transition period have considerable freedom in protecting their monetary systems while trying to fit their national economies into the overall pattern of the world economy. It was because of these considerations that article XIV of the Articles of agreement was adopted. This Article was thoroughly discussed at Bretton Woods and many Member nations felt that they would need this freedom of 20. F.4 E/PC/T/C.II/PV/8. action before assuming the obligation not to impose restrictions on the making of payments and transfers for current international transactions. Yet even this Article, Mr. Chairman, does not mean complete freedom for the Member countries to improse exchange restrictions or maintain them for a longer period than conditions warrant. Exchange restrictions imposed by Members under article XIV will be under constant scrutiny by the Fund. The agreement requires Members to withdraw restrictions as soon as their balance of payments position is stabilised, and the Fund itself can make representations to a Member that conditions are favourable for the withdrawal of restrictions. If the Fund should find that a Member persisted in maintaining restrictions inconsistent with the purposes of the Fund, it could declare the Member ineligible to use the Fund's resources. These provisions of the Articles of Agreement will enable the Fund to play an active role in avoiding undue prolongation of the transition period. At the same time the Articles of Agreement are sufficiently flexible to take account of the particular circumstances of a country which may be facing unusually difficult reconstruction problems. Proposals considered by this Conference which might have the effect of restricting the right of Members of the Fund under the carefully safeguarded provisions of Article XIV of the Fund agreement, should, in our opinion, be approached with considerable caution and with full recognition of the complexities of the problems of the reconstruction period. On the other hand, it would seem advisable to provide generally equivalent safeguards with respect to quantitative trade restrictions that may be imposed during the transition period for balance of payments reasons. Unless there is a reasonable correspondence between the transition features of the Fund' s Articles of Agreement and the proposed Charter of the ITO, so 21. F.5 E/PC/T/C.II/PV/8. far as action is based on balance of payments considerations, there may be an unfortunate impediment to the contribution which the Fund can make, even during the transition period, to the expansion and balanced growth of international trade. It is perhaps of even greater importance that, once the transition period is passed, action authorised under the Charter for balance of payments reasons be in harmony with the policies and operations of the Fund. Since the subject matter of this Conference concerns so largely restri tions on trade, it is perhaps easy for observers like ourselves to get the impression that possibly a disproportionate emphasis is being placed on the use of trade restrictions as a means of preventing disequilibrium or restoring equilibrium in the balance of payments. Undue reliance on the use of trade restrictions for these purposes, particularly when associated with provisions which permit counter measures of the same character by injured countries, do of course carry a very real risk of an attempt to restore equilibrium on the basis of a contracting volume of world trade which may result in harm to all and benefit to none. We respectfully urge that there are other measures of adjustment which are less dangerous from this standpoint. One of the purposes of the Fund, as stated in Article I of the Fund's Agreement, is to give confidence to Members by making the Fund's resources available to them and thus to provide them with opportunity to correct balance of payment maladjustments without resorting to measures destructive of national and international prosperity. Another method of adjustment in appropriate circumstances and under proper safeguards is the adjustment of the value of a country's currency. 22. F. 6 E/PC/T/C.II/PV/8 It is the hope of the Fund thatonce the transition period is past most balance of payments difficulties can be met without resort to restrictive devices. Countries will, of course: be expected to make reasonable use of their gold and foreign exchange reserves to tide over temporary difficulties, but these reserves will be supplemented by the Members' quotas in the Fund, which in the aggregate total $7,600 million. If the balance of payments deficits are due to temporary causes, use of reserves and quotas in the Fund may be all that is required. If the deficits are due to more fundamental causes, corrective action will be needed. It is the purpose of the Fund, however, to avoid corrective action of a sort that will be destructive of world prosperity. Deflationary measures that throw men out of work or measures that restrict world trade are steps that should be taken only as a last resort. We do not argue, Mr. Chairman, that it is incorrect or unnecessary to provide for the use of trade restrictions for balance of payments purposes. We do feel, however, that in view of the specific contribution which the Fund is intended to provide to the solution of these problems, the mechanism which you are designing here should assure that before resorting to quantitative restrictions members will have adequately explored the other safe- guards and measures available to them for meeting balance of payments difficulties. It is the view of the Fund that it would be both undesirable and impractical to attempt to define by formula or specific criteria the precise kind of balance of payments disequilibria or monetary reserve conditions which would justify quantitative restrictions on imports. These are complex matters. 23. G.7 E/PC/T/C.II/PV/8. Each case should be considered in the light of its particular circumstances. It was found to be impracticable to define fundamental disequilibrium in the Articles of agreement. There is not even in the Articles a definition of balance on current account although there is a listing of specific items which without limitation are to be considered payments on current account. It is the view of the Fund that the establishment of precise criteria is so complex as to be impractical and that vague general criteria will invite confusion and inappropriate use. The alternative would appear to be that the ITO should request the Fund to make a finding as to whether the balance of payments and reserve position of a country were such as to warrant the restriction of imports, and similarly to consult with the Fund as to the progressive relaxation and, removal of these restrictions as balance of payments and reserve difficulties were eased. 24. C. fols E/PC/T/C.II/PV/8. It would seem desirable in the post-transition period, that consultation precede the adoption of restrictions as will be required in the case of exchange control measures authorised by the Fund under Article VIII of the Fund Agreement. If this is not regarded as feasible, there should at least be automatic and full consultation immediately after restrictions are imposed, and the restrictions should be regarded as tentative until after I.T.O. approval. Unless there is close lisison along these lines we may well be confronted with a situation in which two international agencies will be operating in or permitting member action in the monetary and balance of payments sphere under conflicting criteria and policies. Mr SPEEKENBRINK (Netherlands): Mr Chairman, of course I have not had the tire to study the United Kingdom paper, so I would confine my remarks to the United States draft. In the first place I would like to say that for the Netherlands and the, Netherlands Indies the question of the transition period is of vital importance, and we think it is of great importance for the success of the Conference that we get flexible formula which will take due account of the special difficulties in which - I think I may use the word - war devastated countries find themselves. I have no doubt that that will come up when we discuss these two drafts in more detail. - There are only two remarks I wish to make with regard to the United States draft. I would like to state that the Nethlerlands Delegation is in agreement with the spirit of Article 20, but would like to clarify the position on two technical points. We do not think that the Article, as it stands now, does absolute justice to the outcome of modern economic theory. In the old days we were taught that there was only one equilibrium to the balance of payments, usually called the natural equilibrium. We know now, however, that the theory of economic equilibrium is much more complicated than was previously assumed. Modern economic theory proves that, given a certain economic constellation, several equilibria are attainable on different levels. 25. C2 E/PC/T/C.II/PV/8 In particular a deficit on the balance of payments may be avoided at the price of considerable unemployment at home. Though we do not wish to imply that the equilibrium of the balance of payments is not worth a scrifice, no Government can under the present circumstances afford to entirely disregard the level of employment at home. I would therefore like to put on record that the Netherlands Delegation wishes to interpret the equilibrium in the balance of payments in such a way that a satisfactory level of employment is maintained. The second observation of the Netherlands Delegation apparttains to the interpretation of the words "current account" as used in the context of particle 20 of the Charter. Article 19 of the Articles of agreement of the International Monetary Fund defining current transactions includes payments of moderate amount for amortisation of loans for depreciation of direct investments. Owing to the extent of war-damage in the Netherlands, the Netherlands Government was obliged to take up considerable credits in foreign exchange in order to be able to execute the rehabilitation programme. For the time being the majority of these credits are at short or medium term, which means that a considerable part of them will have to be redeemed during the transitional period. Under these circumstances we are compelled to consider the redemption of these loans as current obligations thus giving a wider interpretation to the equilibrium on the current account for which the last clause of Article 19 of the Articles of Agreement of the International Monetary Fund, which reads: "The fund may after consultation with the members concerned determine whether certain specific transactions are to be considered current transactions or capital transactions , seems to open a possibility". Mr LOKANATHAN (India): Mr. Chairman, in spite of the considerable time you afforded us to discuss this subject, I think we still feel a certain amount of handicap because we are not able to give that amount of consideration to the United Kingdom memorandum as well as to the very valuable statement presented by the representative of Monetary Funds. I think we all agree in attaching the greatest importance to the subject of balance of payments, 26. G3. E/~~~~~~~~~,/PC/T/C. II/PV/8. blt unfortunately the balance of payments problem is not a single prcalm at all. It is in reality only a convenient form of expressing o''6suntryls internal or external difficulties. Therefore, it is herlmometerregistering theuree,atur ,stmh wre, er the high temperature is due to one cause or another we cannot tell. Again, as the Netherlands delegate rightly pointed out, it is not a simple concept as to why a country has a deficit balance. It is very difficult to explain except in relation to the economic and social problems which that country has adopted. It is not a question of restoring it back to the original position. Unfortunately that cannot be said of any country. In advanced industrial countries the problem is as the Netherlands delgate pointed out, maintaining employment. In the less advanced countries it is a question of bringing about a higher level of activity. Therefore the balance of payments problem is at from that present, to a country like India, very different./of a country like like Great Britain which is obviously suffering from a balance of payments difficulty today. It is not really the result of the war, but is also due to the social and economic policies which exist. Here the remarkable statement made by the Monetary Fund representative is of vital importance, because it is a question of by what meae s you are going to solve this problem. I think the use of quantitative restrictions", except for very temporary periods and a very short period of time, is not desirable at all, because it is simply postponing the more important adjustment. That adjustment has got to be made some time or other, either by that country acting by itself or in co-operation with other cosuntries. Thsere are several means of adjustment, and in the course of our deliberations we went into the question of what are the matters to be modified in order to maintain employment, what are the adjustments to be made in relation to the cost of reconstruantion, and so on. These are all very important considerations, and therefore to use quantitative restrictions for a purpose of this kind is simply either creating more permanently a 27. E/PC/T/C.II/PV/8. difficult problem, or simply postponing the solution of this problem. As I was saying, the United States Charter does not, for instance, give adequate attention to the use of such resources as many be available to certain countries. When you talk of the difficulty of a deficit in balance of payments, it means that normally you have not enough resources to go on with. On the other hand, certain countries may have a limited amount of resources, and those resources have got to be utilised in the best possible manner. Before they even result in a deficit in balance you have to plan ahead and to see that the resources that are available are used more effectively and more profitably in the sense that they should be utilised for the importation of different types of goods, for instance, capital goods and so on. This is due to the fact that the totality is not adequate in relation to the total requirements. Therefore, the balance here is rather different from the sort of balance of trade problems of a country which normally has got exchange resources, but on account of various changes in its circumstances are finding themselves in a difficulty. On the other hand, when you speak of undeveloped countries, the total resources necessary for the purposes, including favourable anticipated balance of trade, and including any loan that a country may resort to, may be just adequate and nothing more than adequate for its requirements, provided those resources are utilised in the most careful mannner. again there are circumstances when countries which need capital may not be in a position to get the capital in quantities, and in time that may be most suitable for that country. Therefore, in such circumstances they can utilise a certain amount of quantitative restriction, or a certain amount of distinction could be made in the nature of the use of those funds, which may be justified. Therefore this is a circumstance which has got to be provided for. I entirely agree with the Australian delegate when he said that they should provide for cases where the totality of resources available to the country would not be sufficient unless a distinction is made between this fund. 28. G5 We also attach very great importance to the question of the transition period. An agreement on the period of transition is very important for countries, and the question as to how long the period would be is again a matter on which no rigidity is possible. Some countries may want it for five years and another country may want it for ten years. Therefore, in regard to the transition period, a greater degree of elasticity should be allowed. to There is only one other point/which I would like to refer, and that is, so far as countries like India are concerned, the question of quantitative control of a disconnected type will have to be gone into with some attention to our own position. It is true that exchange control in a disconnected manner is provided for to cover cases of unconvertable currencies. 29. E fols. E/PC/T/C.II/PV/8. H.1. E/PC/T/C.II/PV/8. There we should like to know from the U.S. delegate whether, if any arrangements are entered into between India and the U.K. in respect of India's sterling balances, it will be possible for us to have any preferential arrangements in the matter of utilising our sterling balances? Would that be regarded as discriminatory supposing we agreed to buy as large a quantity of goods from the U.K. as would clear our own balances? Also we would like more clarification because we do not know how far the currencies will be inconvertible, and in the Anglo-American Agreement provision is made for releasing a certain portion of the currency from time to time. However, supposing, as part of the agreement, India decides to buy more in order to clear the balances more quickly, is it possible to do that without violating Article 22? That is another point we would like to make. On this subject there are a number of other important considerations, and we should be grateful if opportunity is given at some later stage to consider this matter more carefully. THE CHAIRMAN: Thank you. The dellegate for Belgium. M. d' HALLIWAST (Belgium) I would like to make a short statement in the name of the Belgian delegation. Firstly, we second the point made by the delegate of the International Monetary Fund. The application of Articles 20 - 24 raises, indeed, a problem for the countries which are members of the International Monetory Fund. Those countries recognise the authority of the Fund in the matter of exchanges, and we believe that the Fund must be able to control the financial policy of the members. The Belgian delegation believes that this will not need to take in engagements beyond those which they have undertaken under the Fund. Thus, in the transitional period foreseen, there might be some difficulties concerning the powers between the Fund and the I.TO. In 30. H. 2. E/PC/T/C. II/PV/8. this respect we would be interested to have all the necessary explanations. Especially we would like the extent of Article 23 to be explained more precisely in its relation to Article 14 of the Fund Agreement. Moreover, with the Netherlands, we believe that the balance of payments is not a clear enough criterion, and that one should take into account the conclusions of Committee No. 1. THE CHAIRMAN: The delegate for Prazil. SENHOR RODRIGUES (Brazil): The Brazilian delegation believes that countries should be permitted to impose quantitative restric- tions on imports, for balance of payments reasons, in three senses: (a) when such country actually has a deficit in its balance of payments; (b) when there is an evident probability that such deficit may develop in the near future; (c) when a country has very low monetary reserves. Such restrictions should, however, not be permitted unless (a) in respect of the first two cases foreseen above, a country does not possess high exchange reserves; or (b) the International Monetary Fund or the Bank cannot supply or guarantee to supply the necessary means (i) in respect of the first two cases foreseen above, to cover such existing or probable deficit, and (ii) in respect of the third case foreseen above, to compensate for the lack of reserves. The Brazilian delegation further propose that in the computation of exchange reserves, exceptional reserves accumu- lated during the war should not be included, as they represent, in the main, imports necessary for the maintenance of the real capital of a country, which such country was unable to make during the war. The Brazilian delegation also suggests that countries in the early stages of industrial development should be permitted to reserve part of their exchange receipts on current account for the purpose of industrial development, and to be permitted to 31. H. 3. E/PC/T/C. II/PV/8. impose such restrictions on imports which, without restricting total imports, allow of the selection of imports in accordance with the requirements of industrial development. The Brazilian delegation believes that there would be no need for special provisions as to balance of payments restric- tions during the post-war transitional period if the present proposals should be accepted by the Committee. The Brazilian delegation wishes to express its full agreement with the remaining provisions of Article 19 of Section C of the American draft charter. THE CHAlRMAN: The delegate for Canada. MR. DEUTSCH (Canada): We are very grateful for the statements made by the United Kingdom and the United States delegates. We agree that the member countries must have appropriate remedies for their balance of payments difficulties. The criteria, however, for the use of these remedies are of very great impor- tance. We feel that the criteria should include both the question of the movement in the balance of payments and the state of the country's monetary reserves. Both these factors are, we consider, both important and indispensable. The American draft, we feel, does not give sufficient importance to the second of those criteria, namely, the state of a country's monetary reserves. The British formulation, in their annex article 1, we feel gives the question of the state of monetary reserves their proper balance in the criteria, and therefore we would prefer the British formulation in that respect. The Australian delegation have discussed the possibility of developing objective criteria. We are doubtful whether, at this stage, it will be feasible to agree upon objective criteria, and I think there is a great deal in what the representative of the Monetary Fund has said about the great practical 32. H. 4. E/PC/T/C. II/PV/8. difficulties of finding such objective criteria. The Australian delegation has suggested also that study might be given to this problem in the future. That, I think, is something that can be undertaken, but I do not think we should attempt at this stage to try to find these objective criteria. On the question of discrimination and the use of quantita- tive restrictions on balance of payments grounds, we feel that some discrimination is inevitable during the transitional period for countries that have had their economics badly dis- rupted by the war. That was recognised in the Articles of the Monetary Fund, and we do not feel that we should attempt here a major departure from what had been agreed upon in the discussions at Bretton woods. The question of non-discrimination and the longer run period. We have been concerned about the provisions in the American draft requiring non-discrimination with respect to products, at least as far as practicable. We are glad to hear that the American delegate is prepared to reconsider that requirement. Clearly, when a nation is in balance of payments difficulty, it will have to have some regard to the nature of its imports as well as the total of its imports, and there should not be a rigid requirement against non-discrimination on products. Finally, we attach a great deal of importance to the provisions regarding exchange control in this charter. We note that the American draft has no provisions regarding exchange depreciation. We think this is a matter that cannot be left open. Clearly the countries that are members of the Monetary Fund have undertaken certain obligations respecting the use of exchange depreciation; they must abide by certain rules and certain safegaueards are set up. If members of the Trade Organization who are not members of the Fund have compIete freedom in respect to exchange depreciation clearly that H.5. E/PC/T/C. II/PV/8. freedom may be used in a way to the great disadvantage of the members of the Fund and of the Trade Organisation, both with respect to the competitive position in world markets and with respect to the value of the trade obligations that have been undertaken. Therefore we regard this as a very important matter. The simplest solution, of course, would be if there was commercial membership in the Fund and in the Trade Organisation. Then the same rules would apply automatically to all members of the Organization. If that requrement is not practicable, then we feel there should be included in the Trade charter appropriate provisions regarding the important matter of exchange control and the use of exchange depreciation. THE CHAIRMAN: The delegate for Chile. SENHOR VIDELA (Chile): Before I mention some notes I have here, I would like to ask you, Mr. Chairman, whether I may confine my remarks particularly to Article 19. My notes are on Section C, quantitative restrictions, and relate to paper C.2.W.13. THE CHAIRMAN: Article 19 was discussed in General Committee at its last meeting, and was the subject matter of quantitative restric- tions for purposes other than the protection of the balance of payments. It was, I think, referred to a Sub-committee at that meeting, and I would prefer it, therefore, that if you have further views to express on the question of quantitative restric- tions for purposes other than the balance of payments, that you leave it until it is dealt with in that Sub-committee. SENHOR VIDELA (Chile) The Sub-committee on Procedure? THE CHAIRMAN: No. The proposal was that the quantitative restrictions generally, including the matter we dealt with at the last meeting, and the balance of payments, should all be referred to a Sub- Committee to be set up after this meeting. I am anxious not to get this discussion back on to the general subject matter, and I would suggest that you confine your remarks here to the balance of pay- ments issue. I follows 34. I.1. E/PC/T/C . II/PV/8. MR. VIDELA (Chile): Then I think I will reserve my speech for the moment. MR. AUGENTHALER (Szechoslovakia): I have only one or two remarks to make about the proposals. I would like to state that Czechoslovakia, in general lines, would favour the British proposals. I would also like to stress that if we speak about monetary reserves and so on it is very important that it should be under- stood they are reserves in convertible currencies. If we talk of the balance of payments in inconvertible currencies I cannot see how it would help in the removal of import restrictions. You may ask why a country, seeing that such a situation is developing and that an important part of its export goes to a country with an inconvertible currency, is continuing those exports. Well, it is quite natural and simple. If you are faced with the situation of either exporting to some country with inconvertible currency and taking the risk of having frozen balances, or having big unemploy- ment at home, of course you have only one possible choice, namely, to protect your employment. We think that each country has its own particular position, which is given by their geographical and economical situation. This situation is extremely important, because no country - even a great Power - is entirely master of its own commercial policy. The commercial policy of each country is more or less also given by the commercial policy of other countries. If a country is in the situation where an important part of its exports or balance of payments is with those countries which still have monetary difficulties, or which for some reason is maintaining controls, I cannot see how that country would be able to remove its restrictions for certain countries while maintaining them for other countries, because that is a practical impossibility. - The restrictions may be handled in different ways, but they cannot be 35. entirely removed. I.2. E/PC/T/C. II/PV/8. I think each country will be able to see that matter clearly only at the moment of the Plenary Conference, because then each country will see which other countries are ready to remove their restrictions. Although we suppose the rules should be so flexible as to allow each country to take into consideration their peculiar and particular monetary and geographical position, and although it is something which is very difficult to define, the question is one more of the general feeling of safety. You know well what it means, and what effect what we called "hot money" had before the war. This problem is more important for certain countries than for others, but we suppose that there should be certain provisions inserted to meet the case. MR. K S.H. HSU (China): The Chinese Delegation is in general accord with the provisions of Article 20 of the American proposed Charter, except for one point, namely that concerned with this transition period. The American Charter provides that quantitative restrictions should not be imposed or maintained beyond the period of December 31st, 1949, except without consultation with the I.T.O. and the members affected. Since the purpose of this Article is to restore the equilibrium in balance of payments, why should we make any fixed date? No fixed date could be applied to the Articles. Paragraph 3(a) of Article 20 provides that such restrictions should be progressively relaxed until this balance of payments is achieved, or the monetary reserves considered adequate. Even if that is the case, why should we not just make this transition period considered to be concluded when the balance of payments is achieved or when the monetary reserve is considered adequate? Therefore, from our point of view we should not make any fixed date as to this transition period for the purpose of restoring equilibrium in balance of payments. In regard to the section to safeguard and facilitate the requirements of quantitative restrictions 36. I.3. E/PC/T/C . II/PV/8. for industrial development, we have prepared a paper to suggest that there should be revision of that section as a separate Article to provide for various requirements of industrial development. .c suggest that Article should be entitled "Restrictions to facilitate industrial development." But I will not now take up the time of the Committee with that Paper. MR. J.P.D. JOHNSEN (New Zealand): New Zealand concurs in the views which have been expressed by other Delegates to the effect that the decision whether a country is in balance of payments difficulties must be left to that country, and that any rules which may be framed should be sufficiently flexible to safeguard the legitimate interests of such countries. In the statement which I made recently on the general question of quantitative control of imports I called particular attention to the position of New Zealand in so far as her economic structure was bound up so closely with overseas trade. I indicated her sensitivity to overseas conditions, and the constant pressure which would be made on overseas funds available to her for the consumer as well as for capital goods. In such circumstances it is essential that she should have constantly available to hear means for safeguarding her position in so far as her overseas funds are concerned. It is recognised that any control applied should be operated in a manner less restrictive of trade. We would suggest that if a country takes active steps to utilise to the maximum for imports the funds available for that purpose that should satisfy any requirement in that connection. For the time being there is a difficulty in obtaining from certain countries all the goods that it would be desired to import, as such countries are not in a position to supply. It is possible that these conditions might obtain for a considerable period. But as soon as the supply position improves there will be a flow of imports, which will 37. I.4. E/PC/T/C. II/PV/8. result in a heavy demand on overseas funds. Therefore, I would suggest that in considering this question from the point of view as to what level of funds should be available, regard should be had - as suggested by the Czechoslovakian Delegate - to the actual position of the country concerned, and that no criteria should be laid down which would be too limited in application. MR. J. MELANDER (Norway): Mr. Chairman, I would just like to say I wish to reserve my statement. THE CHAIRMAN: I think this discussion has reached a stage where we could profitably refer the matter to a draftinig committee for the preparation of a draft for consideration of the committee. I think the discussion has been very hopeful in that on almost every point there is a substantial body of agreement on the principles involved. The differences appear to be substantially ones of degree rather than of principle. 38. J. 1 E/PC/T/C. II/PV/8. It does, for instance, seem to be generally agreed that quantitative restrictions should be capable of being used for the protection of balance of payments, and that the question of whether such a need exists should be a matter, in the first instance, at any rate, for determination by the country concerned, acting upon previously agreed principles. There does seen to be a fair degree of agreement about the nature of those principles. I think the most important point which has been put forward by a number of countries is the suggestion that in certain countries temporarily, where they wish to restore their economies after the devastation of the war or perhaps for longer periods where they are undertaking substantial longterm developmental programmes, that there may, so to speak, be a tendency of a continuous nature towards balance of payments difficulties arising from those policies which should make it possible for them to take action to select their imports, and thus prevent the appearance of balance of payments difficulties perhaps in advance of their reserves being seriously depleted down to levels which might otherwise be required. But apart from that point, and one or two minor ones, I think there was fairly general agreement as to the principles which should guide countries in the application of quantitative restrictions. Furthermore, it would seem to be generally agreed that, while each country should in the first instance be enabled to act on its own decision, it there should be a right of complaint in cases where other countries felt that the action had been taken unwisely or in a manner detrimental to their interests. It was suggested by the Australian Delegate that this right of complaint should be limited, and that it should not exist where certain objective criteria as to the condition of a country's balance of payments had quite clearly been observed. But attention was drawn to the difficulty of .stating such criteria clearly, certainly at the present time. J.2 E/PC/T/C. II/PV/8. There was, I think, also general agreement that there should be a transition period during which the full rigours of the obligations countries are to accept here should not have to be assumed. There was a difference of opinion about the suitable length of that transition period, or the terms and conditions under which it might be extended. Similarly, with regard to the administration of quantitative restrictions, there was, I think, general agreement with the basic principle of non-discrimination, although there were some variations in the exceptions to that general rule which were put forward by various Delegations. There seemed to be agreement that at any rate exceptions should be provided in circumstances covered by the scarce currency provisions of the International Monetary Fund, and where it was necessary to impose discrimination in order to be able to take advantage of balances of inconvertible currencies. There was an additional point raised here about which I think there would be some difference of opinion, that discrimination might be permitted, subject to the approval of the ITO, where quantitative restrictions were becoming necessary to protect the balance of payments, where it was believed that those balance of payment difficulties derived from a failure of effective demand in other countries. The last remaining point on which some careful thinking will be required is the relationship between these provisions under the Charter of the ITO and the very closely related provisions of the Articles of Agreement of the International Monetary Fund. I think there was here, too, an agreement that in this field the two organizations would have to work fairly closely together, but at the same time it was recognised that some countries may not wish to be 40 J.3 E/PC/T/C. II/PV/8. members of both, and that will immediately raise the problem of whether such common membership should be required, or if it is not required, how far it would be necessary to introduce provisions in the ITO Charter which would not be necessary if membership were completely common. I think that, with that review, we could, with your approval, refer this matter to a Drafting Committee, which I would suggest should deal not only with the material covered by Articles 20, 21 and 22 of the United States Draft Charter, but also Article 19, and also Section D relating to Exchange Control, covering Articles 23 and 24. The Sub-Committee would have before it not merely the United States Draft Charter, but the document presented by the United Kingdom Delegation this morning, and certain other documents presented by the Delegations of Brazil, Czechoslovakia, Australia, and also a document from the Polish observer. I think certain other Delegates indicated that they would propose to submit specific documents on this matter. I think we have one also from the New Zealand Delegation. MR. AUGENTEILER (Czechoslovakia) I am wondering whether also Article 32 should not be discussed by this Drafting Committee. THE CHAIRMAN: We referred Article 32 to the Technical Sub-Committee of this Committee for consideration and the preparation of a draft. I take it, then, that the Committee is agreed to the establishment of a Drafting Sub-Committee at this stage. It will be quite clear that when the Drafting Sub-Committee's work has been completed, their report will come back to the full Committee for discussion and consideration. For your consideration, I suggest that the Sub-Committee on this question might include the following countries: United States, United Kingdom, France, Brazil, Australia. 41 J. 4 E/PC/T/C. II/PV/8. MR. NATHAN (France) (Interpretation): I think we might also, if the Committee agrees, ask the representative of the International Monetary Fund to take part in the Drafting Sub-Committee. THE CHAIRMAN: I did propose to suggest that the Drafting Sub-Committee might invite the representative of the Fund to participate in their work. Would the representative of the Fund be prepared to participate? MR. LUTHRINGER (Observer for International Monetary Fund): Yes, Mr. Chairman. THE CHAIRMAN: In that case, it is agreed that we refer these matters now to the Drafting Sub-Committee, consisting of the representatives of the United States, United Kingdom, France, Brazil, Australia, with the representative of the International Monetary Fund in attendance for their assistance. MR. SPEEKENBRINK (Netherlands): Ought we not to include a member of the Asiatic group? I would suggest the Delegate of India. THE CHAIRMAN: I take it that is agreeable to the Committee? We will add the Delegate of India to the Drafting Sub-Committee. The Committee is now adjourned. (The meeting rose at 12.55 p.m.) 42 End.

GATT Library

gh650hq9436

Verbatim Report of the Eighth Meeting of Committee III : Held at Church House, Westminster. S.W.1 on Monday, 11 November 1946 at 4 p.m

United Nations Economic and Social Council, November 11, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

11/11/1946

official documents

E/PC/T/C.III/PV8 and E/PC/T/C.III/PV/8-9

https://exhibits.stanford.edu/gatt/catalog/gh650hq9436

gh650hq9436_90220063.xml

GATT_157

A. 1 E/PC/T/C.III/PV8 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the EIGHTH MEETING of COMMITTEE III held at Church House, Westminster. S.W.1 on Monday, 11th November 1946 at 4 p.m. CHAIRMAN: m. PIERAE DIETERLIN (France). (From the shorthand notes of W.B.Gurney, Sons and Funnell, 58 Victoria St., Westminster S.W.1.) CORRECTION: In the Verbatim Report of the Fifth Meeting of Committee III on Tuesday, 5th November 1946, (E/Po/T/C.III/PV/5, on page 19, line 9, for "investigation" read "industrialisation." - 1 - A. 2 E/PC/T/C. III/PV/8 TME CHAIRMAN: (Interpretation): The meeting is open. The first item on our agenda is concerned with a letter dated 7th November 1946 and addressed to Mr. Wyndham White by the President of the International Chamber of Commerce on the subject of the work of the Preparatory Committee. This letterr was submitted to me by Mr. Wyndham White, who asked me to do one of two thinigs: either to ask Mr. Philips, the President of the Chamber, to submit to you all explanations or suggestions he might think useful, or else to get into direct touch with him myself. Having acquainted myself with suggestions submitted by the International Chamber of Commerce, which are mentioned in 1Document 101 of this agency, it has appeared to me, as it must also have appeared to the Members of the Committee, that the general ideas expressed in this document conform to those which have inspired the Report we are at the moment discussing. Considering all this, I had a visit from Mr. Philips this morning and explained this point of view to him. When we had exchanged ideas, purely for purposes of information, Mr. Philips declared that he was entirely satisfied with the explanations I gave him, which he said appeared to conform to the ideas held by the Chamber. It seemed to Mr. Philips that it was unnecessary for him to be heard by the Committee. -2 - B.1 E/PC/T/C . III/PV/6. On the other hand, I should have liked to have entered into similar contact with Mr. Duret, who is the representative of the World Federation of Trade Unions. Unfortunately, Mr. Duret is not in London. He will be in Oxford for the next few days. I myself will have to leave London tomorrow morning for Paris, so I am afraid it will not be possible for me to establish contact with Mr. Duret as I would have liked to have done concerning the work of our Committee. Therefore, I shall ask the Secretariat to send him the report of our meeting containing a record of my words on this subject, and express to him all my regrets that I could not see him before I left. If Mr. Duret sees any reason for coming into contact with representatives of our Committee, I might suggest that he be received by our Vice- Chairman, Mr. Gonzalez. Has anybody any remarks to make on this subject? If no Delegate wishes to speak, I shall pass to the follow- ing item on our Agenda, and I will open the discussion on Document E/PC/T/C .III/W.4, which has been circulated this morning. This document contains a few amendments to the text which was discussed by us last Wednesday at our meeting. This document is the blueprint of the report which we shall transmit to the plenary meetings. In the first part, it contains a summary report of our work to date. The second part contains instructions to the Drafting Committee, and, taking into consideration the nature of the draft we suggest, these instructions ask only that the Drafting Committee include the chapter in hand in the future draft Charter. Ther third part contains the suggested text of a chapter on restrictive business practices. There is also an appendix, not yet circulated; which will contain certain reservations and remarks which have been made by some Delegations, which those Delegations wanted to include in the report. In the light of those Preliminary explanations, I now open the debate on the document. 3. B.2 E/PC/T/C.III/PV/8. MR. THILTGES (Belgium-Luxembourg) (Interpretation): --s Delegate of Belgium and authorised by the Delegate of Luxe...bourg to speak in his name also, I should like to thank the authors of this new document. Now that the word "likely" has been chan, ed, these of us who objected to it can now, without reservation, accept the draft. THE CHAIRMAN: (Interpretation): I believe that Mr. McGreger may have a few more precise expIanations to offer to us concerning certain changes and additions which have been made at the last minute to the text received this morning. I think it would be best to allow him to speak before we go on with the debate, as his explanations may give us most usefual help in the discussion. THE RAPPORTEUR (Mr. .cGregor): You will observe from the document before you that it concludes its report of our proceedings as on Friday, November 8th. The suggestion I have to make is that the whole paragraph which appears on page 3 should be deleted, and the paragraph at the end of page 2 should be continued with these words: "The draft of Chapter V ........ was submitted to the Committee in its seventh session on 6th November..." and we would continue with these words wihich have just been drafted, and drafted on the assumption that at the end of this meeting we shall have complete agreement, with the one exception that it appears we will not be able to have full concurrence in...."and the following redraft was sub- mitted on 11th November, Document C.III/W.4. In the latter meeting" _ that is, this meeting, -- if that is what we decide -- "the concensus of the Committee was that this draft represented a satisfactory reconciliation of hi therto divergent views on all points, except that in the opinion of some delegates the provisions should apply to services as well as goods. Certain delegates made observations on other points which they asked to have recorded in the final report, not as formal objections to the draft, but as changes or additions which they would 4. B.3 E/PC/T/C. III/PV/8. have preferred to include in the report. Note was taken of these observations, and it was decided to include them in an addendum or appendix to the Committee 's report. The draft of such an addendum would be referred to the Committee for consideration at later meeting ." THE CHAIRMAN:(Interpretation): I applogise for interrupting on the subject of the last words which Mr. McGregor said. Mr. McGregor was foreseeing the Possibility in the draft he submitted of a later meeting. Personally, as I told you, I am obliged to leave London, but as Chairman, I would have wished, if it were possible, to be able to transmit in person to Mr. Suetens, who is President of our Conference, the report drafted by our Committee. It seems to me that the points which remain to be discussed are not of such importance that they require on our part any long discussions. Therefore, I hope that we will come to an agreement on the subject in the course of our meeting of today. The onl y questions which remain to be discussed are those which might arise in the course of the exchange of views and the contacts which our Vice-Chairman, Mr. Gonzalez, might have with the Chairmen of other Committees, as well as the Delegates who have been designated for the task of liaison, and who were elected to help him. If it appeared as a result of these contacts that it would be necessary for you to come together again, another meeting would take place probably towards the end of this week, but it is not sure that this meeting will be necessary. In any case, unless the Committee sees differently, I insist that we should try, with all the reservations which have been formulated and which are on the third page of our report, to conclude definitely this report today, so that I should be able to transmit it to the President of our Conference. 5. B.4 E/PC/T/C.III/PV/8. The last sentence of the text which has been submitted by Mr. McGregor would therefore have to be modified accordingly. I think that Mr. Windham White, who has done us the honour of attending our meeting today, has a communication to make to the Committee. THE EXECUTIVE SECRETARY (Mr. Windham White.: The question I wanted to bring to the attention of the Committee was the nature of the report under the second part. The plan of the report which has been the subject of discussion by Heads of Delegations does envisage a rather full report in Part II, which would set out in some detail the various points of view expressed in the Committee, and a description of the principles upon which an identity of views was reached, or similar views were expressed, in the Committee upon which would be based the draft clauses for ultimate inclusion in the Charter. An important aspect of that question is that it is proposed to publish Parts I and II of the report, but not to publish the Appendix. I think that that will be a decision which will not be a particularly popular one, and that we shall have considerable pressure to make the appendix available. I think that that pressure can be resisted, but that it is extremely difficult to do that if reports are drawn up in a form which reduces part II of the report to a comaparative formality, which is the case in the report we have before us now. We had envisaged Part II, as I say, going into some detail as to the dis- cussions which had taken place, and provided the basis for instructions or suggestions to a Drafting Committee to prepare a clause reflecting the views expressed in the Committee itself. It is true that the Drafting Committee, in carrying out this task, would be basins their work also upon a text which had been discussed and established in a preliminary way in this first meeting of the Preparatory Committee, but their formal basis of action would be the instructions given to the Drafting Committee in Part II of the report. So I do hope that the Committee will consider expanding 6. B.5 E/PC/T/C .III/PV/8. Part II of this report to conform to the plan which has been rather carefully worked out and considered by Heads of Delegations. THE CHAIRMAN (Interpretation): I thank Mr. Windham White for his explanations concerning the manner in which the Executive Secretariat foresees the drafting of the second part of our report. Before sub- mitting to the deliberation of the Committee the suggestions which have just been made by Mr. Windham White, I would like to clarify the discussion and indicate to the Committee in what for l I had myself considered that second part, after having been present, as Chairman of this Committee, at the meeting of the Committee of Heads of Delegations, where it was decided to adopt the division and general plan in conformity with which we have drafted the report we are now discussing. I thought that the task of the drafting Committee which is going to meet at the end of January was essentially to establish texts as far as these might not have been drafted in this present Conference. I know that the problems which have been submitted to other Com- mittees raise many problems of a technical nature, where it was difficult to draft a text which satisfied all Delegations. Consequently, some questions remained in suspense,. as the somewhat divergent points of view had to be defined in order to facilitate the task of the Drafting Committee. This does not seem to be the case with Committee III. It seemed, after our meeting on Friday, that, in spite of reservations which had to be discussed in the third appendix to the report, and as our report cannot give complete satisfaction to all Delegations here, none of the Delegations, except perhaps the Indian Delegate, felt that it had to refuse the text submitted by our Rapporteur. On the other hand, it is clear' that the problem that we have to discuss here is not one of those which, in the present stage of affairs, allows the drafting of a definitive text, with aIl its practical details. We 7. B.6 E/PC/T/C .III/PV,/6 . all agreed that it would be the task of the Organisation itself to set up little by little its own dectrine and its procedures in the light of the experience which it would acquire with time, but for the time being, we could only establish a eneral line of conduct. In these conditions it does not seem that one can go much further in the elaboration of a text than our Rapporteur with his experts, has done. It seemed to them that the Drafting Committee, as far as the part of the Charter on restrictive commercial practices is concerned, would have to limit itself to the text which we have drafted. This is the impression which I myself deduce from the discussions which were have had and the contacts which I have had with our Rapporteur and the experts who had to assist him. I would be glad to hear the opinion of the Committee on this subject, and I ask those members of the Committee who agree to following Mr. Windham White ' s suggestion of having a much more elaborate second.part to express their approval; but I fear that if we did follow this path we would find ourselves in a very difficult position and a discussion which would make our task less easy. As I have to leave London, I would not unfortunately be able to participate in the drafting of the second part in the way he suggested. MR. HEKIN (Lebanon): I suggest that part II should contain a summary of the views contained in the text without any statement as to which Delegates presented those views. The summary would contain these views not in the form of a legal text, or principles put in legal from, but would consist simply of principles in the form of a statement of views on which agreement had been expressed in this Committee. I think that could be done by a small drafting Committee. Part II should not contain any definite views attributed to certain delegations. The second part of part III, which is in the form of amendments, additions, deletions and reservations would also be contained in that Part II, but without any reference to the Delegations which made those Amendments or reservations. If this suggestion is followed, the work to be done would simply be a summary of the text in the form of a state- ment, but not in legal form. 8. C fols. C .1 E/PC/T/C .III/PV/8 THE CHAIRMAN (Interpretation): I would iike to thank Mr. Makim for his his suggestion. In order to avoid any misunderstanding, I would like to ask him if he would be a little more precise. My impression is that, in the light of the discussions that we have had, some of the Delegates who put forward their points of view at the beginning of our task, have since modified their points of view, and might not be willing to see statements set out which no lon ,er correspond to their present views. On the other hand, I do not see the use of this summary in a Part of the Report which is supposed to assist the Drafting Com- mittee in their task. I fear that if we put these various points of view there, the Drafting Committe might be led to be in all over again the task with which they arc confronted and which, in a way, would differ from the views which we have adopted. They might not correspond exactly with the views on which we have obtained the maximum agreement. If I have understood correctly, this Drafting Committee would only, consist of two or three exports per Delegation, and it is quite possible that some Delegations might not have exports who would be informed on restrictive commercial practices. Therefore, it seems to me that there might be some danger in introducing, into the Part which is destined to act as a directive to the Drafting Committee some statements of points of vewi which do not conform to the attitude whicn we expect of this Committee. Mr. rXZK (Lebanon): I understand that Part II will be published, whereas the text in Part III will not be published. I think we should .ive the public an idea of the main principles of this chapter on restrictive business practices, and of the agreement which has been reached on those principles. On the other hand, I should think that the Drafting Committee will not need the text which it is proposed to pass on to it. As it is, they will probably make certain changes in its wording. This general summary setting out the general principles would correspond with the text of the clauses which 9. .2 E/PC/T/C .III/PV/8 we are passing to the Committe, and only chances of wording will be made by that Drafting Committee and no changes of principle. THE CHAIRMAN (Interpretation): I would. like to answer Mr. Kakim, firstly, on the second point in his remarks. I have consulted. the Committee as a whole on that point. Mr. Hakim suggests the Drafting Committee might be led to bring some changes into the expression of thought of our Committee. It seems to me that there would be a great danger there, for the reasons which I have already indicated, namely that on account of the very small number of experts of each Delegation who would be on the Drafting Committee, there would probably be many Delegations which would not be able to send as members of the Drafting Committee any experts who have been informed of restrictive commercial practices. In those circumstances, I think there would be danger in leading in any way the Drafting Committee to modify the present draft which has been submitted for discussing. If the Committee accepts this point of view, I would like to say that Mr. Hakim's suggestion seems valid to me, but the summary of the points of view which he wants brought into our report should not be in the second Part but in the first. In a way, this first part contains an allusion to various points of view which have been adopted. Perhaps the Committee will think that this first part of the Report does not give sufficient explanation on this point. It is in this way that Mr. Hakim's suggestion might be retained. Nevertheless, having, heard his suggestion, I would be glad to knew the view of the Committee. To avoid any misunderstanding, I will summarise. Does the Committee consider that it would be useful that the Drafting Committee should receive a directive and that there should be some new amendments to the text which we are discussing, now, or does the Committee think that this text should not be amended? The second question is this. Does the Committee think that it would be useful, in the case where our instructions to the 1Drafting Committee would be not to modify the text, to complete the first part of the Report by including a more complete exposition of the points of view expressed around this table, in so far as the Delegates who have 10. C3 E/PC/T/C.III/PV/8 expressed them have not been led to modify their points of view later in the discussion. I would like, to throw open a discussion on these two points. Mr LECUYER (France) (Interpretation): I would like to answer and, on behalf of the French Delegation, to say that I do not see the point in having. any amendment to the present text, and that I thilnk there is no reason for the Drafting Committee to meet again to amend it unless the discussion leads any Delegations to express any different points of view. On the second point, I think there is some real interest in the Report which is to be submitted to the Preparatory Commission mentioning the principal reasons for the text, and why we adopted one or other suggestion. That is necessary not only for the Preparatory Commission but also for the Drafting Committee which will meet later. There is one point, however, to which I think I should draw your attention in order to answer what Mr. Hakim has said, and that is that I think it is necessary that the future Drafting Committee should have in its hands an indication not only of the opinions which have been expressed but also of the Delegations which have expressed them. It might not be necessary or useful that the public should know it, but it seems to me rather serious if the Drafting Committee neglected it. THE CHAIRMAN (Interpretation): I think Mr. Lecuyer for his remarks. So far as the last point is concerned, I would like to point out to him that it is in the third Part that it is forseen that, the points of view expressed by the Delegates should be included, with the names of the Delegates. I would like to ask Mr. Wyndham White for clarification of one point which is obscure to me. I have understood, though I am not sure, that the draft of Chapter III would be included in the third Part of thc Report, but that means that it would not be published, I think. This point is not clear to me. If the Report is published, a great part of the remarks which have been so ably formulated by Mr. Hakim would be satisfied, in that the public would have the maximum amount of details concerning our 11. E/PC/T/C/III/PV/8 tasks and would have the text which comes at the end of it. I think Mr. Wilcox wanted to speak, but first of all I would like to have Mr. Windham White 's opinion. THE EXECUTIVE SECRETARY (Mr Wyndham White): The view was expressed strongly in the meeting of the heads of Delegations that in the published docu- ment there should not be want would appear to be fairly definite texts of what was agreed upon here. The feeling was expressed strongly that some Delegations might be embarrassed if the Report were published which have the impression that their Governments were in any way committed to a text, and that is the reason why this separation was agreed upon between Part II and Part III, it being the preference of these Delegations that Parxt II should merely contain a description of the points on which similarity of views has been established and upon which the task of drafting; could preceed subsequently. THE CHAIRMAN.(Interpretation): I would like to answer Mr. Wyndham White by referring to the fact that, apart from the Indian Delegation, the project under discussion received general agreement. In those circumstances, there is no better way of pointing out the points on which we came to general agreement than to give in the second Part the text of Chapter V as it is now proposed. On the other hand, as it is understood that this text will be submitted to a later conference and our Governments will try to reach a final agreement, I hope it is understood that it will be stressed in some part of the Report that the text which we will eventually publish in Part II does not constitute in any way a definitive text. I now call upon Mr. Wilcox. Mr WILCOX (U.S.A.) I would like to suggest that the subject which we are discussing is not an appropriate one to be discussed in this Committee. It seems to me that the form of the final Report must be unanimous, and that the decision must therefore be made at the meeting of heads of Delegations. I had understood from our previous discussions in these 12. C.5_. E/PC/T/C.III/PV/8 meetings that there was general agreement that Part I would be made public. I do not believe, as far as I remember, that any definite decision was made as to the other parts of the. Report. As far as I am concerned, I would have little question about making Part III public. The text of the United States Draft Charter has already been made public and any sort of a full report of proceedings of this Committee would indicate pretty well what round was covered. However, that, I think, is a decision that should be made, with respect to all the sections of the report, and should probably not be made by this Committee. As to Part II, it was my understanding that it would be the function of Part IIdefinitely to give instructions from this meeting of the Preparatory Committee to the Interim Drafting Committee. As such, it seems to me that with respect to the work of some of the other Committees the content of Part II might be highly detailed and technical, and it might carry a suggestion to the Drafting Committee that it should prepare alternative drafts along different lines. I would suggest that if Part III is not to be made public it would probably be inappropriate to make Part II public, that we would be considerably handicapped in using Part II as definite instructions to an interim Drafting Committee if it were to be made public. I do not see just where we would give the Drafting Committee their instructions if we kept Part III secret and then told them what should be done with that materials. My suggestion, therefore, is that the whole scope of what we, are all more or less agreed upon should be given to the public, should be included in Part I, and then we should decidec at some subsequent time what we should do with Parts II and III and whether we should make them public or not, but the decision should be a unanimous one agreed by all Committees. THE CHAIRMAN (Interpretation): I have taken note of Mr. Wilcox's inter- vention, and my opinion is as follows. The question which we are discussing really comes less under the terms of reference of our Committee than either the heads of Delegations Committee or the Plenary Committee. I would su est that we should not go on with C.6 E/PC/T/C .III/PV/8 the discussion in order to find out what should or should not be in Part I, Part II or Part III, or what should or should not be made publics I think it is understood that it will be the duty of the Plenary Committee and the heads of Delegations to agree on this form, and the wording of the general Report and also of the reports of every one of the Committees. I suggest that we might examine this Report as to its substance, leaving to the Secratariat the task of establish- ing the final form of the Report, in accordance with the directives received from the heads Delegations or the Plenary Committee. Leaving aside all suggestions arising from Mr. Hakim 's remarks, which have been taken note of, are there any other remarks to be made con- cerning the substance of the Report? Mr LEENDERTZ ( Netherlands) I understand that it is desired that the discussion should go further the text of the proposed Charter. First of all, I would like to say that I am agreeably impressed by the alteration brought about by the word "likely" and I also withdraw with pleasure the reservatioin which I made as to that wording. Also, the Netherlands Delegation made a reservation as to the words "Public commercial enterprises" in Article 34, paragraph 2, because this matter of public commercial enterprise should also be the subject of discussion of the second Committee. At the end of the meeting when I had made the reservation, I learned that the Contact Committee had been set up and I am assured that the Contact Committee will look into this matter. If that is so, I think 1 am able to withdraw that reservation. THE CHAIRMAN (Interpretation): So far as the question which has just been raised is concerned, I think it will be the duty of the elegates who were named in the course of our meeting last Friday to enter into contact with the other Committees. It should also be their duty to establish liaison, in particular with Committee No. 2, to see in 14. C.7 E/PC/T/C.III/PV/8 what manner the problem mentioned here by Mr. Leendertz might be solved, what decision concerning; this problem might be, adopted by Committee 2, and how that decision might influence our draft. D follows. 15 D. 1 C/PC/T/ C.III/PV/8 I understood, following the discussions which took place at the beginning of our meetings, that the problem facing Committee II was vastly different from the one we thought we had covered by the draft of Article 34. Nevertheless it is not impossible that there may be some interference between the two Committees such as Dr. Leendertz seems to fear; if that is so, it will be discovered through the contact established with the Chairman of Committee II. It might then be the task of our Committee to take this into account. MR. LEENDERTZ (Netherlands): Thank you very much for your explanation. I woud like to point out that in our last meeting I made a small reservation as to the matter of Article 35. I do not find that reserva- tion in this paper, and I should be glad if it could be included as a last paragraph. I would also like a reference to a suggestion which I made and which we are making in other Committees to the effect that the Court of International Justice might be a very good authority to which to refer questions which might arise within the Organisation which could not find a satisfactory solution there. THE CHAIRMAN (Interpretaotion): Dr. Leendertz has brought to our notice the fact that in the text of the report submitted to us an omission has been made. There are also two points on which he has made suggestions, that is, there is a passage concerning licences and a suggestion about the terms of reference to the Court of International Justice. I will ask the Rapportaur if he will kindly complete the third part of the Report by i;.cluding those two points. I should also like him to agree his draft concerning those points with Dr. Leendertz directly, as this concerns only the Netherlands Delegation and not the Committee as a whole. MR. NAUDE (Union of South Africa): There is something to be added to, and I should like something removed from, the second part of Part III. The third paragraph states that the Delegation of South Africa supported 16. D.1 D. 2 E/PC/T/C. III/PV/8 the Indian suggestion as far as shipping is concerned.. Perhaps I should explain that at the last meeting I thought I understood the explanation that had been given as to the exclusion of services from our studies here, but at the same time ..y Government was interested in shipping and what I said certainly did not amount, to supporting the view of the Indian Dele- gation that the Charter would have no meaning if shipping was not included. My remarks amount to this: would the Rap orteur cut out paragraph 3, that is all. THE CHAIRMAN (Interpretation): I shall ask Mr McGregor to take note of Mr. Nauders remarks. Are there any other observations? MR. HOLMES (United Kingdom): A. point I should like to make about Part I is a small and perhaps technical one which would probably be ruled out in some general, final polishing committee which it is common, I think, to have in the very closing stages of a conference. My difficulty is this: in Part I, which is definitely for publication, there are some references to documents prepared for this Committee and therefore, I think, all of them restricted. I see such references in the last paragraph but two and the last paragraph but one of Part I. As a general rule it is difficult, in a public document, to mention by name and number documents which have not been, and which are not going to be, published. It is only a matter of drafting, but I would suggest that we ought to remove the reference numbers at any rate. THE CHAIRAN (Interpretation): If the Committee agrees,. I will ask the Rapporteur to delete these vvords from the text. MR. MONTEIRO DE BARROS (Brazil): I have two reservations to make and one proposal. The first reservation concerns the exclusion of services. It has been mentioned already. The second reservation concerns public enter- prises. This is referred to in sub-paragraph (a) of the second part of Article 34, and this second reservation has not been mentioned in the text. Moreover, as far as my proposal is concerned, the idea I expressed has not 17. D. 3 E/PC/T/C. III/PV/8 been noted with any precision. It has not been given as it was expressed I wonder whether, before we prepare the final draft, I might not be given an opportunity of coming to some agreement with our Rapporteur, so that our proposal may be precisely and exactly reported? THE CHAIRMAN (Interpretation): I shall ask the Rapporteur to get in touch with you so that the two points which have been omitted may be included, along with the draft of your suggestion about publicity being given to cartels. It is a point concerning only the Delegate of Brazil and I think it might well be agreed between you and the Rapporteur. I do not think it will be necessary to submit there to the whole Committee. Any other remarks? MR. HOLMES (United Kingdom): Before we close the discussion, could we be quite clear as to what will be the position with regard to this draft report? As I understand it it is to be left to a decision of a further meeting of the Committee of Heads of Delegatiorns as to whether a substantial part of the work of this Committee is to be communicated to the Press or very little. Do I understand that if the Committee of Heads of Delegations so decides Part II is to be redrawn, approximately on the lines which have been mentioned in the course of this meeting by Mr. Wyndham White and others, or are we to present this report to the Heads of Delegations with a view to their deciding whether Parts II and III are to be in some way coalesced, or whether the only public portion should be Part I? THE CHAIRMAN (Interpretation): I believe that in any case the normal system of procedure which we ought to follow would be this: we might transmit the report we are discussing to the Plenary Committee of the Conference. It wil then be incumbent upon the Heads of Delegations represented in that Committee to decide what form this report shall "take and in what form it shall be inserted in the report of the whole of the Conference, as well as which parts of the report are to be made public and which not. As far as the second part is concerned, that is, suggestions and D.4. E/PC/T/C. III/PV/8 directives to be given to the Drafting Committee, I rather feel that some of the Delegates wanted to have the second part developed further, and have suggested that the Drafting Committee might be given a certain amount of initiative in preparing this text. On the other hand other delegations might think, on the contrary, that such procedure would not be without danger.It seems to me that if we reopen again a discussion of this point it will be very difficult for us to get the general recent of the whole of the Committee. I am afraid. . A great deal of time and effort has been given by the Rapporteur to the preparation of this text, and we give got the agreement of the British Delegation on the subject. As to the remarks of Mr. Hakim, I would like to put it to the Committee whether it would be wise to keep the draft of the second part in its present form, that is, instruct the Drafting Committee not to make any changes in the text, or whether, in accordance with the suggestions of Mr. Hakim and Mr. Holmes, we ought to leave a certain amount of latitude and freedom to the Drafting, Committee as far as the wording of the text is concerned. I should not like to all a vote on a question of pure form and procedure, therefore I will ask the Delegates whose opinion it is that we should leave our instructionss to the Drafting Committee in their present form to raise their hands, and then I shall ask those who believe the contrary to raise their hands. Will those who believe that we ought not to leave to the Drafting Committee the freedom to change the text please raise. their hands? I will try it the opposite way:. will those who believe that we ought to leave to theDrafting Committee a freedom to change the text please raise their hands? I see that three Delegates beleive that we ought to leave such freedom to the Drafting Committee. 19. E. 1 E/PC/T/C .III/PV/8. I repeat that this is not a formal vote. I do not believe there is any need to give it any such solemn forum, but my conclusion, therefore, is that the opinion of the Committee is that the Drafting Committee should only present our text in its present form. MR. HOLMES (UK): I ask for the floor merely for this reason. I did not when I spoke last make any suggestion. I was only asking for enlightenment. It was not a proposal of mine. I was not very clear quite how we were dealing with the apparent criticisms of the form of the draft by the Executive Secretary of the Conference. I was not very clear how, if there was any question of this draft being altered, we could very well do without a further meeting of this Committee, because it would be this Committee 's draft that would have to go to the President of the Conference. If it is not this draft as it stands, then shall we not have to have at least a formaI meeting of the Committee to approve something, different? I was only asking for enlightenment. THE CHAIRMAN (Interpretation): If I understood correctly the remarks made by Mr. Windham White, the Committee of the Heads of Delegations will decide what must be included in the second and what must be included in the third part, and also what must be published and what must not be published. Although the Plenary Committee has plenary powers, I do not think it would be its intentions to modify the substance or form of the text which we forward to it. On the other hand, I suppose you were alluding to the task of the present Conference. It is understood that after the task of the Drafting Committee is finished, another Conference must be called where the Delegations will have all freedom, in the light of whatever my happen, to bring whatever amendments they wish to the text. But that is another conference. For the time being, our discussion covers only our present tasks, and what the Brafting Committee will have to do. I have no doubt that, with the exception of three Delegates, most of the Committee E.2 E/PC/T/C .III/PV/8 . felt that it was better that the Drafting Committee accept the text just as it is. In those conditions, the second part, though it may not be the second part anry longer -. the second part as it has been presented by our Rapporteurr - seems to me to be in conformity with the intentions of our Committee as they have been expressed. MR. McGREGOR (Canada): Speaking as the Delegate of Canada, our under- standing is that parts I and II should be made public.. If you include this statement in part I it will be made public, but it would only be partial statement, and it would deal primarily with the differences of opinion that have been expressed in this meeting, . even though we do preface it by some statement that there was general agreement. In any case, I do not see the point of making all these observations to the Drafting Committee, which I presume would be a committee of lawyers meeting in New York, who may have to make certain technical changes. but it should not be for them to change the considered opinion of this Committee. Therefore, I do not see the point of turning over to them all the expressions of differences of opinion when we have arrived at a conclusion here. MR. WILCOX (USA): Whether the statement should be made in part I or in Part II, I believe that it is the opinion of several Delegates that the statement that is ..ade public, must be somewhat fuller than what is presented here. Therefore, there is additional drafting to be done, and as I understood it, Mr. Holmes 's question merely was whether it would not be necessary to have a drafting group of this Committee at this time to prepare some additional text, and would it not be necessary to have another meeting of the full Committee to pass on that text. I do not believe that that question was answered. THE CHAIRMAN (Interpretation): .The President of the Conference to say something to us, and I am glad to welcome him here. 21. E.3 E/PC/TC. III/PV/8 MR. SUETENS (President of the Conference) (Interpretation): I apologise for entering this discussion, but I do so in ..y role as President of the Conference, and especially as it seems to e that here are some divergencies of views concerning the decision which has been adopted in the Committee of Heads of Delegations. I think that the position is very clear. The report of each Committee must consist of three parts. The first part is the historical description of the tasks of the Committee. As far as I am concerned, I have no remarks to take about the way in which this Committee has understood its task concerning the first Part. The second part must be a group of instructions or the Draftin, Committee, and I was very such surprised to see that a vote was taken as to whether the Drafting Committee is to be bound or not by a text submitted to it. In my opinion it must be absolutely free in this matter. It is clear that if the Drfting Committee had before it a text, - which had unanity and was not a compromise; it would not want to change it in any way, but I do not think it should be bound in any way. In any case, I think one must give to this Drafting Committee instructions, and to give these istrutctions one ..iust in some way agive an exposition of the problems submitted to it. I have had before ie two reports,, this one and that of Committee I. I do not want to comare them one with the other, but I think that the report of Committee I is more in conformity with the spirit of the decision of the Committee of Heads of Delegations. There is there an exposition of the Points of view expressed, with from time to time indications of possible divergencies, and in the last paragraph, it says, in effect, "In conclusion, this is the from which seems most appropriate and which seems to. reflect best the general tendency of the Committee.".. Since earlier there was hesitation about what were the decisions and the spirit of these. decisions of the Committee of Heads of Delegations, I took the liberty of intervening, and I apologise again. 22. E/PC/T/C.III/PV/8 I hope that I will have brought some light into the debate, and I will add this, that in the meeting, of the Heads of Delegations it was decided that the first part and the second part of the report. will be public. It is only the third part which will not be public, because this is projtect which has to be submitted still to a draftin Committee which must see whether it is in conformity with the decisions which have been taken. THE CHAIRMAN (Interpretation): I would like to thank you, Mr. Suetens, for your explanations. You have brought to us all the clarity which we needed on the problem we were discussing. If I understood correctly the remarks of Mr. Wilcox, he believes it is desirable, and I see that he expresses the opinions of several Delegates, that one should bring greater explanations and more complete ones in the first part of the report. As far as concerns the second part, when I submittee the matter to the Committee, it was never my. intention to deprive the Drafting Committee of its freedom of action, but I had understood, as we were being, asked to give instructions to it, that these instructions had to be conceived in one way or another, and to take the two extreme Possibilities, we could instruct the Drafting Committee either to do as it wants, or to maintain this text as ,ar as possible in its present form, because it seems in its substance to be the most elaborate form of the problems which we could give in the present state of affairs. There might be inter- mediate and more subtle ways of expressing it, but I think I am in the spirit of the Committee when I say that this Committee wishes to see as few amendments as possible brought to the draft which we are discussion now. in these conditions, I do not see very well what we can add, if it is not done for the pleasure of having a fuller page, to the text as it stands. My impression is that in Conferences like ours an tha th rvt the reports. are gLenmrally too lon or too hbrief, and that te brevity 23. E.5. E/PC/T/C.III/IV/PV/8. of cur second part is due to the fact that the subject we were discussing was different from what was beinig discussed in Committee I, and, the .instructions .which we have to give to the Drafting Committee do not, necessitate any such long development as those given in Committee I. May I again ask the Committee if it is their opinion that the drafting of part II should be amended, and. whether, taking into account the observations made by Mr. Suetens, in .what way it Believes that the second part could be completed, that is to say, this instructions which have to be, given to the Drafting Committee. MR. SUETENS (President of the Conference) (Interpretation): I would like to complete what I have said. I was impressed by the remarks of the Lebanese Delegate, and I think he formulated. clearly the proposal which is needed. Since parts I and II are for the public, the Public must know what we have done. It. is not by reading. Part I that it can have any idea of what we think of the problem we have been discussing, Part II is therefore a group of instructions given to Drafting Committee, but it is also an exposition destined to the puLiic, and. it is in this way, I believe, that some development of the nature of the tasks you have undertaken must be included, together with the points of view which have been expressed and the general solution which we give to them. THE CHAIRMAN (Interpretation): I would like to thank Mr. Suetens again and in these conditions I believe it would be necessary to take into account the remarks which have just been made, and that Mr. McGregor should redraft the second part of the report. It would also be necessary for our Committee to meet again to examine this revised second part. With regard to the French text, this text could not be drafted in time: for this meeting. Therefore., I ask Mr. Lecuyer, the .French expert appointed to help Mr, McGregor in his task, to maintain contact with him in order to establish as quickly as possible the parts of the French text which correspond to those which it can be said we have already agreed. 24. F fols. E/PC/T/C.III/PV/8 So far as concerns the adtitional sections which Mr. MacGregor is going, to write for the second Part, I hope Mr. MacGregor will maintain contact with him. THE RAPPORTURE: I would like to suggest that someone else should be asked to undertake.the work of drafting. THE CHAIRMAN (Interpretation): As anyone a proposal to make in order to solve the problem brought about by the temporary absence of our Rapporteur? As no one wishes to speak, I would like to remind the Committee that Mr. Mc Gregor is being assisted in his work by three experts, Mr. Lecuyer for thier French draft, Mr. Wilcox and ,Mr. Holmes. Perhaps in Mr. MacGregor's short absence, Mr. Wilcox and Mr. Holmes might be able to prepare text for the second part which Mr. McGregor might examine on his return. This text might be sub- mitted to a new meeting of our Committee. Are the Committee agreed upon my proposal, or has anyone any other proposal to make? As no one wishes the floor, I consider my suggestion adopted. THE RAPPORTUER. I thought we .were just on the point of reaching agre- ment on Part. III which is a vital part in our whole deliberations. what has cropped up. here is purely a matter of form as to whether we put it in Part.I, II: or III. We had proposed to put in Part III an addendum. or Appendix which would contain first of all a reference to ,the general nature of the. Understandings reached, and also the discussion on the points on which there had been differences. It would be left then to the Preparatory Committee to use that addendum in whatever way they. liked to make it public or not. If you put it in part I or II it must be made public. If it is put in Parts I or II you make public all the. differences of opinion, All the emphasis will be on the differences of opinion, and, this whole conference has not been.marked.by sharp differences of opinion. It has been exception for the unamity which, we secured during the session. It would be most unfortunate if we would publish a. document which 25 E/PC/T/C.III/PV/8 emphasises what has not been present during our discussions - namely a considerable degree of difference. There has been a give and take here which I think should be noted with great satisfaction, and I suggest that we should not not it this meeting today to break up because we have not put the matter in the particular form in which the Committee and heads of Delegations have decided it should be. I submit that with all respect to the heads of Delegations. THE CHAIRMAN (Interpretation): Has anybody any observation to make concerning the remarks of the Rapporteur? MR. LEENDERTZ (Netherlands); I fully subscribe to what Mr. McGregor has said, and I also feel it would be rather a pity if we should make further work because of technical difficulties which, to my mind, would not improve the work before us now. would it not be possible to add to Part II something like the last part of Part II, which, is on the third page? If something, Iike this could be worked out, I think perhaps Part II would have sufficient body to be satisfactory to the other "gentlemen who express other views. MR.WILCOX (U.S.A): I ask the Committee's indulgence for prolonging this session which has already been too long,, but it seem to me from the course of the discussion that we want to accomplish four different things in our Report. One things. we want to do is to give a history of what the particular Committee has done Another thing we want to do is to give an exposition of the issues discussed, for the information of the public. third thing we want to do is to give instructions to the drafting Committee. In the case of this Committee, I do not think that raises any particular problem. I think what we have here in Part II of the Report is quite ample. We can say to the Drafting Committee "We have covered this ground, and this is the way it looks to us" and stop. We do not have any more detailed technical problems for the Drafting Committee to go into. The next thing we want to do is to provide them with the textual material. I think, however, that in the case of a number of other Committees, or 26. F.2 E/PC/T/C.III/PV/8 at least in the case of Committee II, we will have to give some pretty explicit detailed technical directions to the interin Drafting Committee of a character that would not be the sort of thting, we would want to put forth for the edification of the public. I think this discussion points towards the fact that our Report should be in four parts rather than three, and that what is given as Part II is wht you should have in Part III, and that we have not yet writtenn what I would call Part II - an exposition of the issues and that task still remains to be done. I think that would be the task of the Committee which is to be appointed. THE CHAIRMAN (Interpretation): I think that Mr. Wilcox has once again expressed most clearly everything, that I myself had in mind. However, I do have the impression that the different ideas which have been propounded around this table on a question which is, after all, only a question of procedure, do touch upon the subject of our work. It is our. duty to follow the directives which have been given to us. Following the suggestion made by Mr. Hakim at the beginning of the discussion, our Rapporteur and hia assistances will have, to bring about certain important changes. to the work in the form in which you have seen it today. In view of this, I do not think we should be able to put a final touch today to our Report, and I am afraid that I shall not be able, as. I would have liked, to submit it myself to the Chairman of the Conference. As our Committee will have to. meet again I see no use in prolonging this Debate at the moment. I shall.leave to the talents of our Rapporteur the task of taking into account a. h. benmaehre , far as possible allal the remarks which have been made here. I sha ask him Mto take intzto account particularly the remarks of r. Leender. It will alseo be the duty. of the pporteur,.while not to gitcthe imression tahat o work has been marked by. grave discord. n disagree- ment, which hagve not really existed, at the same time to ,ive the greatest possible precision to his Report. At the next meeting you will be able' to see the new ext presented by the Rapporteur. 7.- E/PC/T/C.III/PV/8 Before closing; this meeting and taking leave of you, I would like to call upon Mr. Korican who has a statement to make of a practical nature, in the name of the Secretariat. THE SECRETARY, COMMITTEE III (Mr. Korican): Parliament id re-assembling tomorrow, and Deans Court entrance .to church House will be closed, so you will have to expect that some strcets wiill probably be blocked and it will take sore time to get to the Great SmithStreet entrance. For that reason, I suggest that those delegates who have meetings tomorrow will take that fact into account and will try to use the Great Smith Street entrance to church House, leaving sufficient time for changes in traffic arrangements. MR. WILCOX (U.S.A): Before this meeting of the committee adjourns, in view of your departure from London, Mr. Chairman, I would like to express on behalf of my Delegation, and I am sure on behalf of the other Delegations here, our very great appreciation of the skill and fairness with which you have conducted these sessions, and the great contribution that you have made to the successful conclusion of our work., MR. HOLMES (United Kindom): I would like to associate myself' with those remarks. THE CHAIRMAN (Interpretation): I, thank Mr. Wilcox for his very kind works which he has spoken in the name of the American Delegation, and I thahk Mr. Holmes for the support which he has given in the name of his Delegation. Before taking leave of you, I would like to make a short statement concerning our work. When you did me the great honour of appointing me as Chairman of this Committee, I thanked' you for the honour you were doing me and my country. Now I would like to state with what pleasure I have felt in directing .your work.- It has been a real pleasure to me, in spite of the very strictrules of international procedure. It has been a pleasure to discover the good will and co-operation and objectivity which have inspired incessantly the Delegates surrounding this table, and I thank the 28. F.5 E/PC/T/C.III/PV/8 Delegates from the bottom of my heart. I would like once more to remark upon the .work done by our Rapportear and the experts who assist him. I have no doubt that our Rapporteur and his experts will bring the work to an end, and good end. At the same time, I would like to thank. the Secretariat and Mr. Korican for all the trouble they went to in order to take care of the material side of thinks, which were very difficult to cope with in view of the short time at our disposal. I regret the necessity of returnin, to Paris which .will prevent me from taking part in the work of our committee, but I have no doubt that Mr. Gonzalez as Vice-Chairman will take my place with much greater talent than I have been able to furnish. On the Subject of our work, I would like to add a vew personal remarks. During the all too short moments .of leizure we have had, I had occasion to study a book published recently in England by a young professor of Cambridge a study of the development of capitalism. 29 G.follows. G.l. We all know - we all knew it before - that the question of restric- tive practices is almost as old as the world itself, and that, as I have already said in the course of the press conference, there has been conflict after conflict between a tendency to establish a monopolistic situation and the opposite situation for the maintenence of healthy compeitition. The merit of the book I have mentioned is that it approches this subject with the greatest possible amount of documentation. The fight for the maintanance of healthy competition through all the , periods of economic history has seen ups and downs. There have been periodcs when such compeitition has entirely dis- appeared. One might say that during the period between the two wars this competition has, in many cases, seen many dancers. It may be that the effort we are accomplishing now and the effort we have been putting forth for The past eight days, may be no more than just a brief episode in a story which will see no end, but it may also be - and that is work I, personally, hope and what the members of this Committee hope with me - that the work of our Committee represents truly a turning; point in this history and: the beginning of the solution of a problem which has been facing the world for centuries, a solution which will finally allow us to find bevver standards of living for all humanity. Also, as is stated in ,Article 34, the establishment of a real income level as high as possible. It is with this conviction that I leave you, and this deep conviction makes it easier for me to leave you and diminishes my regrets, as I am sure that the time we have spent together has not been time lest. (Applause) Gentlemen, the meeting is closed. The meeting closed at 5.47 p. E/PC/T/C.III/PV/8.

GATT Library

qf093wk3507

Verbatim Report of the Eighth Meeting of Committee IV : Held in The Hoare Memorial Hall, Church House, Westminstor. S. W. 1. on Tuesday, 19 November 1946 at 10.30 a. m

United Nations Economic and Social Council, November 19, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

19/11/1946

official documents

E/PC/T/C.IV/PV/8 and E/PC/T/C.IV/PV/8-9

https://exhibits.stanford.edu/gatt/catalog/qf093wk3507

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GATT_157

E/PC/T/C.IV/PV/8 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatin Report of the EIGHTH MEETING of COMMITTEE IV held in The Hoare Memorial Hall, Church Westminstor. S. W. House. 1. on Tuesday, 19th November, 1946 (From the Shorthand Notes of W.B.GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminster, S.W.1. ) 1. at 10. 30 a. m. CHAIRMAN: MR J.R.C.HELMORE (U. K. ) E/PC/T/C.IV/PV/8 THE CHAIRMAN: It is some time since this Committee had the pleasure of meeting in full, and during the time that it has not met the Drafting Committee worked, at any rate so far as its members were concerned, extremely hard; its Chairman was not always so regular in attendance. I think I ouht to explain that in an endeavour to keep to the time-table for the meeting of the Preparatory Committee as a whole one or two pieces of anticipatory action were taken by that Drafting Committee, or by myself. The first was by the Drafting Committee. After they had completed their draft text a message was sent to Committee V explaining how that text could be implemented in the Article relating to the Commodity Commission and other relevant passages in the chapter relating to organization. In the second place we nominated two or three members to listen, on behalf of the Committee, to the representatives of the International Chamber of Commerce. The other thing I ought to report to the Committee is that in order to have a preliminary draft of a report by this full Committee before us I ventured to ask the representative of Canada to act as our Rapporteur; and I am sure the Committee will approve of my action in that respect. I suggest the best way for us to conduct our business this morning is to take the report of the Drafting Committee in its two parts; that is to say, the text and the explanatory notes. Unless there are any general questions which any Delegation would like to raise at this point I think it would be the most expeditious and businesslike way for us to make the most rapid progress we can if we were to go through that text, taking with each Article the notes that refer to it. If that is agreed I will take the text Article by Article, and it is open to any member of the Committee to catch my eye. At this point I might say that we are again working vwith simultaneous interpretation, and it is important for the convenience of the whole Committee that Delegates should not speak until they have caught my eye, because that gives the master of ceremonies, as it were, a chance to switch on the appropriate microphone. At this point I might also repeat my appeal for pauses between sentences. It is reported to me - not greatly to my surprise, due to the appalling screams we hoard from somewhere in 2. E/PC/T/C.IV/PV/8 the region of the interpretators' gliass box - that the simultaneous interpretation has not been working while I have been speaking. If any Delegate wishes for a translation of what I have said I shall be glad if he would say so. Are there any remarks before I turn to the draft text? I will now take the text, and I will refer to Article 1, in which, as you will see, there is a square bracket which refers to a note; that note refers members of the Committee to the note on the very last paragraph of the last Article. I think it would be convenient if we kept the discussion on that point until we come to the last Article, when we can have a general discussion on the point. Are there any other observations on A.rticle 1? ThrnI1 take it that we p ass Ar tile c1, subject to teh pointab out priecs ebng r erervsed, and I nwo cal Alrticel 2. R. WIL'OX (United States): Do)you w.sh to takecthis up pa agraeh by paragrap^? THE CHAIRMAN: Yes, I think it would be convenient if there are points to be raised. Are there any points on paragraph 1 of Article 2? Then I pass to paragraph 2. There is a note on paragraph 2. MR. BEYLEVELD (South Africa): Instead of specifying "owing to the difficulties" would not it be bettor to make it more general and say that inter alia those difficulties would be referred to? Something to the effect that "economic problems which, may arise inter alia through the difficulties of finding alterna- tive occupation", then you do not restrict it to that one condition. MR. WILCOX (United States): I believe the phrase in brackets was in the original United States' draft. I do not think, that it is necessary, and we would be prepared to drop it if there is objection to it. THE CHAIRMAN: The proposal is -- and I think this would meet the South African Delegation too -- that the words in square brackets should be dropped so that the paragraph would read: "To prevent or alleviate the serious economic problems which may arise when production adjustments cannot be affected by the free play of market forces as rapidly as the circumstances require." Would the Committee agree? MR. HML? (United Kingdom): We would agree to dropping that if that is the wish of the Committee. ?.3 THE CHAIRMAN: I think the Committee is generally agreed that it would be prferable to have the paragraph without the words in square brackets. Is there anything else on paragraph 2? Then we pass to paragraph 3. Paragraph 4 is in square brackets, and the note again refers to the question of prices, which we said we would keep until the end, so I will hold that paragraph back and call paragraph 5. MR. WILCOX (United States): Paragraph 5 creates one difficulty which I think was in the minds of the Drafting Committee. That has to do with conservation agreements relating to fisheries on the high seas or in international waters, such as, for instance,/whaling agreement. I doubt that some of the provisions that are set forth in the rest of the chapter would appropriately apply in that case. I think, however, that that is something which has to be thought over at some length. I would believe it to be unwise for us to try to do that here and now. I suggest that the attention of the Interim Drafting Committee be called to that probem. fols E/PC/T/C.IV/PV/8 4 E/PC/T/C.IV/PV/8 MR DE VRIES (Netherlands): Mr Chairman, I believe that the objection of Mr Wilcox is covered to a great extent in so far as it goes to the Protection of fish, and for instance in the case of herrings in the North Sea, that is covered by protection of plant and animal life in the exceptions. That is, as far as there is an economic question, it should come under this; but I quite agree to p2ut it before the Committee in New York. THE CHAIRMAN: Shall we then ask the Rapporteur to make a note of this point and have a suitable passage thought out saying that this question requires further examination? (Agreed) Paragraph 6: the note by the Drafting Committee refers us forward to Article 7, and I suggest we might follow that arrangement of business and withhold paragraph 6 for the moment. Would the Committee then pass. Article 2, subject to the reservations we have made? (Agreed) I will now pass on to Article 3, paragraph 1. Paragraph 2. Paragraph 3. If there is nothing else on Article 3, we will pass on to Article 4. MR WILCOX (USA): Mr Chairman, in paragraph 1 of Article 4, the third line from the bottom the text reads: "convene an intergovernmental Conference of interested members for the purpose of discussing measures," and so on. The words "of interested Members, " as we have read then over, seem to be confusing, and unnecessary, and I would suggest that they be dropped. THE CHAIRMAN: The suggestion is that we cross out the words " of interested members" in the last line but two of Article 4, paragraph 1. MR McCARTHY (Australia): I would agree to that. MR GUERRA (Cuba): Will that then mean that the Conference will include other Members, even though they may not be interested in the commodities in question? MR WILCOX (USA): I think the answer to that question is found in the following MR GUERRA (Cuba): Ye?, that is covered. THE: CHAIRMAN: With that explanation would the Committee agree? We will cross paragraph 2. ~~ s-e < - y -s - - - c ~~~~~~~~~~. If . - e- -;-- - C. 1 C2 E/PC/T/C.IV/PV/8 MR BEYLEVELD (South Africa): Mr Chairman, I would like to raise a point here in regard to the three groups interested in starting discussions on the establishment of an agreement. There are the producers, the consumers and the trade. Now, apparently in terms of paragraphs 3 and 4 there would. be more or less equal representation for those groups first to study the matter and then to hold a conference. If there is not some prior right for the producers to establish this organization, would not you have the danger that there will be so much argument over establishing it, or bringing it beyond the conference stage, that in the end you might have more organizations established in terms of Article 8 on a sort of unilateral basis instead of being established in terms of paragraph 3 and 4 on what one might call a multilateral basis. THE CHAIRMAN: I may say I have no intention of trying; to answer that conun- drum myself. MR HALL (UK): I am not quite clear I am afraid on this particular point. It is of course Governments who are going to attend these conferences, but I have not quite followed the difficulty, I am afraid. MR BEYLEVELD (South Africa): Assuming two producing governments and two consuming governments and two trading governments, and they start arguing in the study group and ultimately they start arguing in the Conference, Will not they between the three of them, being of a sort of eqal status, argue without end and never come to finality, whereas in the last resort most of these schemes would be in the interests of producers; and it seems to me that producers should have a little bigger say in establishing an organization, after which in the administration of the organization every interested party would have more or less an equal say. MR HALL (UK): I wonder if that does not arise on later Articles. It seems to be clear on this Article that any member can ask for a. conference, and if, as is quite natural, the producers are most interested, it is perfectly upon to them to have one. On the question of whether they reach agreement or not, that does not seem to me to arise on this Article; it is considered mainly in Article 8. 6. C3 E/PC/T/C.IV/PV/8 MR BEYLEVELD (South Africa): That is sort of unilateral - one is going ahead when the others do not want to work together. I do not want to press the point, Mr Chairman. I thought I would merely mention it. MR MELANDER (Norway): I think the answer to the point raised by the delegate of South Africa could be found in Article 4, paragraph 1, where it says that the "Organization shall convene a conference at the request of a Member. SIR GERARD CLAUSON (UK): I do not think this is a real difficulty in the light of experience in the past. It is perfectly true that if a member asks for a conference to be convened, the Organization has got to convene it, and if it does convene it it seem, to me only reasonable that it should also be under obligation to ask everybody who is concerned; but of course the interests in production, consumption and trade are not equal. Production and consumption must balance. But as a representative of what was at any rate once a great trading nation, I am bound to say that in the case of primary commodities countries interested in trade are very much fewer than they were, that is to say, trading in commodities which they neither produce nor consume, and they cannot hope to bulk very large in a conference of this kind. Nor, I imagine, would the people who are really interested in the production and consumption put up with very much nonsense from countries who are purely interested in trade, and I feel sure that they would force the Conference to a conclusion. One cannot, in a document of this kind, lay down rules for voting in a Conference of that kind because it is a matter which has got to be settled by the good sense of the Conference. What happens in such a Conference is a vast amount of argument between the producers and the consumers who start by thinking that their interests are equal but oposite and after an intolerable deal of talk come to the conclusion that they also have a great many common interests and that those common interests require them to reach agreement. I do not myself despair of those conferences coming to an agreement reasonably quickly because it soon becomes obvious in such conferences that it is to everybody's interest that there should be a conclusion of some kind. So that I do feel that this wording is quite innocent these thi MR McCARTHY who are it could could re we will having de E/PC/T/C.IV/PV/8 as it stands and it will not run the people who have to manage ngs into serious difficulties. (Australia): Mr Chairman, my idea of it is that this Article 8 paragraph 1 was designed just to meet the case where one or two countries perhaps important to the Conference hold it up, and I think that be said that if, after a certain period, those who thought they ach an agreement, would say to those one or two countries, "Well, go ahead and make an agreement without you," they would then, cided to do that, make an agreement in accordance with the Charter. In practice, it would probably be found that the recalcitrants who perhaps designed held it up would be the ones that would be left out and that without them an agreement might be possible, or it might be found that when they saw that the others were determined to go on with it they would come in. I think that that is what would happen in practice. But it is quite conceivable that a particular country of sufficient strength might set out to hold up the proceedings, and that Article 8 (1) was put in to stone that; but I think the next step would be to make an agreement without them. THE CHAIRMAN: I wonder whether with those two explanations the Delegate of South Africa would be content? D fols. 8. OM MR. BEYLEVELD (South Africa): Yes. THE CHAIRMAN: I think that finishes Article 4. Article 5, paragraph 1? Paragraph 2? If there is nothing else on Article 5 we go on to Article 6. Paragraph 1? Paragraph 2? Paragraph 3? MR. QURESHI (India): On Paragraph 3, Mr. Chairman, I just wanted to know about the point that we raised about the representation of those countries which were both important producers and importers. It is not clear to me from the -ording here. Have they got any vote for their dual capacity? THE CHAIRMAN: If I may venture to answer that point, I think it is dealt with, as well as the Drafting Committee felt that it could be dealt with, in the next paragraph. MR. QURESHI (India): It is not clear to me, Mr. Chairman, whether they will get votes in proportion to their imports or exports. THE CHAIRMAN: No. it was not/clear to the Drafting Committee either I think I am within the recollection of the members of the Committeeo in saying that, and most members of the Drafting Committee felt that circumstances would vary so much as between the circumstances in each particular commodity that the right way to deal with this point, without a formula that might be as long as the rest of the Chapter, was to say that those who were interested, but could not be classified precisely as one or the other, wore to have an appropriate voice . MR. QURESHI (India): Do you think it is possible for instructions to be given to the Interim Drafting Committee that they should have this in view when drafting the Report, and/then this position may be further explored, because we do feel that then a country is an important producer and at the same time an important consumer it should get the weight in regard to representation in its dual capacity. THE CHAIRMAN: I think members of the Committee might like to express an opinion on that suggestion by the Indian deIegate E/PC/T/C.IV/ PV/8 SIR GERARD CLAUSON (UK): Mr Chairman, the Drafting Committec did, as you said, try to deal with the matter in the next paragraph, and it is possible that they did not deal with it as skilfully as they could. Would it meet the point of our Indian colleague if in the last line but one of Para. 4 we said instead of the words "which do not fall procisely under either of the above classes", "but which are not large importers or exporters"? Then it would read "Provided that those countries which are largely interested in the commodity, but which are not large importers or exporters, shall have an appropriate voicc". I think that was really what we meant to say. MR. QURESHI (India): I think if we added the word "both" - "which are both importers and exporters" - that would satisfy us. SIR GERARD CLAUSON (US): Yes, but it would not satisfy a country like France, which is a very large producer. MR. QURESHI (India): But if it is not a very large importer, you see, it is a different story. That is why I suggested we need not discuss it at any length here, but it may be left to the Interim Drafting Comittee to have this in view. As regards the principle I do not think there is any disagreement. It is only a matter of drafting and could be well taken in hand by the Interim Draft in Committee, because the point is important. THE CHAIRMAN: The suggestion made by the Indian delegate is that the objective being fairly clear we should note in our Report that some of us are not entirely satisfied that these words at the and of Paragraph 4 convey all the shades of meaning which we intend them to convey, and would they have another look at it. MR. QURESHl (India): With the addition "with a view that countries which are both large importers and exporters of a commodity should have adequate representation". Within that formula they could make out some sort of wording which would be acceptable to us. SIR GERARD CLAUSON (UK): We must cover the case of a country which E/PC/T/C .IV/PV/8 is a very large producer and Consumer, but a very small importer or exporter. There are really two cases: one, of the country which practically supplies itself with very large quantities of the commodity, and the other is the case of a country which is so large that it is importing at one and of it and exporting at the other, so it is both a large importer and a large exporter. That is the point, is it not? MR. WORMSER (France) (Interpretation) Mr. Chairman, the sentence which has called forth the remarks of the Indian delegation originated in a French amendment, and if we are to give any instructions to the Drafting Committee I should like to insist on having these instructions drafted in the most clear way possible, without any grounds for misunderstanding, in order to indicate to te Comnmittee clearly that we wish to ensure proper representation for countries who are producers of merchandise in large quantities and consume that merchandise nationally, without taking a large part in international trade. MR. QURESHI ( India): That is satisfactory to us. THE CHAIRMAN: Then may I ask the Rapporteur if he thinks he has the point sufficiently to think of a form of words, which perhaps, to save time, might be cleared outside this Committee for reporting as soon as possible, with say, the United Kingdom, India and France? MR. GUERRA (Cuba): At this point I have an observation to make, Mr. Chairman. In paper E/PC/T/C.IV/W.7, the Report of the Drafting Sub-Committee, it says in the second paragraph "The draft as now presented has been generally agreed as suitable for presentation to Committee IV. Passages on which all Members were not agreed are indicated by square brackets." I want to call attention to this, that while some of the amendments of our delegation that were not agreed in the Drafting Committee are in the form of additional paragraphs, I find that some of them are not included. In this case of Para. ## our amendment was not an addition, but was a different position. It was on the question of equality 11. E/PC/T/C.IV/PV/8 of voice, and that part has not been put into square brackets, and we have to do one of two things: either put that in square brackets or change the wording of Para. 2 of this paper I read, so as not to give the impression that our delegation agreed on that Paragraph No. 4. THE CHAIRMAN: In defence of the Drafting Committee I think we should also read the third paragraph of their introduction, which says "certain other matters to which the Sub-Committee wishes to draw attention", and there is on this particular point a note a gainst Para. 4, which I had not yet called , but to which we were led forward by the question the Indian delegate raised on Article 3. We have got slightly out of order, but I am afraid it was my own fault, because I referred the Committee forward. However, I wonder if we could agree Article 3 and get ourselves back on the rails again? Then on Article 4 there is a suggestion new that the Rapporteur should take account of the points made by India and France and include a plassage on those. I think at that point I should ask whether the Cuban delegation would be satisfied by the inclusion in the Report of a passage on the lines of the note on page 2 of W.7., to which reference has just been made? MR. GUERRA (Cuba): I notice the third paragraph, Mr. Chairman, but I think if no say "generally agreed" in para. 2 it gives the impression that every delegation agreed to that in the Drafting Committee, and I would prefer to change that to "has been agreed by a majority of the Drafting Committee". Otherwise it gives the impression that every delegation agrees on all points that are not in square brackets. I will not make a point of putting that part to which I referred into square brackets; I prefer that the wording in para. 2 ofthis Report of the Drafting Sub-Committee be changed in that way, to say "agreed by the majority of the Drafting Committee", or some other wording which will mean the same thing. "Generally agreed" 12. E/ PC/T/ C.IV/PV/8 is not Acceptable to use because we were in the Drafting Sub- Committee and we did not agree to that. THE CHAIRMAN: I suggest to this main Committee that it is not worth while wasting time on what is the Report of the Drafting Committee, which has been passed, and all that that sentence says is "The draft as now presented has been generally agreed as suitable for presentation to Committee IV". It does not in any way say that everybody agreed to very word in it. It simply says that .weall on the Drafting Committee thought this as a suitable draft to bring up, and everyone has his chance here of making objections to the draft or asking for points to be noted. MR. GUERRA (Cuba) Mr . Chairman, the difficulty is that if the sentence says "Passages on which all Members were not agreed are indicated by square brackets", that will again imply that the paragraphs round hich there are not square brackets were agreed by everyone. THE CHAIRMAN Then may I ask this Committee to make a manuscript amendment to the text which is in n.6 and put square brackets round Article 4? Is that satisfactory? 13 D5 Mr. GUERA (cuba): Well, it may be satisfactory, but I think other dele- gates will probably prefer to read the paragraph that way and amend the Report in the sense that it was agreed by the majority. THE CHAIRMAN: I think there is a genuine confusion here. What we have before us in W.17 or 7 is a Report from the Drafting Committee which is a document presented to this Committee. No one here is committed to that. What we are trying to do this morning is to consider the lines of the Report of this Committee We are now at Article 6, Paragraph 4, which, as the Cuban delegate has quite rightly reminded us, was not agreed by all Members on the Drafting Committee, and it is for this Committee to decide what it wishes to do with Article 4 and how it intends to handle the matter in the Report of this main Committee IV which is going forward. Mr. DEUTSCH (Canada): I may say, Mr Chairman, that in the preliminary Report of the main Committee there is a reference to the question raisedby the Cuban delegation, and, it was pointed out there that the majority view is represented here in this Article, but that there was one delegation which did not agree with this. Mr WILCOX (USA): Mr Chairman, my understanding would be that the only documents which would be made public here would be the draft and the Report to which Mr Deutsch referred, and that document 17 is purely an internal communication and that the point is adequately covered in what would be the Report of the Committee. THE CHAIRMAN: I think perhaps at this point I ought to ask for an expression of view quickly on the point which has been reserved by Cuba from the Drafting Committee. If there is a substantial expression of view in favour of the passage we have now put in square brackets, then I think that is the passage that should appear in the main text and we do justice to the Cuban point of view in a passage in the Report. Mr GUERRA (Cuba): Mr Chairman, I agree that our position is being dealt with justly in the reference to Article 6, paragraph 4, as Mr Deutsch suggests, But I do not quite understand why, though in some of these parts we have this reservation properly taken care of, as in this part to which Mr Deutsch referred at the same time in the beginning E-2 E/PC/T/C.IV/PV/8 In the introductory part it is said they are generally agreed and that the square brackets are only on the points where the delegations agree Therefore I think the whole thing will be solved by changing it to make that clear in the introductory paragraph. THE CHAIRMAN: May I ask, to which document you are referring when you speak of the introductory part? Mr GUERRA (Cuba): W.17. THE CHAIRMAN: Well, we have already met that. When you referred in W.17 to passages on which all members were not agreed and are indicated by square brackets, we hastily put square brackets round this particular paragraph in W.6. Mr GEURRA (Cuba): In paragraph 4? THE CHAIRMAN: 4. That is now standing in square brackets. What I am now seeking to do is to see how we should deal with this paragraph in the Report of the main Committee IV. I might perhaps say that at would be helpful to general progress on this subject if we could print our final text without square brackets, but see that justice is done to any reservations and in the Report which Mr Deutsch has pre- pared. So that if there is a substantial but not unanimous agreement on Article 6, paragraph 4, as it now stands, I would propose that the point should be dealt with not by square brackets but by a definite note drawing proper attention to the point of view which the Cuban delegate has indicated in the appropriate paragraph of the Report of this Committee, which, as at present drafted, does refer to it. This is in document 10, paragraph 8. But perhaps we might return to that when we come to consider document 10. I would just like to know now whether the views of the Committee generally are in favour of Article 6, paragraph 4, as it appears. Sir GERALD CLAUSON (UK): Mr Chairman the United Kingdom delegation are in favour o Article 6, paragraph. 4, as it now appears. We do feel that square brackets are a very useful device when a document is submitted by the Drafting committee to a main committee; but we very much support your view that they are a disfigurement to a published text, and that the better course would be to publish the whole of the drafting of Chapter 6 without any square brackets, but to cover all the reserva- tions in the covering Report. E-3 E/PC/T/C.IV/PV/8 Mr GUERA (Cuba): I have only one question to ask. The Report is document 17? THE CHAIRMAN: No; document 17 is not to be published; but the document which will be published will have this Committee's revision of document 10. Mr GUERRA (Cuba): What I mean to say is, it will include the reservation: the Report will include the text with square brackets and then the reservation of the delegation on every point? THE CHAIRMAN: Yes, Mr GUERRA (Cuba): That is satisfactory to us, THE CHAIRMAN: I am very grateful to the Cuban delegate for that under- standing. Then I think it is the general wish of the Committee that we pass paragraph 4 as it stands and remember that when we come to draw our draft Report this point has to be properly noted. Mr GUERA (Cuba): That is right. THE CHAIRMAN: Then may I return to the text and call Article 6, paragraph 5. (After a pause:-) Paragraph 6? Shall we pass on to Article 7? Mr QURESHI (India): Mr Chairman, I would just like to request you to consider one point, Though it may seem rather early at this stage, but it may help us because Articles 7, 8 and 9 have a very intimate connection with Article 15, which is the last Article; and with your permission I would like to make some observations on Article 15, which is intimately connected with 7, 8 and 9. It will help the dis- cusslon. Or you may allow me to refer to this when we discuss 15. But I personally would prefer that you should give me about 5 minutes in order that I may explain the position. THE CHAIRMAN: I had hoped that we could discuss the general principle of 7, 8 and 9 when we came to the governing words, which as the Indian delegate points out, are contained in the very last passage of all in the text; but I think perhaps it would be right and fair that we should ask the Indian delegate to make his statement now, and, having heard it, decide whether we should deal with it on these articles or return to the point when we come to the last Article. E-4 E/PC/T/C.IV/PV/ 8 Mr. QURESHI (India): I am very grateful to you, Mr Chairman for the opportunity that you have afforded me. Let us refer to Article 15 and the words that have been put in brackets regarding prices. I think, at least from our point of view, it is a very peculiar situation. If the words "or prices" are removed from the brackets, then any arran ment with regard to price control will not come under the commodity arrangements, and if these words are retained, then it will become a sort of exceptional clause and will not be covered under Articles 7, 8 and 9. So that the difficulty from our point of view would easily be removed if the words "or prices" in Article 15 are kept, but a small addition is made somewhere in Article 7 explaining that when a commodity is subject to excessive fluctuation in prices - and so on, The meaning of this amendment is that the words "or prices", which are in brackets, from our point of view should be kept as they are, in order that it should not over-govern Articles 7, 8 and 9, which at present is the situation. There might be a clause in Article 7 asto when a commodity is subject to excessive fluctuation in prices. That would cover our position. THE CHAIRMAN: I think it would perhaps be convenient if we discussed that point when we come to Article 15, because it seems, to the Chair, at least, that it is associated with two other points which we have reserved from Articles 1 and 2. Mr BALA (Czechoslovakia): Mr Chairman, I would like to ask the Drafting Committee why in Article 7 "commodities in short supply" is omitted. I am fully aware that in Article 14, paragraph 1, and in the Report 4/10, page 9, it is explained that commodities in short supply is omitted from this draft. but I should like to know the reasons, because as we are trying to create a machinery for commodity agree- ments, so I think we should include commodities in short supply as well. I would like to know the reasons why they are not included. THE CHAIRMAN: If delegates would refer to paper W.17, page 3, there is a note headed: "suggested additional paragraph on threatened short- ages". I think that point is dealt with in that note, and if it is convenient, we could have a general discussion on that now. - I F.1 E/PC/T/C.IV/PV/8 MR.GUERRA (Cuba). I have a suggestion to make. When you refer to paper W.17 would you also refer to paper W.12, because the same paper has the two different numbers. THE CHAIRMAN: That is perfectly true; some copies were numbered one way and some another. Have the Committee now found the note to which I referred? I ouht perhaps to remine the Committee that we left over from Article 2 paragraph 6, which is related to t his point. I hope I can incite some member of the Drafting Committee to answer the point which has been raised by the Czechoslovak Delegate. SIR. GERARD CLAUSON (United Kingdom): Perhaps I could leap into the breach. We had a very long discussion in the Drafting Committee on the question whether there should be an additional paragraph in article 7 relating to commodities which are in short supply. I think it is true to say that the majority of Delegates felt it would be appropriate to have a regulatory agreement for a commodity in short supply only if it was considered that the commodity was temporarily in short supply, and that by reason of that fact prices would be so high as to stimulate production, and therefore that it could be described as an article in respect of which a burdensome surplus might be expected to develop later. It was therefore felt that in the particular case of the commodity in short supply which could be pretty certainly judged to be going to be in burdensome surplus later Article 7 would apply. The Committee also felt that where the difficulties arising out of the short supply could only be met by something in the nature of a rationing or distribution scheme it would be covered by paragraph 1 of article 14, which leaves right outside this chapter inter-governmental commodity arrangements which relate solely to the equitable distribution of commodities in short supply. We then felt that we had not covered one case, which was that of the commodity which was in short supply, and regarding which international action to stimulate production was necessary. To meet that case Article 2 (6) was inserted, which allows Governments to frame inter-governmental commodity arrangements which are not regulatory agreements in order to provide for expansion in the production of a primary commodity which is in such short supply as seriously to prejudice the interests of consumers. Then there wore three cases; one which could be 18. F.2 E/PC/T/C.IV/PV/8 covered by a regulatory agreement because a burdensome surplus could be foreseen later, the second which merely required inter-governmental rationing procedure - which is left out by Article 4. (1) - and thirdly, the commodity regarding which combined efforts to increase production are required, which is covered by Article 2 (6). MR. BALA (Czechoslovakia): I feel that in Article 7 a fourth paragraph should be included which covers the case of commodities in short supply. I think that this Charter should be as comprehensive as possible, and it would be of value if we met this very important case. THE CHAIRMAN: I wonder whether it would be possible for you to assist the Committee by describing exactly what this paragraph would say? If that is an unfair question to answer offhand it is pretty clear that this Committee will have to meet again this afternoon, and we could return to the point then, if that would give Delegations time to think this over. PROFESSOR de VRIES (Netherlands): In the Drafting Committee we had a long discussion on a proposed text from Australia. Perhaps in the meantime the Secretary could talk that over with the Czechoslovak Delegate and see whether the suggestions made in the Drafting Committee would meet the idea he has in mind, and we could discuss it after that. MR. McCARTHY (Australia): I think some time might be given now to consideration of the principle whether some reference should be made in this paragraph to the consuming aspects of it. As the records will show, I rather took the view that some reference should be made to the interests of consumers in direct language, and that there should be a statement that in the event of shortages an agreement might be brought about. The view of the members who took a different view was, not that they disagreed that the agreements were designed to include the interests of Consumers and were not designed to meet periodical shortages but that the Article as it was worded did actually provide for that. I think the question then resolved itself into whether the Article was designed to include shortages as one of the criteria for making an agreement; and the unanimous view was, as it was designed to do that. Then the question resolved itself into whether the working should be altered to indicate precizely that that was so. E/PV/T/C.IV/PV/8 My own view was that it should be altered; but the other view was that there was a lot of merit in leaving it as it was because of the obligations that would have to be assumed by the producing countries, and that those countries should have emphasised to them the fact that the agreement would be introduced when burdensome surpluses were likely to arise. I Ultimately came to the view that the alteration of the words from "burdensome surpluses which had developed or were developing" to "surpluses which had developed or were expected to develop" did largely meet the point, because where we would want regulatory agreements we would know the history of the product, and if we were clear from the history of that product that surpluses also meant shortages periodically we could then lot that stand as an adequate indication of the fact that shortages would be met. I am quite satisfied that where you get surpluses you will get shortages subsequently, and that is inextricably bound up with the fluctuations in prices. Ultimately the Australian Delegation took the view that the position was met, particularly if a paragraph was put in the report which indicated that the paragraph was designed to cover shortages as well as surpluses, and that was accepted by all members of the Committee. We discussed the position at considerable length, and as one who pressed for the inclusion of something on the lines that has now been mentioned by Delegates I would say that my Delegation is satisfied that the attitude we originally adopted was met by the alteration of the words to "expected to develop" and a statement, which will be made in the offficial report, that members of the Committee generally agreed that shortages would be one of the criteria which would come into the question whether an agreement should be made. I would rather regret it if the whole thing were opened up again; though, as I have said, I see a lot of merit in the views of those who have raised it. I doubt if. we should consider adjourning it until we look at words, unless we have decided that some words are to go in. I suggest the issue now is, first whether in the opinion of the Committee the present wording does adequately include shortages and the interests of consumers; and if the answer to that is "Yes", whether the words indicate it or not. 20 . G fols G1 E/PC/T/C.IV/PV/8 MR HAKlM (Lebanon): Mr Chairman, I would like to point out the relation between this question of shortage of supply to paragrah 5 of Article 2 which deals with the question of conservation of natural resources and their protection from unnecessary exhaustion. If the cause of the shortage is a natural cause, then the question becomes different from the case where a shortage is temporary or where it will be followed by a surplus in the future. I have in mind certain mineral resources in connection with which there is a threatened shortage of a more or loss permanent character and the cause if natural and not simply one of temporary adjustment of supply and demand. I simply wanted to point out the relantion between such permanent shortage and the objective in Article 2, to protect natural resources from unnecessary exhaustion. MR McCARTHY (Australia): I would like to make a comment upon that. I do not think that we could apply permanent shortages to an agreement to deal with the regulation of the trade in a commodity concerned. The agreements are really designed, particularly when they involve the regulation of production and perhaps of actual prices, to check the ebb and flow in the supply of the product, which actually brings about, in the main, the fluctuations in price; and the point that we were concerned, with was, to take an example from the present - wheat: there is a district shortage of wheat at the moment, notwithstanding the Sunday papers I think of this country, and that shortage might continue for a little time - that it might have been read into this Article, that until it was clearer that there would be surpluses, negotiations for an agreement could not take place. Now, our interpretation is that an aggreement could be made for wheat at once under this Article 7 under the clause "surpluses are expected to develop," because the history of the product shows that shortages are followed by surpluses and surpluses are followed by shortages, and that is the trouble, and I would prefer to see shortages particularly mentioned. But I am satisfied that it is covered and the only reason why I have spoken again is rather to emphasize something I might have said earlier, that the agreements are really designed to correct the cycle of shortage and surplus. Where you 21. G2 E/PC/T/C.IV/PV/8 have a permanent shortage, as in a mineral or even in an agricultural product, though in the case of the agricultural product the shortage usually brings with it a stimulus in the shape of a high price, if it than were clear that there were long-term shortages, measures other/an agree- ment of this character I suggest would have to be adopted. MR HAKIM (Lebanon): I would then ask why should we have as one of the ob- jectives of the intergovernmental commodity arrangements, paragraph 5, to maintain the develop the natural resources of the world and protect them from unnecessary exhaustion? MR DE VRIES (Netherlands): Mr Chairman, may I answer the delegate of the Lebanon? One of the things which cover especially the case of the Lebanon delegate is the question of forestry. In the Drafting Committee the Netherlands delegation for that reason from the beginning asked, in support of the point raised by Australia, to have shortages explicitly put in here in Article 7, but we were content with the declaration and explanation given by other delegations, that in such a case as the development and maintenance of such natural resources as forests they should come under an arrangement and not come under an agreement, so that such arrangements come under Articles 4, 5 and 6 but need not come under iArticles 7, 8 and 9. There is every reason to have such an arrangement as regards forests and maybe there are minerals also, but there is no need to have them under Articles 7, 8 and 9. If there should be any case where various stimuli to the development of such natural resources are not enough and you needed some rationing again, the Netherlands delegation is content to say that such rationing schemes should not come under the governmental agreement here, but that they should be dealt with by another mechanism and come under the ex- ceptions. So that in the mind of our delegation, although we feel that it has to be put in the Report explicitly, and we do not want to exclude shortages of the types that have been described by Sir Gerard Clauson from the arrangements, we need not have an extra paragraph in Article 7 to deal with that. 22 G3 E/PC/T/C.IV/PV/8 MR BALA (Czechoslovakia): Mr Chairman, if I may suggest it, I think the point of view of the Czechoslovak delegation might be met if, after the w rds "burdensome surplus" we could insert the words "or shortage, " and then if in Article 14, paragraph 1,we could omit the words "solely to the equitable distribution of commodities in short supply or". THE CHAIRMAN: I wonder if you would mind repeating these amendments more slowly at something like dictation speed? MR BALA (Czechoslovakia): After the words "burdensome surplus" in Article 7, paragraph 4, insert the words "or shortage," and after the words "producers or consumers" in Article 14, paragraph 1, line 2, omit the words "solely to the equitable distribution of commodities in short supply or." MR WILCOX (USA): Mr Chairman, I am afraid that the meaning of the paragraph would be destroyed by such an amendment. If you read it, ".... shortage is expected to develop which because of a reduction in price does not lead to an increased consumption or a decrease in production, would not be corrected by normal marketing forces, " - I do not believe it makes sense. The whole paragraph has to be taken as a unit, and if the words "or shortage" are inserted it will have to be changed pretty radically. THE CHAIRMAN: Does any other delegate wish to express a short view on the proposal made by the Czechoslovak delegated I am now calling upon the delegate of Canada and not the Rapporteur. MR DEUTSCH (Canada): Mr Chairman, if I may speak as delegate of Canada and a member of the Drafting sub-Committee, we also preferredsome mention of for the problem of shortages, but/the reasons cited by Mr McCarthy we became convinced that the question was adequately covered in the draft articles as they now stand, taking into account the interpretation that has been made of Article 7 and the exception that is provided in Article 14. Article 14 does say that schemes for the equitable distribution of commodities in short supply are excepted from these provisions entirely and therefore can be entered into when required; so that it seems to us the question is covered. Mr (Cuba): Mr Chairman, the Cuban delegation is of the same opinion as the Australian and Canadian delegations regarding this question of G4 E/PC/T/C.IV/PV/8 the inclusion of shortages in Article 7. I would further like to make a remark or two on the question raised by the Lebanonese delegate, I think there are two different questions here. Article 7 refers to the circumstances governing the use of regulatory agreements and the principal paragraph of Article 2 contemplates agreements of other kinds; in the case of products which are in permanent shortage or in danger of exhaustion it may be possible to contemplate some sort of scheme for conservation in which all countries which are facing that situation might take part, and yet such an agreement would not be a regulatory agreement in the sense that we are trying to maintain a proper balance and relationship between supply and demand. So that I think it is entirely consistent to put the principle in the general agreement covering conservation of supplies and the prevention of unnecessary exhaustion of commodities in short supply, and yet not put that same objective covering Article 7, because Article 7 refers only to regulatory agreements which will necessary contemplate cases in which the problem is to balance properly supply and demand, with the idea of avoiding or diminishing these difficulties which are con- templated in Article 7. MR WILCOX (USA): I would suggest that the point which concerns the delegate for Czechoslovakia might be met by calling this record to the attention of the Interim Drafting Committee, together with the explanations that have been offered by the delegates of the United Kingdom, the Netherlands, Canada, and Australia. THE CHAIRMAN: If the Czechoslovak delegate is prepared to have the point left in that way we could return to this point when we look at the draft report and we shoud still preserve pur objective of having a clean text to print with our report. 24. H1OM E/ PC/ T/C.IV/PV/8 I take it that in the light of this discussion it is the general view of the Committee that the words we reserved in pard. 6 of Article 2 should be included. The words were "to provide for expansion in the production of a primary commodity which is in such short supply as seriously to prejudice the interests of consumers". If these words were included and we referred to this discussion and the views that have been expressed, could we regard this point as dealt with? MR. BALL (Czechoslovakia): I am satisfied with the suggestion of the delegate for the United States ifit is the case that in Article 2 the paragraph 6 is included? MR. WILCOX (US): Yes. MR. GUERRA (Cuba): Mr. Chairman, on paragraph 1 of Article 7 I have only a suggestion to make. The Cuban delegation had proposed an amendment to the Article and that has been taken care of in the Report. In the discussion in the Drafting Committee we considered that the change made in paragraph 1 sufficiently covered our point, but I have received instructions from my Government to make a reservation on paragraph 1 of Article 7, so I will just call attention to that in the sense that the Report of the Committee will take note of that reservation. THE CHAIRMAN: I think the Committee is now ready to continue its examination of Article 7, paragraph 2. I should call attention to the note by the Drafting Committee which says that they understood "unemployment" as covering "under-employment"; that the Rapporteur has covered that point in his draft Report. Paragraph 3: there is also a note of interpretation which relates to synthetic products. Of that also the Rapporteur has taken account. Any other points on Article 7? Article 8: in paragraph 1 we have a passage in square 25. E/PC/T/C.IV/PV/8 MR. WILCOX (US): Following the first sentence, Mr. Chairman, the first part of the socond sentence provides that if Members substantially interested do not obtain agreement through the Conference because of a delay in calling the Conference or in the proceedings of the Study Group, they may proceed by direct negotiation to concludes an agreement if it conforms to the other provisions of the Chapter. I think there is every reason why the Organization should be asked promptly to call a Study Group and promptly to call a Conference, and why that should not be delayed. I think, however, that this passage seems to indicate a distrust of the Organization in this respect, and to imply that it would be possible more speedily to call countries together and get an agreement outside of the Organiza- tion. In my view that section is not necessary. I do not, however, object to it particularly. My concern is more with the last section, which is in brackets, which says in effect that if it is impossible to get nations who are interested in a commodity to come to an agreement, the nations who are interested in that commodity may then proceed to come to an agreement. I would suggest that the section in brackets is entirely unnecessary and should be dropped. THE CHAIRMAN: Perhaps I should give the whole Committee some of the background of the discussion on this point. One delegation only, I think I am right in saying, really wished to press those last words, but we felt it right, as there were specific words suggested, to bring them to the notice of the main Committee, in square brackets, and it is for this Committee to decide how they shall be handled. We all of us who were on the Drafting Committee know that this is a point to which the delegation concerned attaches very great importance, but I would still hope that in the interests of obtaining a clean text we may take these words out of the text which is to be/appended to our Report. and cite them definitely, with the proper reservation, in the 26. H3 E/PC/T/C.IV/PV/8 Report of the Committee which is to be published. I think it is for the members of the Committee now to decide how this should be done. MR. GUERRA (Cuba): Mr. Chairman, mine was the delegation which stressed that point, as we considered it very vital to the country we represent. We do not want to reproduce here the very extensive discussion we had in the Drafting Committee, but as that discussion only took place in the presence of members of the Drafting Committee I will very briefly state the reasons why we have this opinion, so that the whole Committee may know the reason why we wanted this clause to be put in. The question is very simple. We realise the difficulty and danger/of putting an escape clause in such a general way that it will make it possible for any country to proceed to negotiation of agreements outside the framework and principle of the Organization. We also realise that an escape clause of that sort will make almost unnecessary the whole procedure set up in this Article, in the sense that it till deprive it of its real force if immediately afterwards we put a wide-open escape clause, but I only want to explain to the Committee that we entirely withdraw from the position originally taken by us in that sense, and will try to meet the objections to which I have just referred, making the escape clause a very restricted one, to be applied in cases only in which the export trade and even the whole economic life of the country depends on/a particular commodity. We feel very strongly that where the entire economy of a country depends on the trade in one article we should not it entirely beyond any possibility to proceed with independent action. For Cuba it is a question of the responsibility of the State itself towards the nation, not to be able to proceed with any kind of policy with regard to trade in a product if any kind of Conference says that we should not do so. As I said before, we tried to restrict this very carefully, first restricting the escape clause to cases in which the entire economic life of the country depends 27 E/PC/T/C.IV/PV/8 on a particular product; and, secondly, that any commodity agreement that the country tried to get would have to conform to the principles and provisions of a general character contemplated in this Chapter of the Charter. We felt in the Drafting Committee and we still think that there is no proper justification for not taking into account an escape clause of this sort, when it is so restricted and so guarded or safeguarded as to make it necessary that the agreement should conform to the provisions of the Charter. I thought we ought to tell this Committee what we said in the Drafting Committee on the question of the method of dealing with this. We do not have any objection to having the bracketed sentence dropped and making a proper reservation in the Report. That method will satisfy us, but I want to make it very clear to the Committee that our impression is that the Cuban delegation or the public of Cuba would not be able, either in this Conference or any other Conference, to accept the position that the complete responsibility of the/State should be put in the hands of a Conference, and that we should surrender our legitimate right to proceed with any kind of negotiation on a product which is absolutely and entirely vital to the country. MR. WILCOX (US): Mr. Chairman, my only comment would be, first, that this is not an escape clause because it requires that the agreement arrived at by this method conform to the other provisions of the Chapter. The only thing that the first part of the sentence does is to say in effect that the organization must proceed with dispatch. With respect to the second part of the sentence, I think it is perfectly acceptable and desirable to note in the Report the reservation of the Cuban delegation with respect to this matter. THE CHAIRMAN: Perhaps to can return to this matter when we come to deal with the principle in the Report. MR. DE VRIES (Netherlands): Mr. Chairman, the objection on the first 28. E/PC/T/C.IV/PV/8 part of the sentence by the United States delegation, that there is something of distrust in the Organization, can perhaps be met by omitting the words " calling of a Study Group" and "calling of a Commodity Conference" and "unreasonable delay in the proceedings of a Study Group and Conference", and putting.." promptly" in Article 3 and in Article 4 - "shall promptly invite" and "promptly convene", because then we omit the idea of distrust in the Organization as a whole. 29. I-1 E/PC/T/C.IV/PV/8 THE CHAIRMAN: If I may express a personal opinion, the view just expressed appeals to me rather as enjoining a duty on the Organisation to act promptly, and then leaving the question of unreasonableness to the actual proceedings of a study group or a Conference. Would the Committee generally like to make those changes? Perhaps I might say exactly what they are; they are to leave out in Article 8, para- graph 1, the words "in the calling or", in two lines, so that it reads unreasonable delay in the proceedings of the study group"; and then I suggest we can go right on "or of the Commodity Conference"; and to insert in Article 3, paragraph 2, after the words "the Organisation shall" the word "promptly"; and in Article 4, paragraph 1, alter the word "shall" and before the comma, the word "promptly". There is no amendment of substance in that; I think it is more an amendment of good manners towards the yet-unborn Organisation. Mr. SCHWENGER (USA) I would say that was an improvement. THE CHAIRMAN: Does the Committee generally agree that that is an improvement? (After a pause:-) Very well. May we now pass on to paragraph 2 of Article 8? There is a note there by the Drafting Committee of this Committee which is meant to serve as an instruction to the Interim Drafting Committee that they should bear in mind what we have done, when they are looking at the non-member clause in the commercial policy chapter. I think that would be generally acceptable. Mr JOHNSEN (New Zealand); There seems to be a small matter of drafting involved in the paragraph to bring it into line with paragraph 3: it would seem that after the word "shall" in the first line you need to insert the words "in matters the subject of such agreements". THE CHAIRMAN: This, if I remember aright, was a point that we discussed at great length in the Draftlng Committee, and we came to the conclus- ion that the words "under such agreements" conveyed that meaning. Mr JOHNSEN (New Zealand): Then why is it different in the ... paragraph? THE CHAIRMAN: I wonder if any member of the Drafting Committee can remember why we did it in different ways in different paragraphs? (UK) Sir GERALD CLAUSON:/ I do not think we did, I think the words "under such agreements" were cut out in paragraph 3 when we put in the words "subject to such agreements". I think they reappear here by accident. I-2 E/PC/T/C.IV/PV/8 THE CHAIRMAN: Yes. We are proposing to delete the words under such agreements" at the beginning of paragraph3. As Sir Gerald Clauson has pointed out, they are taken up by the words "in matters the subject of such agreements". With those explanations, may we pass 2 and .? Paragraph 4 I would direct attention to a note in the Report of the Drafting Committee. Mr. ALVARO MUNOZ (Chile): This paragraph refers to the statement which the Chilean delegate made on prices and which is mentioned in the notes here, I think, The words "reasonable prices" do in a measure express what we then said. However, we feel that a more ample defini- tion is needed, and I would suggest including a passage in the Report so that the Interim Drafting Committee should consider this point at greater length when it meets in January. THE CHAIRMAN: I wonder if the Committee would look at the words on the white paper that was circulated this morning under the heading of Article 2, and see whether the whole of that passage would be a suitable guide to the Rapporteur. I would like to call attention to the paragraph over the page, which really is an attempt to sum up the views of the Committee as a guide to the Rapporteur which defines this point. I think the Chilean delegate wished to suggest than we should add at the end of that: "Some delegations felt that this definition was a matter which might be profitably further examined by the Interim Drafting Committee". Mr. ALVARO MUNOZ (Chile): That is right, Mr. Chairman. THE CHAIRMAN: I take it that such an addition would cause no difficulty. WIth regard to paragraph 5, Members of the Committee will see at the end a long battle on the Drafting Committee which ended in a draw, neither side being willing to give in to the other, and we were forced to bring back to this Committee the question of whether "effectively" or "economically" was right. I should say that a minor battle between Membes of the Committee, the Secretariat and the typist still continues, because we said, I think five times, that the word we wanted "economically", not "economically". The particular on one side of spelling it "economically" was the United I-3 E/PC/T/C.IV/PV/8 Kingdom. The Secretariat told me that after exhaustive searches through all the dictionaries they failed to find the word so spelt. Mr. QURESKI (India): As a compromise, might we used both words, so as to please both parties, and say "effectively and economically". Mr. SCHWENGER (USA): We are quite agreeable to that. Mr HALL (UK): I am afraid there would be a disagreement on the United Kingdon delegation about the spell.ing. I support the dictionaries. But on the substantial point, we should certainly accept "effectively and economically", if the Committee agrees. THE CHAIRMAN: Would the Committee generally accept that conclusion? What was a drawn battle is now, I think, still a drawn battle. As for the spelling, I shall leave it to the Secretariat and the United Kingdom delegation to have it cut in private. Mr DEUTSCH (Canada): Mr Chairman, as delegate of Canada, I should have preferred the word "economically", but wi ll compromise on using them both: "effectively and economically". Mr. MELANDER (Norway): As one of the delegates who do not use the English language, may I say perhaps we should have an explanation of the difference between the two words. J.1 E/PC/T/C.IV/PV/8 MR. SCHWENGER (United States): If necessary we can have one from the dictionary and one from more up-to-date sources.. THE CHAIRMAN: I am inclined to suggest that the slight suspicion of levity which is intruding upon the Committee indicates that it is ready to accept this compromise without further argument. MR. GUERRA (Cuba): I have only one thing to add here. The Cuban Delegation also had an amendment with regard to this paragraph regarding the historical position of countries supplying. We were inclined to think that the inclusion of the word "effectively" would, in the main, meet our point. However, even if this compromise had not been arrived at we had specific instructions to make reservations regarding that amendment to this paragraph. I would like that to be taken care of in the report. THE CHAIRMAN: We pass to paragraph 6. MR. SCHENGER (United States): I wonder if I might presume on the Committee to go back to paragraph 3 for the purpose of making a clarifying suggestion. Where the word "other" occurs in the second line I think it would be less subject to misinterpretation if it were "non-participating" - which I think is the sense of it. THE CHAIRMAN: I do not imagine there would be any objection to that: In paragraph 3, line 2, for "other" road "non-participating." It is what it means. Now Article 8, paragraph 6. Mr. BEYLEVELD (South Africa): Is there any social reason why the Committee omitted paragraphs 4 and 5 from paragraph 6? They now only apply to what I have previously called unilateral agreements. But should not they apply to them too? In the original American draft they were applicable generally. THE CHAIRMAN: On behalf of the Drafting Committee I should like to attempt a snap answer. It is that they are really only relevant in the case of an agreement that regulates. If there is an agreement that does not regulate it could not assure, as in paragraph 4, nor make appropriate provision as in paragraph 5. MR. BEYLEVELD (South Africa): It is included in Article 46 of the American draft, which covered those agreements generally. Now they have been put into a sort of exception clause. 33. E/PC/T/C.IV/PV/8 THE CHAIRMAN: I think the South African Delegate has been sharp enough to spot one of the many improvements on the American draft which the Drafting Committee made. These two provisions have be moved to a place where they are relevant and not, as they might have been in the previous case irrelevant and unworkable. I will now have one last short at calling paragraph 6 before lunch. If there are no comments, I hope that concludos Article 8. I should say that in case anybody is looking at the paper sometimes numbered ".17", where under the notes on Article 8 it says "paragraph 7" that paragraph related to Article 11 and not to the Article we are on now. I think that in view of the time-table of the conference generally the Committee ought to proceed this afternoon, and I hope the time of 4 o'clock will be generally acceptable. The engagement with the International Chamber of Commerce, to which I referred earlier in the proceedings, is due to take place at 3 o'clock. At 4 o'clock we can have a very short report from the three nominated Delegates on the proceedings with the International Chamber of Commerce. Therefore, I will adjourn this Committee now until 4 o'clock in Room 230. (The meeting rose at 12.50. pm.) For verbatim report of afternoon session see E/PC/T/C.IV/PV/8 - Part 2. 34. A1 E/PC/T/C.IV/PV/8 - PART II. The meeting resumed at 4.00 p.m. THE CHAIRMAN: Gentlemen, it might be a convenience if I divulged to you the wicked plots hatching in the mind of the Chair for the conclusion of this Committee's business. It is now four o'clock and, as everyone knows, the onset of plenaries is pressing very heavily on us. Let me hasten to say I have no intention of asking the Committee to sit late tonight. I think what we ought to try to do today is to get through the rest of the text and to have a very rapid run through the draft Report, without devoting too much attention to exact words, so that we can give the Rapporteur a chance to revise it tomorrow morning. If there are very many points of principal raised no doubt he will need tomorrow morning and afternoon to revise it, in which case we shall have to meet tomorrow night. If there were not many points of principle we might perhaps have a meeting tomorrow afternoon; but I was thinking we ought to make an attempt to get through in a preliminary way both the text and the draft Report today. Having said that, I now hasten to impede progress towards our objective by asking the Vice-Chairman of this Committee whether he would like to say what happened in the meeting with the International Chamber of Commerce. MR MELANDER (Norway): Mr Chairman, at the instruction of the Committee four members received the representatives of the International Chamber of Commerce just half an hour ago, and they handed us a document outlining the International Chamber of Commerce's view on the problems with which we are dealing. That document will, I understand, be duplicated by the Secretariat and will be distributed in due time. The main points which the representatives of the International Chamber of Commerce raised were these: namely, first, that the Intergovernmental Commodity Arrangements ought to include provisions for letting representatives of consumer countries and producer countries have an equal share in the administration of Commodity Agreements and Arrangements. That is really what we have already agreed in principle. Secondly, that the different commodities raised different problems, and that the arrangements relating to Commodity Councils ought to be comparatively flexible. so that each commodity could be treated on its merits. That is also really what we have so far accepted and worked on. Thirdly, they mentioned that the problem of obtaining a stability of price by way of buffer stocks or other technical methods was one problem which they had particularly in mind, and I informed them that that was certainly a problem which we had tackled as well, A2 E/PC/T/C.IV/PV/8 and that we certainly would try to solve this problem if possible, and if not we would certainly be willing to consider any proposals they might have to suggest on those particular problems. Fourthly, they mentioned that the Commodity Agreements or Arrangements ought not only to cover commodities in surplus supply but also commodities in short supply, and we informed them that that problem has also been very extensively discussed in our Committee; and, lastly, they suggested that although it is all very well to aggree on principles for Intergovernmental Agreements relating to primary commodities, it would also be advantageous to consider the problem of private agreements relating to those same commodities, and we informed them that that problem was really outside the scope of Committee IV but that of course that problem was covered by Committee III. That is really all that emanated from the very short meeting we had. THE CHAIRMAN: I think the Committee would first of all wish to express its gratitude to the three members who consented to receive the International Chamber. Secondly, I suggest the Committee might ask the Rapporteur to make mention in his Report of the main points made by the International Chamber; and with that I think we have finished with this intervention. Perhaps we might go straight on now to the text. We had finished before lunch with Artlc 8. I propose now to call Article 9, paragraph 1..... Paragraph 27 MR GUERRA (Cuba): I may be wrong, but I thought we had made a modification i paragraph 2 in order to make it more clear. It now says, "These members alone shall have a vote", I think that instead of that we had agreed to say "shall have the right to vote", in order that there would not be a misunderstanding about the number of votes which any member country might have. As a matter of fact, the voting power should be in accordance with the importance of the country, and one country might have three or five votes. In order to clarify it, I think we had agreed to say "right to vote" instead of "a vote". THE CHAIRMAN: I rather think you are right and that we did mean, at any rate, to convey that sense. If it would be more acceptable to say "have the right to vote" I do not think that would depart from what was agreed on in the Drafting Committee, and the Drafting Committee might suggest that to the main Committee. The second sentence of paragraph 2 would then read: "These members alone shall have the right to vote." MR. SCHWENGER (USA): That is in accordance with out understanding. 36 A3 E/PC/T/C.IV/PV/8 THE CHAIRMAN: May we accept paragraph 2 in that form? (Agreed.) Paragraph 3. MR MOSTIN (Belgium-Luxembourg) (Interpretation): May I ask you why only one member has been mentioned here and what the functions of this member would be? THE CHAIRMAN: This point of a non-voting member did cause us a certain amount of difficulty in the Drafting Committee, but we thought it would be best to leave it as a non-voting member, relying on the usual international practice that any member of an international body may appoint an alternate and adrvisers. MR MOSTIN (Belgium-Luxembourg) (Interpretation): This first sentence does not seem to apply only to Intergovernmental Organisations; it might also imply that there would be another member. SIR GERARD CLAUSON (U.K.): Mr Chairman, I think the intention was that the purpose of this prevision was so that the organisation - by which we meant in this particular context the Commodity Commission - could keep in touch with the operations of each Commodity Council, and therefore that they should be allowed to appoint a member to that Council to report to the Commission what was going on there; but equally we felt that that member should not be allowed to vote because the voting ought to be the business of those who are concerned with that. That is the whole purpose of that provision, and that led on to the second part of the sentence, which allows for the organisantion to invite, for instance, the FAO to appoint a similar representative to keep then in touch with the proceedings of that Council. THE CHAIRMAN: Is that explanation satisfactory? May we accept paragraph 3, then? (Agreed.) Paragraph 4.... . (Agreed.) Paragraph 5.....(.Agreed.) Paragraph 6..... (Agreed.) Paragraph 7.... (Agreed.) Paragraph 8. MR BEYLEVELD (South Africa): Does the word "expenses" refer to all funds or administrative costs? THE CHAIRMAN: I think I am within the recollection of the Drafting Committee in saying that it means all funds including administrative costs. We thought that as we had given in paragraphs 4 and 5 a relationship between the organisation and the staff of the Commodity Council it was right to make it clerk that the relationship did not include in any way financial provisions, and that the finance of every Commodity Council, whether for administrative expenses or for other things, should be borne by the members of the Commodity Council - that is the members interested. May we finish, then, with Article 9? ....(Agreed.) Article 10... (Agreed.) 37 A4 E/PC/T/C.IV/PV/8 Article 11, Paragraph 1. Here I should direct the attention of the Committee to the note at the bottom of page 5 of the document which has zo many numbers. There is a further note on the white paper that was handed round this morning which informs members of this Committee of the latest position of the draft text of Article 76. SIR GERARD CLAUSON (U.K.): I think the Committee will agree that the text of Article 76(2) as prepared by Committee V. entirely meets our requirements and that we could quite properly take out the square brackets round the words subject to the provrisions of Article 76, paragraph 2"; because it is now quite clear that the Executive Board can issue a finding, or refer the Iatter to aritrtion, THE CHAIRMAN: We should have to make this read now Article 76, paragraphs 2 and 3. SIR GERARD CLAUSON (U.K.): I was just going to say that. PROF. de VRIES (Netherlands): Or just say Article 76? THE CHAIRMAN: I think Article 76 is enough. What we want to secure in fact is that the terms of the Intergovernmental Commodity arrangement should be subject to the sare provisions about interpretation as the Charter itself. May we cross out the square brackets in the Note and make the Article read "shall then issue a finding subject to the provisions of Article 76? (Agreed.) MR SCHWENGER (USA): Mr Chairman, if that is agreed, I think the new draft calls for the use of the word "ruling" rather than "finding"; I think it is better for this type of thing. THE CHAIRMAN: If the word "ruling" is used as it is, I entirely agree. May we alter "finding" to "ruling"? (Agreed.) SIR GERARD CLAUSON (U.K.): May I call attention to one other alteration in Article 76. of which we were not aware when we divided this Article into two bits? Article 76(2) now starts, "Any question or difference concerning the interpretation of this Charter or arising out of its operation". That would rather lead us to insert in paragraph 1, "any dispute concerning the interpretation of the povisions of a regulatory agreement or arising out of its operations"; and then we can insert paragraph 2. THE CHAIRMAN: I think it was the Netherlands delegation who were particularly attached to the omission of the words "to the Organisation" in paragraph 2 of this Article since they did not necessarily wish arbitration on a dispute arising out of the operations of a commodity agreement to be referred necessarily to the Organisation. If they would agree that Article 11 should read "Any question or difference concerning the interpretation of the provisions of a regulatory 38 45 E/PC/T/C.IV/PV/8 agreement or arising out of its operation shall be discussed originally by the Commodity Council and agreed on in the absence of agreement" down to the end of that paragraph finishing with "Article 76". I think we should have removed a substantial area of disagreement. PROF. de VRIES (Netherlands): That is quite agreeable. THE CHAIRMAN: Would the rest of the Committee accept that? It simply brings the Commodity Agreement, as I understand it, into line with the provisions of the Charter. E/PC/T/C.IV/PV/8 M. WORMSER (France) (Interpretation): Then does the second paragraph of Article 11 disappear? THE CHAIRMAN: .Yes, it does under that suggestion. Mr. WORMSER (France) (Interpretation): Can we have the English text? THE CHAIRMAN: Yes, at dictation speed, This is to correspond with the new text of Article 76: "Any question or difference concerning the Interpretation of the provisions of a regulatory agreement" - and here we have an insertion - "or arising out of its operation" - then we read it as in the original text - "Shall be discussed originally by the Commodity Council. In the absence of agreement, the question shall be referred to the Commodity Commission for examination and recommendation to the Executive Board. The Executive Board shall then issue a ruling subject to the provisions of Article 76." M. WORMSER (France) (Interpretation): Is it the intention to leave thehoading of this Article the same as it is settlementt of dispute", as the word "dispute" has disappeared from thetext? THE CHAIRMAN: I think perhaps having the word "dispute" in the title is advantage, since the text of the Article refers to questions or differ ences concerning interpretation or arising out of the operation. I should have thought "dispute" was a good description of the state of affairs described by those 11 or so words. Mr SCHENGER (USA): In any case it is uniform with Article 76. THE CHAIRMAN: You get a strict parallel with Articleo 76 where you insert into the title: "Inteorpretation and Settlement of Disputes". May wec accept this item 11 as redrafted here? Mr SCHWENGER (USA): What is the heading, Sir? THE CHAIRMAN: "Settlement of Disputes". I think perhaps we might ask the Rapporteur to note in his report that we drew up Article 11 to correspond with the latest version of the text of Article 76. Then I take it Article 11 is agreed? Article 12, paragraph 1? Paragraph 2? Then we pass from Article 12 to Article 13. Mr DE VRIES (Netherlands): Mr Chairman, this is a matter of general difficulties, general objectives and general undertakings. THE CHAIRMAN: In point of fact we are now in the Section called "D: Miscellaneous Provisions". I myself would have been disposed to think it was perfectly 40. L- 2 E/PC/T/C.IV/PV/8 satisfactory in this place. Now Article 14. Mr BALA (Czechoslovakia): Mr Chairman, is it not inconsistent that in Article 2, paragraph 6, the sentence "solely to the equitable distribution of commodities in short supply", should be left there? THE CHAIRMAN: If I may attempt to answer that question very shortly, the position is this that in an intergovernmental arrangement or agreement of the kind to which this chapter as a whole is directed, there might well be provisions dealing with a supply situation, and such an agreement, if it included paragraphs or articles about the situation of short supply, would come under the chapter as a whole. What we had in mind here however, was the sort of arrangement by which certain countries might agree, especially in the immediate post-war period, to share the available quantities of a commodity in short supply and not to deal with any other aspect of the problem, the sort of arrangement that the Inter- national Emergency Food Council is now handling. We thought it right that this being rather of a transitional or emergency character it should be com- pletely exempted from the other provisions of this Chapter. Such arrangements, of course, have to comply with the last sentence of this Paragraph, nearly, that would if they involve the regulation of trade, which they certainly ,,/they have to be authorised or provided for by a multi-lateral Convention subscribed to by a majority of the nations or operated under the I.T.O. I thiink I am right in saying that the general view of the Drafting Committee in reporting it was that those comparatively short term agreements which relate to nothing out the sharing out of supplies could be left to be dealt with under that general safeguard. Perhaps I might explain that, saying the provisions of Chapter 6 are not designed to cover these things does not mean that they cannot happen. It means that the Rules of Chapter 6 do not apply to them if they do happen. Mr BALA (Czechoslovakia): Mr Chairman, could that explanation be put in the Minutes for the Drafting Committee? THE CHAIRMAN: I am certain that that explanation could be noted in the Report if the Committee would like it to be. The Rapporteur actually has some words in the preliminary Draft which has already been circulated, and we will come to look at those; but I think it is entirely proper, so far as I myself am concerned that that point of explanation should be noted. MR DE VRIES (Netherlands): Mr Chairman, on the question of language, as you now say the provisions do not apply to intergovernmental arrangements, I think that 41. L-3 E/PC/T/C.IV/PV/8 is better than saying they are not designed to cover; but I donot know if that has some other implications in English which you say do not apply. THE CHAIRMAN: I am in the hands of the Committee on this. "are not designed to cover" is a phrase found in the American Draft Charter. Mr SCHWENGER (USA): Is it proposed that this be changed or is it the question of the note that we are talking about? THE CHAIRMAN: No, I think the suggestion of the Netherlands is that we should change the words "are not designed to cover" to "do not applyto". MR DE VRIES (Netherlands): I say that in order to make it easier to explain it at home. MR SCHWENGER (USA): The words were drafted in order not to create an apparent inconsistency between that language and the proviso, I believe, Mr Chairman. THE CHAIRMAN: Yes. MR SCHWENGER (USA): It is a very subtle difference. I am sure the interpretation eventually would be the same, but I think these words are a little more accurate, in view of the proviso. MR JOHNSEN (New Zealand): Mr Chairman, there is one point I would like to bring up. It is in connection with arrangements to cover seasonal produce commodities. Certain agricultural products such as meat and dairy products reach peak productic over a comparatively short period. During the Winter period they fall to a low point of production. Now, at the point where they are at their peak there is really no purpose in putting the whole of the production on to the market at one time, and one can visualise that a good purpose might be served in making arrangements for other producers to regulate the flow of those commodities. I would suggest that in the third line of paragraph one after the word "supply" we introduce the words "or to regulate the flow of commodities subject to seasonal production". I think there is nothing to prevent those arrangements; .,,,~.jA--; . ,- . .E, . * . g . e , } . :,0 . - - *. 7$4Vthcm..~, L-4 E/PC/T/C.IV/PV/8 SiR GERALD CLAUSON (UK): Mr Chairman, I hardly that the United Kingdom would like such arrangements to be purely producers' arrange- ments. It seems to me that that is exactly the sort of thing about which there ought to be a scheme on which consumers have equal repres- entation. Mr. DE VRIES (Netherlands): Mr Chairman, I believe this case has been put forward by the New Zealand delegate. It is one of the cases where the United Kingdom also want to have some such schemes by the inclusion of the last two words "or prices" in square brackets, to put them outside the scope of the agreement. If something as is now being proposed by New Zealand can come under the provisions of Article 15, paragraph 4, saying that such things are arrangements and not agreements, I believe they are still under the general pro- visions of this Chapter, which is far better, but not under the strict arrangements of Article 17. Mr. McCARTHY (Australia): I think the case which is included by New Zealand is really not excluded. This was designed to deal with allocation of shortages only. The word "solely" was put in to indi- cate that if there were a demand for a particular product, there is no reason why that agreement should not administer a shortages allocation, provided it was created for other purposes. Now, I agree with the Netherlands delegate that if it came to an arrangement for a short term regulation as to the flow of your products, provided that it met the general conditions laid down in this Article (I think the only one that would be really significant would be the consent of importers), this does not exclude it, because this is purely for the administration of shortages and to deal with allocations such as are now going on in regard to wheat. It is not designed to cover a spreading of shipments over a short period such as we have done at different times by holding back the January butter for April, or April butter until June, and that sort of thing, and perhaps we could fit it in with you, but under this we could not do it unless we have the consent of the United Kingdom. Mr. JOHNSEN (New Zealand): That will be the idea. 43. L-5 E/PC/T/C.IV/PV/8 Mr McCARTHY (Australia): And that arrangements business covers it. The arrangements all round are a bit vague, but I think it has that virtue. that it would cover a lot of these miscellaneous odds and ends of schemes. Mr GUERRA (Cuba): I agree with that interpretation. If it is possible to make that kind of arrangement, It would be better. I mean in the scope of arrangements of a non-regulatory type, but we will have to chance the definition of the regulation of trade, because a scheme of that sort will not in a sensee require regulation of trade. So that we shall want a new definition of a regulatory agreement, because other- wise, if there is a strict interpretation of regulation of trade, that again will come under Article 7. I do not think they should come, but I mean that under a strict interpretation of trade they wll come. THE CHAIRMAN: I think it would be right for me to say to the Committee that the whole of this draft has been drawn up on the basis of dis- covering general rules which are applicable to all commodities. I do not suggest that it is unimportant detail but it we were to go into the comparative detail and decide what were to be the rules about a product which was subject to seasonal change, we should inevit ably land ourselves in the task of discovering rules for other commodities subject to special difficulties. The basis of this is the the principal substantially interested producers and consumers agree, and if they are faced by a seasonal problem, then they can make provision in the arrangement or the agreement, whichever it is, to deal with that problem sensibly and reasonably in the light of all the circumstances. If we attempe to take in the task of defining the types of circumstances and of action that can be taken, then this Chapter will be as long as the Charter is now, and will possibly prove restrictive, because even in this Committee I do not believe we are possessed with an allseeing, prophetic eye, M. WORMSER (France) (Intearpretation): I am completely in agreement with the explanation just given by the Chair, but b ecause of the great importance certain countries do attach to these considerations one wonders if mention could not be made in the Report of the explana- tion just given by the Chairman. -6- E/PC/T/C.IV/PV/8 les, and then every one else will be on the same line. The Committee might, however, be prepared to agree we should make the point in the Report in this way, that we should say that we did not attempt to deal with the special difficulties attributable to each type of since we felt it would be unwise to try to lay down &c., and then put the explanation. Mr Mc CARTHY ( Australia): Could you add that it is considered, however, that the Charter is sufficiently. broad to admlt. of special consider- ation on different matters as they arise? I.c: an then .v -, ,oe THE CHAIRMAN: Certainly, that I take it would be part of the explanation: that the rules here are, we hope and intend, wide enough to cover very type of varying, circumstance, Would the Committee now be ready C,~~~ p a. .0 to go on to Article 14, paragraph 2? Mr SCWENGER (USA): With one Drafting change: the word "agreements" escaped the penciI that was changing "agreements" to arrangements". THE CHAIRMAN: That is the fast line, but three of 14 (1), . It is an obvious typographical error. For "agreements" read "arrangements". Mr DE VRIES (Netherlands): Mr Chairman, there is one more "arrangement" and "agreement" in line 7 in 14 (1). Mr SCWENGER (USA): That one was changed. THE CHAIRMAN: Our text reads "provided that such "arrangements are not used to accomplish results inconsistent with the objectives" It is "arrangements" all through that paragrahph. Paragraph 2? The Rapporteur points cut to me that perhaps we ought to alter "agree- ments" in paragraph 2., line 2, to read "arrangements" - "arrangements relating to fissionable materials". "Arrangements" is the broader word. "Agreements" is used in this Chapter with rather technical sense. I should say that I had a note from the United Kingdom saying that they cannot find "fissionable" in any dictionary either usdt. .copls .eut .nosAtn . vt:,h obetv .i Are there any other comments on paragraph 2 of Article 14? Article 15, paragraph 1? 45. L-7 E/PC/T/C.IV//PV/8 Mr GUERRA (Cuba): Mr Chairman, I want to call attention to a question which may be academic, but I think as we translate "agricultural Product" into Spanish it will not cover livestock and products like meat and so on. We make a real distinction between agricultural products and other things like fish, cattle or something like that. I do not make a point about this, but I suggest we should try to draft this in a form which in any language will convey the meaning that we intend. Mr HALL (UK): I think the Drafting Committee were using it in the sense in which it is used in the Food and Agriculture Organisation. Mr GUEERA (Cuba): But they include food, and then meat is a food and fish also; but whether they are agriculture or not is a different question. Mr DE VRIES: Forest products are included in food and agriculture. Mr GUERRA (Cuba): I have no doubt that we intend to include that, but if we do not make any reference to any particular interpretation of the word, it may have a different meaning in another language. THE CHAIRMAN: I have consulted the walking dictionary. In a game which is very well known in the nurseries of the United Kingdom the expressi "animal, vegetable or mineral" is used, and those are precisely the words that we want. I hesitate to suggest that the Committee should give everybody in the United Kingdom a good laugh by substituting those words. Mr HALL (UK) : Mr Chairman, as this does involve a question of language and particularly of translation, would we meet it if we also called the attention of the Drafting Committee to it? Mr GUERRA (Cuba): I call attention to this because the modification of Article 76 by Committee V makes Spanish an official language. I mean, it has been made an authoritative text; that is the only reason I say this. THE CHAIRMAN: May we call the attention of the Interim Drafting Committe to the word. "Agricultural" here and say by it we mean to include livestock for food, siivicultural and fishery products -- the British version of "vegetable, mineral and animal" covers it but it has certain infantile connotations. L-8 E/PC/T/C.IV/PV/8 Mr MELANDER (Norway): With regard to the inclusion of fisheries and fishery products within this term, I would like to reserve our position. We thought that agricultural products" would relate to products of tho land and not to products from thle sea, and it may well be a point of certain importance. I would rather like to state that our delegation interpret it to mean agricultural products, in its so to say limited strict sense, and on the question of including also fisheries and fishery products we would like to reserve our position. THE CHAIRMAN: Would not your position be met by the reservation we already agreed to make this morning in relation to what the then United States delegate said about certain fisheries conventions? Mr MELANDER (Norway): I am not certain whether that would cover it. If this problem is raised in connection with the definition, I think I would prefer to have a special reservation connected with thc definition. Mr DE VRIES (Netherlands): Mr Chairman, I should like to have two more reservations. The first one is that it says for .the purpose of t'his Chapter. Nsowe, all over the fxrz ft Charter as it no;; has been con- sidcred. by all the Committees many tiiries, there are used the words !prf-mary co~mnodItyll, I commodcfityll or "agricultural products". It has boon said that it would be useful for the Drafting Comi-tteo to see 'Who definltions of all the provi sions of Chapter 6 rclatgng to ;ovisi-cns for agricultural proucts or comm-odlitles or primary commodities as they care in other parts of the whole Charter, so that- it would then be seen as a whole. 1 tmay- be we shall have to delete thi.s for the purpose of this Comri:ttee, or it maybe that such provf3 sJ ons come under this chapter and come out of chapter 4, for instance, coming under chapter 6, so that there is more said on commodJ-ty policy and not only on commodity arrangements; but that is a thIng which must be done in your Draft,-ng Committee. The second thing is hils: I hope the NorwegIan delegate, wi-li not boangry wvi th Me if I say that on the Food and. Agriculture Orgazi-sati-on It was the Norwegl-an delcEgte who especially,- asked for fisheries to bc inCludod under the rords'Food 3Bord'% A 7 7 E/PC /T/C .IV/V/6 It is the specific instruction from my Government to the Nether- land's Delegation that we see that the objectives of FAO are covered by the rules of the game we are setting up here. So the second general reservation is this: that, though I personally believe that we have completely succeeded in setting up rules of the game which can be followed by bodies like the World Food Board or any other body proposed by FAO, it might be that, after considering the results of the Washington Conference and of this Preparatory Committee, my Government would say (maybe other Governments also): "Well, you tried to do the job and make provision for rules of the game, but, ,when we try to play the game we see that the rules are not sufficient." So, although I personally believe we have been successful in this draft, we must have a general reservation that it is provisional only. THE CHAIRMAN: My conclusion from the first part of the Netherlands Delegate's statement is that fisheries products are of great im- portance to Norway -- .when I take it together with the Norwegian reservation. I am wondering how we can deal with it in the report. Would we say, that we intand the word "agricultural" to have the widest possible significance but that one delegation was not sure whether it should extend as far as fisheries products? MR MELANDER (Norway) I would like to have my reservation made a little bit stronger. I would like to have it worded that for the time being, anyway, the Norwegian delegation would not like fisheries" for "fisheries products" to be included. THE CHAIRMAN: We could say that one delegation did not wish "fisheries products" to be included. I think, if we say "the widest possible significance" and then go on to point out what we mean by "the widest possible significance" by referring to fisheries, we have really covered the point sufficiently for this time round. As for the more general point made by the Netherlands that alI this, so to speak, is ad referendum, I think that applies to the whole awork of the preparatory Committee and not only to the work of this committee. - - comments ar--k~cos o1Aole T5 ara1grah :? 48 C.2 E/PC/T/C.IV/PV/8. Paragraph 2? . ... Paragragph 3?... I now propose to put a questioni in two parts: Are there any other observations on paragraph 4, then those relating to the last two words? MR HALL (United Kingdom): We were going to propose a purely draft- ing reformulation of paragraph 4, but it seems appropriate to have that after the discussion of the words in brackets, as we do not think our amendment alters the sense of paragraph 4. THE CHAIRMAN: .All right . I now call for observations on the words "or prices". I here refer the Committee to the end of the report of the Drafting Committee, where there is a note on Article 15, paragraph 4, "or prices", which explains the object. I think, quite clearly of leaving out the words "or prices" and states a reservation on the two items in square brackets still remaining from Articles 1 and 2. MR HALL (United Kingdom): .Mr Chairman, it was, I think, primarily the United Kingdom which felt some difficulty about the inclusion of the words in square brackets in this paragraph, and I think that our views on the subject are already well-known to the members of the Committee. The United Kingdom delegation has felt strongly that a very useful contribution could be made in the international economic sphere by measures which will introduce greater degree of stability in the prices of primary products; and we had onvisaged that Inter-Governmental Commodity Arrangements might make contributions in this direction, and we hope that that will still be the case -- that, when the time comes for the conferences to consider the situation of particular commodities, serious consideration will be given to the question of intro- ducing stabilising arrangements; and no doubt at those conferences representatives of the United Kingdom may well be found saying the same things as we have said here. We have also felt that the rather rigid rules which are laid down to govern agreements which regulates production and exports might be somewhat modified in the case of agreements the main function of which, or the sole function of which, was to ensure a greater stability of prices, and we had hoped to make some modifications in the text in that 49 C .3 E/PC/T/C.IV/PV/8. direction; but the United Kingdom delegation does feel that, on the whole, we are all very much of a mind here about the general objectives of commodity policy.' We feel that, although there have been a number of arguments in this Committee about various points, those, in the main, hare been the kind of arguments that one gets where there is a broad agreement and where sometimes not such important points are pressed quite hotly. We also feel that it would be a very great advantage, for a number of reasons, if a clean document emerged from this Committee, that is to say, if the final document could have as few square brackets in it as possible; and we feel that valuable concessions have been made to our point of view: in other parts of the document, and particularly if the Conittee sees its way to removing the square brackets now in Article 1 and in Article 2 (4). We feel that that will still leave the way open for us when problems arise in the case of particular commodities to urge further consideration, and that on the whole we have been quite clear that, if you are to have stabilisation schemes, they would have to be done commodity by commodity and through the procedure of conferences and agree- ments. In those circumstances, if the Committee is substantially agreed on the other parts of the draft and if the only obstacle standing in the way of reaching agreement is these square brackets, we are prepared to remove them, on the general understanding -- as you, Mr Chairman, have already stated -- that it covers the whole charter, that is, that it is ad referendum. MR SCHWENGER (United States): Mr Chairman, we appreciate the view of the chapter that has prompted the United Kingdom delegation to volunteer to remove the brackets that appear with the last two words, and we are happy to remove the contingent brackets that were placed around the portions of Article 1 and Article 2 that relate to the question of prices. I believe that the objectives of which then United Kingdom Delegate spoke can be satisfied to a large extent, if not entirely, under the chapter as it is drafted, and I think that we can congratulate ourselves that that does deal with this matter in a way that will prove satisfactory in operation. ~- F t-e '' : I- ' ' .--: '. >4 I- ' . , THE CHAIRMAN: I now call on Mr Deutsch, not in his capacity as Repporteur, but as the Canadian representative. MR DEUTSCH (Canada): Now, as one of the delegation who was troubled with the inclusion of the word "prices" in the last sentence, in view of the goven interpretation given and the effect on the whole charter of the specific recognition of the problem of price fluctuations and the objections arising out of the deletion of the brackets, we would be happy to adopt the solution suggested, that is, to remove the brackets from the phrase "or prices" and also to remove the brackets in Articles 1 and 2. We think that is a fruitful way out of this difficulty and we are happy to accept. THE CHAIRMAN: I hopF I am right in gathering that this compromise solution is acceptable to the whole of the Committee. ... Then we delete the brackets in Article 1, we delete the brackets round paragraph 4 of Article 2, and we delete the brackets round "or prices" in Article 15 (4). I think it is right to remind the Committee that we have no square brackets left and we have achieved xx our objective which we set ourselves this morning of being able to publish a clean text. MR GUERRA (Cuba): There were brackets in paragraph 6 of Article 2. THE CHAIRMAN: Yes, but we agreed this morning to remove those. MR GUERRA (Cuba): Thank you. THH CHAIRMAN: Now the United Kingdom said they had a drafting amendment to, I think, the whole of paragraph 4 of Article 15. I gather this is not intended to change the sense. MR HALL (United Kingdom): I am sorry that we have not had time to circulate the text. May I read it? It is as follows: "A Regulatory Agreement is an Inter-Governmetal Commodity Arrange- ment involving limitation of the production, export or import of S commodity'' or regulation of prices'', namely, we felt it was rather a clumsy beginning to say "an Inter-Governmental Commodity Agreement "an Inter-Governmants Commodity Arrangement", and wo hope that this is just a slightly happrier way of stressing the 51. *,~ - 1 C . 5 E/PC/T/C. IV/PV/C. thought on which the Committee has new agreed agreed on Artilea 4. MR McCARTHY (Australia): Do you attach significance to the word "limitation"? I suggest regulation". THE CHAIRMAN: Perhaps I could read the amendment again with the further refinement suggested by Australia: "A Regulatory Agreement is an Inter-Governmental Commodity Arrangement involving regulation of the production, export or import of a commodity or regulation of prices". I am unable myself to discover any difference in maning between the United Kingdom text and the text as amended by Australia. MR McCARTHY (Australia ): There is a difference between "limitation" and "regulation". THE CHAIRMAN: Anyhow,. the United Kingdom here expressed their wrillingness to. accept the w.ord "regulct on" instead of "limitation" Is that drafting amendment generally acceptable? MR SCHWENGER (United States): We have a small change that we would be willing to see made in paragraph 4 of Article 2 which has just been unbracketed for public view. We consider that in this context and in the light of what has just been said, the words "over a period of time" in this paragraph are of little, if any, significance, and it might be a clearer statement if they ware removed. THE CHAIRMAN: The suggestion is that, in Article 2, paragraph 4, where we have just removed the square brackets, we should read "to. moderate pronounced fluctuations" instead of "to moderate over a period of time pronounced fluctuations". I take it that the Committee, will agree to that? (Agreed). Well, may we now part with this text, which-would be appended to-the published report of this Committee? (Agreed). There remains for us to consider then the report from this Co mmittee, and there is also a resolution which the United Kingdom now, I think, having, arrive at clean text, ask this Comnittee to put forward to the Plenary Session for adoption. Perhaps it would be convenient if we were it, the next, place to look at the resolution, since that is a substantive act and will no doubt require to be noted d in our report . I' think it would be , - * ~~~~~~~~S~v of help to the Rapporteur if we were to look at the resolution rather than at the text of the report. The resolution is contained in paper E/PC/T/C.IV/14, which the Secetrary tells me is alternatively numbered "W. 9", and it begins: "The United Kingdom delegation hopes that in the event of substantial agreement *.^8*.- - .,, nav -i * ;n*,), we have nowc done)" (hi we ave now done) 'he follmmowing wCondttee svul a reolution oiln the terms".f£owing Would you learikee to h th United Kingdom say a word about this? R HALL (Unimedm : MKinhairman,g'o)I Chmmthe Cowillnittee lremember rintt g its ealier discussionsm sone rference was made to perteid which will intervene between this meeting and the establishment of an International Trade Organisation. I think hat tthe hope aws expressed there both that the work that we have been doing here ill be of assistance to the Food and gAicrlturarl rOganisation Commission,w hchi is nwo meeting in aWshington, nd alaos where a serious stiuationi s xpected or is possible, e in the case of apoimaryncopmmodityi tdor is possibl aywich one of us ,be interested, it will be possible for ion tvon be taken ernehougnh there has -otyet been a genera 1ccepted charter. 53. E /PC/T /C. IV/PV/ 8 The United Kingdom feel, Sir, that since we are all of a mind about the way in which these problems should be handled, we, ought not only to say so, but we ought aIso to give a lead to lndicate to our own governments that we feel that action need not stand still. In the case of certain commodities some preliminary action has already been taken. There are in existence now four study groups and there are I think several draft agreements which provide for discussion of problem by countries primarily interested. I do not think I need speak on the details of the resolution, for it is self-evident. It just suggests that so far as consultation is necessary, the governments concerned should adopt the principles that we have considered here as a guide, and further that the Executive Secretary of the Preparator Conference should be requested by the Conference to keep in touch with the consultation, and if there is anything, that any particular government feels can be done by way, for instance, of advice or actual physical steps necessary for calling a Conference, he should do what he can in that direction. I think that now that we have got an agreed draft we should like two verbal amendments in the resolu- tion. The resolution refers only to the Report of this Committee, but this Committee has now produced a text, and what would be met if we inserted in the first "Whereas" paragraph, the second line: "The Report of Committee IV of the Preparatory Committee and the text appended to it". That is the text that we have just agreed. And in the first recommendation in the same way, this last line: "should adopt as a guide the Report of that Committee and the text appended to it". Mr CLAIR WILCOX (USA): Mr Chairman, I have been reading over this resolution and my mind was running along the same channels as Mr Halls. The substantive matter upon which the Committee has come to a common position is set forth in the draft chapter on which action has been taken, and the Report that is later to be considered will or,- -of .th- - etationfo that chapter together with a discussionogether with>-A dtan 4 ;? - --' ._ _ 7 s pre a' ntd d-ri dlsgcussionso ths mitce, : s kew'eu'on w~ n tly fd- e-or a de. lonwas ten ' toon 2b4shhebeen takenm &af- tex' No that thaz d~ciei. hs N-1 E E/PC/T/C. IV/PV/8 however, I would suggest stitute for the t& eor T amendered offorod by ITr eall, tho followinge in th" first ":hecertain diffi-ain diff of t cs o0fthe kind referred todin the craft chapter on intergovern- mental arrangements appended to the Report of the Preparatory, Committee"; and then in the last line "f ehat 'Whoreas", substitute 'dIrLft1 for "Report".e In tho third "lWhereas" sub"titute 'draft" for "Repodt"; anc in thi last l1ne if the fIrst recommendation insert adoptias a eulda th- droft chapter on Intergovernmental arrangements appende' to the Report of that Committee. MN: CEAIRA: Perhaps it would be the wils of the Committe- hat I should rerod lethwhoiresonluti-rwith the aemts mendm~ust suggested: 'hereas certadin i-fiiecultt of the kind referred to in the draft chapter onergovernmmental commodity arrangemnts appended to the d to Report oe tho Preparatorymittee-utc have already occurred in respect ertainti.Jmary arym comodities and the governments conceraned re alreaakingdy t action oen th lines proposed in that draft, whereasand zherers siriAar eulti-s may occur in resoect Gf other primammoditi-odi-t- gcs, end whcrats teparatoryratomi Coe.-ttea is agreed this it 4s ble that action -actio taken in respecteach ohI ioimodltJes should proceedeon thc general lines pripose .ndraft flrLf, the Preparatory Committee (1) recommendsithat In so fir as Intergovernmental Consul- tat.an or -ctioe in rcspect of particulmoditiesdities is necessary before the atternetional Trade sation is established, ti-shethe governments concshould ho;.ldadopt as a ghe e t dedraft chapter on intergeveanmontcl commodity ementspenent appended to the Report of tmmitteeIttc-e; (2) requests the Executive Secretary toikeep In with suwtthsuch consultation and to take such action as rmay be-appro e rite tolitai-". I take it that is corredt?-t t. .AIRWCLR WILCOX (USA) Yes IERRA G' Cuba): Mr Ohaan, thje n,anubn delegation retre's to say thbecause se of ttypey-n of some of the amendments that were proposed onetdra &aft, chaptehiw-hch have not bean adopted, aid -t has been recessary for us makea.h reservations on this point and some of teosc reservationsearr coderedeie vory imortany bD our government, and some of them evindi ntspins-blw, ve aret p repdre to endorse 4,.,; s _-- N-3 E/PC/T/C.IV/PV/8 Mr McCARTHY (Australia): Mr Chairman, I agree with the principle con- tained in this proposal. I would like to see more postive action contemplated than that proposed, I would have hoped that during this period, which might be a fairly lengthy one, the Prepartory Committee woul be able to take more definite action is here proposed. However, I see difficulties in that and I am prepared to accept it as it stands at the present time. Mr DE VRIES (Netherlands): Mr Chairnan, the Netherlands delegation accepts it in the same words as the Australian delegate. THE CHAIRMAN : I do not knowwhether it is any use the Chair endeavouring to compose the difference between the Cuban delegation and other delegations. it is a personal suggestion by the Chair that we might insert words which say something like: "bearing in mind the points of view expressed in the Report of Committee IV". Mr GUERRA (Cuba): Mr Chairman, I appreciate your efforts, but I think there is no possibillty of doing that. The resolution may be adopted be the Comririttee, but there is a reservation on the part of one delegation for the reasons that I have indicated. THE CHAIRMAN: Yes. Mr HALL (UK): Mr Chairman, I think we might all of us find ourselves in the position in which the Cuban delegate is, and if he feels himself constrained to adopt this course, we clearly cannot go behind it. So that we would be prepared to accept the resolution with a record of dissent. Mr GUERRA (Cuba) : I think that is the, only course. THE CHAIRMAN: Well, we shall have to note that in our Report to the Prepatory Committee itself. M. WORMSER (France) (Interpretation): Mr. Chairman, we are ready to give the agreement of the French delegation to this proposed resolution under one condition, that when paragraph 4 of Article 6 is re-drafted, as was decided this morning, it will be re-drafted in such as to take into consideration the point of view which has expressed by the French delegation. I would like to add that the present drafting does satisfy me. .. ..... _.. . A -4 E/PC/T/C.IV/PV/8 THE CHAIRMAN: Then I hardly think it is necessary is reservation, because if one delegation accepted resolution that recommends that governments should adopt as a guide the draft chapter, and here it is appended to the Report, and the draft chapter chapter, and here it is appended to the Report, and the draft chapter~~~~~~~~~~~~~~~~~~~- ded to its dissatisfas subsequeily amenction, clearly then itstilerlyt etr;e tion is open to reconsideration.en.to reconsIderatlon . WOBXR (Frncei spoke but was not Interproted. edHE Cs morning, I think,VBFR : hat we decI thnk, wao let thei r-tn iecl raph4 of Art -cl 6standwith an. injuction to the Interim Drafting Comrte to look at it again to see whether it should be altereud to take accont of iethe point of vw exipressed by Inda. i, F-S: ane (Ineterpr tation): France does ./agree, IRMAN: Then we :_Hinstct our Rapporteur o strincue this resolu- Inclu tpart of ion a h of ithhes matr I -i- report, and wheni I cometo Introduce he Report mof the Com.ttee to thSe Plenary ission, I sihall say t is he wish of this Committee that the Preparatory Comrittee should pass thl es,oblutihogaut tra ngaain dele unableE; was to fall in with ehat v~ of thmie Com.-ee because certain points to which they attach igrea portance nhad it beenoet. Weill, I the 4 inutes remaining to us perhapsmight we have a hasty glance at the preliminary draft report prepared by theRapeportur. Allp Raporteur,i I mght say, havene be in ra rveygeat idilff ciutyh n te last 1y0 bedas cause the Heofads gDteleaions, of wIhrom egret to say I have been acting as one and Mrcox Wil bhas ac ieegnln as heanotr, have changed the rules oafrt_-ng_, potsr every 24 hours, an odhinny day on wiihc we have or changed the rtles, the secietiriat have gi1en a different inter- pretation of the previously adopted rules. So that I hope that, however we approve of this Report in substance, the Committee will give a reasonable measure of latitude to the secretariat in its arrangement, that is to say, whether matter comes first and then the text and then the notes, or whether the matter comes first and then the notes and last the text, and so on. What we ought to do this evening if we can is to have a hasty look at the matter hast lockl a ma tter porteur andnd see whether it isn satisfactory -hether it I-s en satI 57 .~~ N-5 E/PC/T/C. IV/PV/8 lines, I propose to put the first six paragraphs on bloc. This is in paper 10. The first six paragraphs are an historical account of the work of this Committee. I think perhaps at this point we might as the Rapporteur to insert a remark about the observations of the Inter- national Chamber of Commerce in the light of what was reported to us at the beginning of the meeting. I take it there will be no observa- tions on those preliminary paragraphs. Mr CLAIR WILCOX (USA) May we take up minor drafting matters in these paragraphs at this time? THE CHAIRMAN: Provided they will not take too long, yes. Mr CLAIR WILCOX (USA): Well if they would take too long, then what happens? is THE CHAIRMAN: This is where the irres/tiblo force in the shape of the Chairman meets the unmovable obstacle represented by the United States delegation. We will see how we go, l mean is I do not wish to fail to get through these in the short time we have available by reason of having a long discussion on each point, Mr CLAIR WILCOX (USA).: We have some very minor draft suggestions through out this text, and I would forbear .to take up the time of the Committee to discuss them, but I think they might perhaps be a useful contribution. .0. 58. E/PC/T/C. IV/PV/8~~~~~~~~~~~~~~§ liKC tstance of one or two of the delegationsocgei tanoo of in 'draft. I think probably that would be the bably tt ouwd place to drafting suggestions, n"D sugwoations end if the Unitcd Ste.tumber a goodent rib - or porsay, in the d, eayj inth arter, a substantial interest in draftinge.est MInd'. learly they could elehe t could cect themselves to this small body to assist the Rapportour. usl lam anxioi. about is that. ehis Commnttec should hot umcur the odxecutivethc EZiecutlv Seeretary for boing laee on the timotable MR. tIILCO (US):e In that casc I shall forbear esemention thoso points at this meeting. iITEE GIRAN: t is aw declaration hiratech I, atam any , and I surc th -mMf heeowill-mittoeillwi ec -ith gre pleasure. Would elegatescgate liko to make. any general comments on the shape and ff/this Report?r't? Perhaps that is the first question to put. ILCOX.ILCO (Ues: Yc., Mr ChairIn. i should like to say that both in shape and in foem eph& Rcort is excellent. HAIRMANJHIRM: Thwill '-il ask if there is any-pwint rhich is of highcr level then a drafting pwint rhich any delegate rants to brinr eo tho attention of the Rapporteur, other than those points that have noted as -e have gone through the text? Thporteurortou is making a careful note. I think, to/time,ime, an ban take points in almost anyer.dr. MR.DE VRIES .therlands):): Mr. Chairman, the first agra.-rph of theviewicr of the deliberations of the CommittrefersCrs toetha policy of high and stable employment in relation toetwc thole nomicmic scheme. wNo7 in Committee I there is a. erence tod t modity ty Policy, saying that will itel b a safegard tome so extent to full employmenHeret. it iput ut the othwr .ay round. I should .like to put ie h reethc posvtiVe thing, in the eamc as as in Committcee I. . 59. E/PC/T/C. IV/PV/ 8 THE CHAIRMAN: This would be a third sentence in paragraph 1, I take it, which would say "On the other hand", and then put the thing the other way round as well? MR. DE VRIES (Netharlands): Yas. THE CHAIRMAN : Yes. Anything clae? MR. McCA.RTHY (.Australia): Mr. Chairman, the only observation I have to make and not because I propose leaving almost immediately - is that the Report, from our point of vierw, is quite thorough and quite clear, and we have no improvements tc suggest. THE CHAIRMAN: Thank you. MR. CHANG (China) Mr. Chairman, on page 5, the fourth line from the top, it reads "subject to certain strictly limited exceptions". I doubt if the two words "strictly limited" are necessary. I wonder -whether -we could not be satisfied -with saying " subject to certain exceptions", leaving out the "strictly limited"? MR. W.ILC0X; (US): Well, they are limited exceptions. we might drop the word "strictly". THE CHAIRMAN: All right? MR. CHING (China): All right, Mr. Chairman. It is better. THE CHAIRMAN: If there are no other comments, other than those of a drafting nature, we have already asked the United States, by implication, to help the Rapporteru. Has . anyone else any drafting suggestions that he rants to bring to the notice of the Rapporteur? MR. DE VRIES (Netherlands): Not outside the alterations in the text which we have brought in today. x .ac b. of course. The Rapporteur will revise this in Rapporteur till rev lthe ight a! toda's discusswon and obviously rill have to .. ncado certi. reservations and intorpretations and. points of discussed from time to time.dos ad frome tim, -:6 0. f-0. .' E/PC/T/T/C. IV/PV/8 ' "'a -:CR:e.'.m VR : Mr. Chaairman, with regard para. 19.ard to pre. 19 po 12, that reeelatese to thpr Ccmmodity theoission oodity Commri ot.hich ro did nis Committee?".- CHAIRMAN: Ae .os Tahnk yoe vcmy nuch. MR. DE VRIES (Netherlands): Do you end nd to leeav it as it is, or doywou ish to open discussion forme so mienuts on that? THCHAIRMAN:irmI mam ogratefi; ul to you. I meant to ask this mComittwhethertho inetho light of its examination of the text this morning it was s prepared toratify the passawhich/wee g ventured to send to Commee VttV from the Drafting Commiette. Thomormieecw r-ll find.thamessagegc aexed d to the document of many numbers. It is on the lastwtro pages in eh shap of T Taebl.. MR. DE VRIES e(Nethallnds): Mr. Chairman, y wiu ll kwno, from Committee V that mmnrietoe V refuses to do thiw 7ork, and that thewant n our Cmimitte, to meak a redraft of the Article on the Commodity mmCoission and ethse organization questions. Cawe-o hevc a small Drafting Commieeoc to brgn' it here morrowro for us, or not? EHCHAIRMANii: I think n.t, MR. DE VRIES eNcehcrlands): If notwerc have to lea eo that toewCr, York, I believe, as Commiteeo r refuses to do it. THE CHAMAN:":We%bll, mmnniteec V adopted ehc procedure that they -ould remit the actual drafting of the Articles to tho Interim Draftgn- Committee NewNc York., but they say they want guidance front That I might call the various Policy Commiteeow rhich have boon sitting. That is eho Joint body, Commit eW II, Cormieeoo III and this Committee -If this Commieeoo is prepared to ratify these instructions thaw -ill ehcn e remitted to tho Interim Drafting Commietce in we York. I say nothing about the policy contnetid in these Articles - that is for the Committee to decide - but w -ould advise the Committee that these insuclxtions erc perfectly plain andwe needcd not da zny mo work oron it, and that it is vercry suitable job for the Interin Drafting Comieeoo ..1 E/PC/T/C . IV/PV/ 8 to draw this up into a textual form of the Commodity Commission Article, particularly as they wiill no doubt be doing the same- for the Commercial Policy Commission and the Restrictivie Business Practices Comission. So I Would like to put the question to this Committee, are that are criticisms of the messagee which is appended to the Report of the Drafting Comittee? SIR GERARD CLAUSON (UK).: Perhaps I might just call attention to the square brackets on'Article 11, paragraph/2? THE CHAIPMAN: I think the whole passage disappears in the light of the settlement we reached on Article 76. Thank you very much.. MR. DE VRIES (Netherlands) : Mr. Chairman, in this proposal, in nearly every case where they refer to the Organization they say ' Executive Board on the recommendation of the Commodity Comission", and if you put that into the definitions the draft rill be Very Casy. That will apply to everthing. THE CHAIRMAN: Not quite, and since it is not everything.I do not think we can do it in that easy way. MR. DE VRIES (Netherlands): You only, have to draft the exceptions. THE CHAIRMAN: As I am not going to New York I feel disinclined to make it too casy for the lucky member of my staff who will be going, and I think we should leave him some work to do . If no-one is anxious to disagree with this; perhaps the Committee would ratify it now? I have already asked the United States to assist the Rapportcur. I do not 1know whether the Netherlands delegate would also be. prepared to assist the Rapporteur tonight and tomorrow? MR. DE VRIES (Netherlands). I am prepared, Mr. Chairman. THE CHAIRMAN: Thank you very much, I hope the Committee will tter than ;a mittee of four, and even better than a Drafting bet eing of five. So if we could ask the Rapporteur and oneteu_-~ wi E/PC/T/C. IV/PV/8 - I oe thc enitod es' delegation ring as a revised draft towmorrow, thatwould be a gre .......,, .....,- I !a-W- meetingtho timc of iocttng todoretterI-think I ha5 bottc - sk tha/heRapportchave somer hc thinkeo could zvc so: othing.` rcadry by.5 o'clock? THEpossibleTEUR: Iereiwk that is poswiblo, but thc-o -ill not, bo prior distributicase, it, Ie m afraid, in that ca i, if th. Co=rittoo is content to roivo it at 5 o' clock. THE CHAIMI: wIf ::reive it at 5 o'clock re can take it wpara-aph gby paragraphe and -rk throuE it until w0finish, -ith a suitable adjournmot fore wdinner, but I think thero'uld bc something. getto bcsaid for trying-to pthis job finished tomorrow. I -ll asgek the Scceocry to arran accordingly. The Co.n-litteeroso at 63.

GATT Library

yp097yr8617

Verbatim Report of the Eighth Meeting of Committee V : Held at Church House, Westminster, S.W. 1. on Wednesday, 6 November 1946, at 3.0 p.m

United Nations Economic and Social Council, November 6, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

06/11/1946

official documents

E/PC/T/C.V/PV/8 and E/PC/T/C.V/PV/6-8

https://exhibits.stanford.edu/gatt/catalog/yp097yr8617

yp097yr8617_90230014.xml

GATT_157

. - 1 V/PV/8.E>I2~>L- WEDA.TION ' ECONIC AND SOCIAL :CUNCIL PYREPTOR MM COiSAEE of the TTERNAMNA..FERENLCONMETR ON MAE AT EMPLOY T'E Verbatipm Reort of the EIGMEETTH SNG of MICTEE OT=V held at Church House, Westminster, S.W. 1. on Wednesday, 6th November, 1946, at 3. p0m .. Mr. NNLY RED.INS MRTE (U. S. A.) (From the Shorthand Noteos f W.BGURNE. Y, SONS &UNNELL,ME 58, Victoria Street, Westminsters, .1W..) AaCMAIRN: . . _ _ A. 1 E/PC/T/C.V/PV/8. THE CHAIRMAN: Our Ayenda today calls for a consideration of Articles 53, 57 and 58 of the United States.-Draft Charter. Article 53 concerns voting in the Conference. At one of our recent meetings it was agreed that a paper on that subject should be prepared by the United Kingdom Delegation and distributed to this Committee in advance of this meeting. That has been done, and I think it would be appropriate at this time to call upon the Delegate of the United Kingdom to discuss his memorandum. MR. HOLMES (United Kingdom) Having fulfilled our undertaking, I am not sure that, as representing the United Kingdom, I have very much to say. The paper has now been distributed, and I think it probably speaks for itself. We have made it as brief as we could, and we have left a certain amount unsaid, because we felt that if a decision in principle -to have a system of weighted voting were taken, it would be probably a matter very appropriate to any Drafting Committee which may be set up at the end of this Session to work out the scheme in more detail. The paper, as you will see, starts with a general paragraph which is simply intended to draw attention to the fact that countries which will be Members, we hope, of the Organisation are bound, for various reason, whetherr by their size or the structure of their economy, to have rather differing interests in the principles and details of the Organisation. E/P /T/C.-/PV/ -- . | C . V4 I would poinnt out that th main criterion of ar interest in -n organisation of this, sort is a countrs share in, or contribution to, inwternational trade. We feel that hile the principle of one State one vote has much to recommend it on the grounds of mere simplicity., the sort of field whicnmh is covered by the proposed inteational organ- virsation is one which lends itself ey properly to a certain functional recognition. Therd e, was, as we explain in the seconmain paragraph of the paper, in the prnmoposals of the United States Goverent in December 1945 a proviestsionn whereby a certain number of ba o the Exwecutive Bard of the bganiaaion -oud be reserved permanently for certain countries, or would be atany rate allotted to countries pre ably having, a particular interest in the objects and principles of thove Organisation. Now that prision disappeared when we came to examine the United States Draft Charter, and that paragraph is merely designed to call attention too the fact that the document t which we had expressed our agreement, on certain points at any rate, did differ fro the Charter. In the third. main paragraph we have attempted to call attention very shortly to the corresponding provisions in the Conventions or >emts establishing other bodies akir, rather, to the proposed oerganisation which we ar attempting to set up. In some cases there is provision therne fomr npermanent seats o theai directing body, in other cases there isprovi1ion for weighted voting, and I think that in one or two cases there is provision for both. As regards the outline of our proposal, which is given on page 3 of the paper - in the English text - we suggest a wenay lin which, in very gera terms, our proposal might be :rked out, I do not think that I need elaborate on that because of the explanation I have already given, that we should feel the subject was one which could very properly be studied by the Drafting B. 2 E/PC/T/C V/PV/8 Ccmmittee with a view to more specific proposals being available to us when we meet again. The last paragraph of the paper, that is the third sub-paragrap on page 3, makes a certain proposal in regard to the length of time for which an arrangement of this sort should be initially valid. It has already been stated at a previous meeting of this Committee, on behalf of at least one Delegation, that a proposal of this kind ought to take account not only of a country' s actual share in international trade but also of that country's potentialities in that direction. We have, in our sketch, suggested tentatively that some weight should be given to national income, which would be a recognition to some extent of the claim that we should take into account not only the present but also the future. We feel ourselves that on the whole that claim, while it certainly has some validity, will be more satisfactorily looked after by providing that there should be a periodic review of the weighting, so that account can be taken from time to time, after a comparatively short number of years, perhaps, of any marked changes which may have taken place in the shares in or contributions to international trade on the part of the various members of the organisation. I do not think that there is anything further which I need to say at this stage, or anything with which I could properly delay the proceedings of the Committee. THE CHAIRMAN: A number of Delegates wish to have the floor, I presume to discuss the matter that has been put before us by the Delegate of the United Kingdom, but before I recognize any of them I should like to suggest that the Committee might be interested to hear at this time a statement by Mr. Tate, the observer from the International Labour Office who is here with us, with respect to the manner in which the system of permanent membership on the Governing Body of the International Labour Office operates. I make this suggestion because it is very clear from our previous discussion of the matter of voting in the Conference, -4- vi..n. E/PC/T/C.V/PV/8- s * s. :d ->'e,,-4g . . , d likewise clcarrom thc stement thich as -ist b 00' ingdomoztyhtathrreanad submiittd by the Delogae of the. Unted ,- et is a vr efinclite connecti n btween the subject rtter f Artiele 53 nd Articleo m57,e iand it might be haful therefore to our Cmitt6 -n deiscusswe wein g th=ter of voting in the C- nfrnc f 7 =reto he ethis statement fr Mr. Tatway e at this tinc ith reference, to thie 7 which vooanent inbrsiz of hc Govening Bdy of the International Labour Omeffice works oult. Would that et the approva of the Co itee? 5. C.1. E/PC/TC/C.V/PV/8. MR QURESHI (India): Mr Chairman, while we welcome the suggestion made by you that we should hear the observer from the International Labour Office, I wonder if at this stage it would not be a help to the Committee if we heard a statement from the representative of the United States as to what were the considerations which led them to incorporate the changes in the new proposals, because they have made some considerable change in this respect in the draft Charter. This, I think, would be very relevant. Again, I wonder, in order to save time, if the ear-phone system is working all right, whether we could not do away with the duplicate interpretation, unless it is requested for some exceptional reason, as that will mean a considerable saving of time. The formal type of statement may not need that second interpretation. THE CHAIRMAN: Well, that suggestion requires me to ask the Delegates from Belgium and France whether it meets with their approval. I am referring, of course, the suggestion that we use only the simultaneous translation. MR HOUTMAN (Belgium) (interpretation): Mr Chairman, I agree entirely to have for today at least just the simultaneous interpretation, if it is used in the correct manner; but I should not like to see it introduced in a general way for the future as frequently the system does not work properly and then the successive interpretation is very useful. THE CHAIRMAN: Apparently, for today, simultaneous translation is agreeable to the Delegates from Belgium and France, The Chair should perhaps add that if we are to use that system, we had better be a little bit more fastidious in using the ear-phones. As to the suggestion of the Delegate of India with regard to the statement from the United States Delegate regarding the changes that have been made in the Charter as compared with the original proposals, I should prefer, if it is acceptable to the Indian Delegate, to have a statement from the Observer of the International Labour Office first. I think that the statement from the United States Delegate could be made just as well after that, and it might be a little better order for us if we took it up in that way. MR QURESHI (India): That is quite acceptable to us. THE CHAIRMAN: I will call on Mr Tate. . ~~ ~ ~~~~~~6,- MR TATE .(I.L.O.): The Constitution of the International Labour Organisation provides that of the sixteen persons representing governments eight shall be appointed by members of chief industrial importance. There is also one other provision concerning the appointment of the government representatives on the governing Board of the I.L.O., namely, that six of them shall. represent non-European States. What, however, interests the Committee particularly is the way in which the criteria have been drawn up and applied concerning the eight States of chief industrial importance. Naturally, this question has given rise to certain difficulties, as was to be expected, but I do not think that it can be said in any sense that these difficulties have proved to be insuperable. The first thing to do, of course, was to determine the criteria and to give these criteria their appropriate weights. At the very first meeting of the International Labour Conference in 1919, a list had to be improvised by the organising committee, .and this list gave rise to protests .by certain States which were excluded by the criteria adopted. As provided by the Constitution of the I.L.O., the question was then referred to the Council of the League of Nations, and with the assistance of expert advice detailed criteria were worked out in 1922, which were applied during the succeeding years until 1934. In 1934 the question had to be reviewed, because one of the States of chief industrial importance gave notice of resignation, and at the same time two States, both of indubitable industrial importance, were admitted to the Organisation. It therefore followed that at least one, if not two, States hitherto regarded as being of chief industrial importance would have to retire from the governing body. The whole question was therefore reviewed very carefully and very exhaustively, and the governing body had the assistance of a small committee of experts to advise on the matter. In 1935 they drew up criteria which, with one slight modification made in 1940, are still in operation. These criteria, with the modification, are as follows: Firstly, the scale of contributions to the League of Nations established by the Assembly of the League, on the basis of national wealth. 7. C.3. E/PC/T/C.V/PV/8. Secondly, the second criterion is based on the table of the industrial importance of States, prepared on the basis of statistics compiled by the League Secretariat for its Index of World Production. The third criterion is the table of the volume of foreign. trade, both exports and imports, prepared from the statistics compiled by the League of Nations Secretariat. Fourthly, total figures of the occupied population. These criteria natural enough, I think, gave rise to some protests, but they were adopted; and of course the situation became easier by the fact that progressively Germany, Italy and Japan left the Organisation, and the States which had lost their seats regained them. As I said, before, in 1940 the question came up again, and it was then decided to maintain these criteria except for the one change which I have referred to. In 1944, again, a vacancy had to be filled, but in view of the War it was impossible to apply the criteria at that time, and a provisional appointment was made on the understanding that the whole list would be reviewed on the basic of appropriate criteria as soon as circumstances allowed. That is the situation at the present time, and while, as I said at the beginning, the establishment and application of these criteria have naturally, given rise to difficulties, it does seem that the formula has permitted. the reserving of quasi-permanent seats for the States of chief industrial importance, while avoiding complete rigidity ; and no other - formula to achieve this result has been devised. If any Delegate, Mr Chairman, woulld like to ask any questions on that I should be glad to answer to the best of my ability. MR. COUILLARD (Canada) I should like to ask Mr Tate one question; the details : might have escaped me. I would like to ask him what is the relative importance attached to the various criteria that he mentioned.. MR TATE (I. L.O.): The governing body decided, on the advice of the committee of experts, that the weighting of the four criteria should be in the proportion of 3:3:3:1 - that is to say, the first three criteria are of equal weight, and the fourth criteria one-third of the weight of the other 8. ~~~~~8. I three. MR. COULLARD (Canada) Thank you. THE CHAIRMAN: Before calling on the Delegate of the United States, with regard to the matter that was mentioned a moment ago by tae Delegate of India, I should like to recognise the Delegate from Brasil. . I aso want to thank erMr Tate vt much for this very useful statement which he has just ugiven to s CL3Ho B ().(intepretotibn): Mr Chairman, as far as Article 53 is concerned, which is the Article which we are going to discuss at to'sys meeting, the Brazilian Delegation would like to make a declaration of a general nature concerning the British proposal. rticle 53 in the American draft Charter concerns in its entirety the democratic principle of thjudiciiial legality and equality of nations. We hare all recognised that such a principle is the very foundation of all international relations and international judicial wlas. The proof of all this is so evident that I have not r eeat edthis argument. The American Government, in preparing the draft Charter, did not want to forget those democratic principles; nevertheless, we have received a proposal which has been put forward byh te United Kingdom Delegation, which proposal, imn y humble opinion, is opposed to this principle. As a matter of fact, the British Delegation considers in the first place, that the true criterion which would allow us to evaluate the interest which countries might have in an International Trade Organisation is the measure in which they participate in international trade, but this criterion is not a very correct o.ne Countries that participate in world trade take no less an interest in trade than the great commercial powers. As a matter of fact,. the contrary is true. What does really happen is that the nations, in the initial phase of their commercial expansion, really have the greatest desire to augment their foreign powers of rchpuase or sale, and they have the greatest interest in world trade. Moreover, one should not forget that, in spite of appearances, it is not always the countries with the greatest ecomnoic power who suffer most when trade exchange is lowered. As their . - , 9 C .5. P . ~~~~~~~E/;FC/T/C .V/PV/8. economic system change, they can alwaysi havee regard to other possiblitis. The undeveloped countries suffer, most, because when they have lost a little they have lost all. In order to facilitate the arguments let us assume that the considerations offered by the British Delegation are justified. -..s 0 , ,^', ~~~~~~~~~1... .'' E/PC/T/C.V/PV/8 .r .er}- * - .1 ;, MGif** v & There mad f coentrolg nizabyon three or four Powers oa t! Oriati `,-. which is naotucrlly the ery contrazyof the spirit cf o-operation-: which we are trying to fosterin order to achieve the results of aur . efAmeforants. eInmen the original proposal of the ric Govrnt there was a reference to the princile of the differential vote. This prin- ciple has beeuln changeod in the present ext, and I shot like taoffer congratulations to the authors of this change, which establishes once and for 1r ndume democratic spirit. In the memo a- of the British duelegation we are reminded of the cmulative vote system which has already beegennies adopted by other international as such- as the Monetkary FIund and the mInternaaytional Ban. t seems to e - I m, of Course be wrng - tdifferhat na these agencies are of a very ent.ure from the onpe whiic.h we riare about to put into ractce Paty of quotas does to a certain erxtenet determine the value of thei vot and thus the Braziliang deyse`m basidon believes that a voti-n szt:-e n the volume of internationawol trade and on national income uld present vey gIat difoficulotyenie and --ertain amount cf ncznv-r. It would be almost impossibole to mdetermine national incme of ember States, as weo have alree dafdy ulseen, and mit wuld also bifict to deterine the real volume ef intuntryernational trade of evae cc. The Brazilian delegation believes thsenoferefore that the proposalt orth in the draft Charter congrcrng the systewim of votin: o be adopted _'in this Conference should be adoted just as it stands at the moment and just as was sopzsed in the original American draft. TEC1AJAN: n calgl upon the deile.,ate ofhe Urnltedd tte. MR :wMfOG (UrmaSA); Ur ghipnrn, kinS u- uistionrt the, q'iez' voting in the Conference, the reason the UniddtedS putate. i nott a provision for weighted voting into Article 53 beisu,e we be first, caslieved the democrateic principl should apply ein thi thiss cas, and .consideration was extremely well expressed by the delegae at ae of Franct previous meeting, when he pointed out that a symallrne hcoguntr, v touh small, might be as seriously involved in questitoens.T.O before h I. as a large 31. D.2 E/PC/T/C.V/PV/8 one; that the mere fact of its being small did not diminish the importance of the question to that country. Also we followed, the precedent set in the United Nations Charter, which provides with respect to the Assembly that one country should have one vote. However, we do rocognize that in some cases it might be necessary to have a difference in the system of voting. Delegates have probably noticed that in Article 55, for example, there are provisions for a difference; they provide in Article 55 paragraph 2 for a two-thirds vote and not a simple majority; in Article 55 (8), again, there is provision for a two-thirds vote. In connection with the commodity agreements there are special provisions under which countries particularly involved are those countries which have more say in the matter. Finally, we were very much influenced by the fact that we felt it would be very difficult to work out a formula acceptable to all the members of the I.T.O., and we would like to have a provision as to voting acceptable to the largest number of countries. Going on then to the question of permanent seats in the Executive Board, the same considerations apply. Firsts we are motivated by the democratic principle which exists in the Economic and Social Council of the United Nations. As is known, there are no permanent seats on the Economic and Social Council: and, secondly, we found that in discussing this matter almost all the proposed formulae working out provisions to provide for permanent seats had distinct advantages in them and we felt they might be unacceptable to a large number of the countries who we hope will be members of the I.T.O. It was for those reasons that we made the provision in Article 57 as it now stands. MR. QUESHI (India): Mr Chairman, we find ourselves in complete agreement with the views expressed by the representative of the United States, also supported by the Cuban delegate. We are in full agreement in regard to the democratic principle, and we think, on the whole, it will be very fair if each country has one vote, irrespective of its size or of its importance. This will generally create feelings of good will and trust, and they will find that they are really in a committee of the nations 12. . D.5 E/PC//C.V/PV/8. country one vote, we turn now to the criteria suggested by the United Kingdom delegation. Their first criterion is a basic vote for each country. Proceeding from the previous remarks, we should naturally like to see that form a very large proportion of any voting strength. This would ensure that no nation' s voice was so small that it did not count for something. But the second criterion, the number of votes to be based on external trade, is obviously one which has got to be the main criterion if there is to be any system of weighted voting, and it does measure the importance of individual countries in international trace, But when one turns to the last criterion mentioned, the number of votes based on national income, we find ourselves rather out of sympathy. It may be perhaps that that would not wcrk our way, but irrespective of that, we think there are important considerations regarding national income in relation to international trade which make it a very unsuitable criterion. 15. fols. E. 1 E/PC/T/C.V/PV/8 If the national income of a country is large and its trade is proportionately small, international trade to that country is far less vital. Therefore, we do not think that decisions on international trade should be weighted in favour of that country. On the other hand, if a country has both a large national income and a large international trade, then its position would already be taken care of in giving a certain weight to international trade. But there is another criterion which we suggest should be con- sidered if a weighted voting system is to be considered at all, and that is the relative importance of international trade to individual countries. It is the case with certain countries; including a near neighbour of ours, and perhaps to a lesser excent ourselves, that any substantial failure of international trade can paralyse the whole of that country's economic life, and particularly if it is a small country it may, in certain circumstances, find itself somewhat powerless and completely at the sway of outside forces. That in itself, is serious enough, but it would be even more serious if it were liable to be overborne in international councils by countries whose dependence on international trade was so much less. Therefore, we suggest that if this weighted system is to be considered, that consideration should be given to this factor. The point has perhaps been put most effectively by Mr. Wilcox, if a his opening speech for the United States, when he said: "If the trade of the world were to be governed by rules the opposite of those contained in the suggested Charter, the United States would deeply regret it, but it could adapt itself to the resulting situation. Its economy would survive the strain. But other nations in this r s e t less fortuna d eap~ch are J>*; T:hutely einowed tban we are. ir~~ uldde wcosl nte ae CeSsite- r~ zjus'eadJ1~For otnt :~ ~~heouldspell L catastproe." - , *, - - ~~~~~~~~;4- 16. E/PC/T/C.V/PV/8. MR. BENDA (Czechoslovakia): As I said at one of our previous meetings when we started to discuss the question of voting and the composition of the Executive Board, the. Czechoslovak Delegation finds itself in sympathy with the observations made by the Delegate for France. As to voting at the Conference. the Czechoslovak Delegation fully adheres to the principle of one State, one vote. In our opinion, the Conference should be a democratic body responsible for the broad outlines of the policy of ITO, and the system of voting should conform to the accepted principles and the accepted practice for assemblies or conferences of other international organisations. If we introduce a differentt system of voting at the Conference, we would have to modify other agreed Articles of the Charter accordingly, and I have some doubts whether we could come to an agreement. Moreover, since for certain decisions of ITO qualified majorities are necessary, a system of votes based on total external trade and/or on national income might perhaps endanger the interests of less developed countries which, in questions for which the Charter demands a qualified majority and which concern major problems of commercial policy vital to the interests of member countries, might be outvoted by the preponderance of votes of the more developed countries. As to the second point raised, that is, the question of the composition of the Executive Board, the Czechoslovak Delegation agrees that the Great Powers should have permanent seats on this Board similar to the Security Council of the United Nations. we think that the Great Powers ought to be responsible for the day to day execution of the policy of ITO, and we are quite willing to accept a solution which would make the Executive Board consist of permanent members and eligible members. I should like to add that by "Great Powers" we do not mean only Great Powers in the sense of great trading Powers, so that the criterion for that is not only purely commercial. 17. E. 3 E/PC/T/C.V/PV/8 MR. MERINO (Chile) (Interpretation): The Chilean Delegation, has been greatly surprised by the proposals made here by the United Kingdom Delegation concerning voting within the International Trade Organisation. The Chilean Delegation are greatly surprised that such serious proposals should be. suggested at a moment when a discussion. of the subject has alreaddy gone so far. The Chilean Delegation reserve the right to express its opinion on this problem after it has consulted its Government. Nevertheless, I can state even now that we accepted the invitation to assist at this Conference mowing that the discussions would be based on the proposals suggested by the United States Government, proposals which establish a basis of complete equality wherever voting concerned. This, moreover, is in complete agreement with the principles expressed in the United Nations Charter. The British Proposals changes in a fundamental manner this basis of discussion which had been accepted by us. Without trying to analyse in any detail the United Kingdom proposals, I believe that we can say even now that we shall not be able to accept it. However, as I have already said. before, I shall have to inform my Government of the state of affairs, and have to await instructions from them, in view of the gravity of the problem. MR. CABAL (Brazil): I do not want to elaborate on the proposal made by the Delegate of the United Kingdom, but I must call attention to the fact that our Organisation will be neither a political organisation nor an organisation of the same character as the other organisations. In the United Nations we can admit the principle of differential voting because when it is a question of re-establishing peace or the enforcement of decisions by the United Nations, Great Britain and the United States would be more responsible than the smaIler countries. In that case I can understand th sp citlbre ea nsitioxi of those two countries and the other owers. IfOisI~ question of t"the Wod Bank or the Iinternaional ~~~~~ . 18.. ' P C.V/PV~~~~/pC/T/c.v>v/83 Monetary Fund, I can also understand it, because the quotas are larger. If the United States brings 7 million dollars and the other countries briIng only 7,000, can understand the different position, the different rights, othe. different vtes I can understand that such a thing would have a certain relevaAnce in Navy or rmy matters. But I could noti understand i'f in a court a judge had two, or three, or differential votes. In this Organisation we shall be more in the nature of a court. Everybody will be equal, everybody will be voting to maintain fair international trade. For this reason, I cannot see why a country ought to have more voting power ninside the Orgaisation. If we want to destroy this Organisation from the beginning, the best thing we can do is to establish a differential grade of voting. I am sure that wmost countries ill be greatly disappointed by the proposal for a differential vote. As far as we are concerned, we do not agree with differential voting inside the Organisation, because the rule of a two-thirds majority is a sufficient guarantee that no decision will be taken thaot is of any imprtance against the wishes of any big trading countries. We camt accept a differential vote because of national income or becautse of internaiWonal trade. e ought to establish the principle of equality, the same opportunity, no discrimination all round in this Organisation. Trade must be equal .for everybody The Rules must be discussed and voted -- one vote for each country, no differential system for a Great Power or a small Power. M. MORAN (Cuba): I expressed the opinion of the Cuban Delegation on this subject a few days ago, and I want to add very lWittle now. e feel, like other Dealegations tht have taken the same position, that we would be happier if tihe Organisaton were based on an equal v Wwote footinge enjoy a feaeling of equlity when we do business. We do not want to feel 19. E/PC/T/C.V/PV/8 that because of given circumstances, we are not on the same footing as the other fellow. We want to trade on an. equal basis. As a matter of fact, I would like now to add only that the Cuban Delegation would not feel prepared at this time to vote for any other position than the one which is in the suggested Charter put forward by the United States. MR. DAO (China): The Chinese Delegation has always stood in principle for one Member, one vote. In our opinion, a system of weighted voting may be admissible if it can be established that the obligations assumed by some Members of the Organisation are greater than those of the others, and that there is a common standard which is measurable with some degree of constancy or accuracy, and by which the importance of such Member's contributions to the work of the Organisation could be assessed. However, we have serious doubts about the practicability of the suggestion made by the United Kingdom Delegation, with regard to the system of weighted voting based upon the volume of external trade and/or national income, not only because the suggested criteria are variable year by year, but also because the methods of evaluation and estimation are widely different from one country to another. ~02. 7 F .1 E/PC/T/C.V/PV//8 t impos, ., u ;, i-.}''i ' 7,'* We find thaimpt in the propsed earbe the obligations zosd. uon Members re the samome for all mmbers, whether of much econ-v importance of of less economic imortance. Each ember undertakes to -erform certain specific duties and to fu'i certain obligations. Both in absolute and in relative terms the obligations imposed upon Members are identical. Thereforewe arsin favour of the porposal contained in the draft Charter with regard to the system; of voting, for the reasons stated by previous speakers and for those I have just mentioned. R. VAN T=il; thcrlads):o I am in the unhappy positi n tht I cannot yet express the views of the Netherlands Delegation on this matter. The subject matter is vey complicated and I am afraid the 2etherlands Delegation is still considering the proposals of the United Kingdom Delegate as well as the opinions expressed by the French Delegate in a former meet- ing nd since supported by a number of other Delegations. If you agree, x.Chairman, I myshould like to reserve :rositifoon until a later stage c the discussions. R.p HOLAT (Bium)n(Interretation): Ir. theame of Belgium I should like to associate self with the reservations expressed by the Delegate of the Netherlands. Belgium also beleievoes that the quastin of votingis n eaxtremely complex nd important problem for the future of the Organisation and, as wen havee onlye been iformd sinc yesterdaym of the memorandu of the United ingdom Delegate, the Belgianl Delegation, deeing that this memorandum is of grweat importance, ishes to refer the matter to its Gocverment, and to onnmbvey to its Goveent the opinions and the precedents quoted in the United Kingdom memorandum In any case, the matter does not seem to the Belgian Delegation to be so urgemnt,n since the meoradum itself foresees that it will be submitted to a Drafting Committee for further study, ad therefore the Belgian delegation prefers to express its opinion later when the discussion has progressed further. M. OFAL (Norway): I thinhek rethat at t' pivis meeting I expressed general agreement with the stateyment made b the Delegate of Franfce to the efect E/PC/T/C.V/PV/8 that in the full meeting of our Organisation there should be an equal vote for everybody. I would add that I have no instructions because my Gavernment had before them only the Draft Charter submitted by the United States Delegation, and had no reason to go very fully into it at this stage, but as my personal opinion I would add that, as far as the Executive Board is concerned, I would feel it entirely reasonable - I would almost say imperative - that the great trading Powers should have a special position. In the draft of Article 57 it is said that "a retiring Member shall be eligible for immediate re-election". That must certainly apply to the Governments of the great trading powers. With regard to the majority of the Executive Board, say at least ten of them, I would rather like rotation to be introduced. I just mention this tentatively so as to throw the necessary light upon my attitude with regard to Article 53,. namely that it is in no way my intention to deny the special position of the, great trading countries. MR. LE COULLARD (Canada): I join with the last three or four Delegates who - have spoken in recognising this question as a very complicated one and for that reason I speak necessarily without the detailed study which this question requires. On first impression, Canada would be inclined, I think, to support the proposition put forward by the United Kingdom Delegate, namely, that the principle of weighted voting should apply in the Conference. On that point we differ from the Delegate of Norway in the sense that we should like the representatives of major countries to en oy the strength reflected in their economic powers in the Conference rather than in the Executive Board. While I pause, Mr. Chairman to allow the interpreters time to catch up, I would point out that Canada is a democratic country. We would however reserve until after clarification our view on the proposal that the same principle should be extended to voting in the Executive Board. We are not clear as to what the United Kingdom proposal intends in . .-to -s. cp port of t r lii h . g wes < - ^tte 'nthb f lihtd otin -i te Pe F.3 E/PC/T/-.V/PV/8 ;.. tS C ! / Conference is in agreMnt with the practical application of our view thatn, generally speakiog, ~berhip in the Orgaisation should be cn a wde a basis as pososible and that it should be on a,functi al2basis, bMemasd on fauncteional principles. Once a 1er has sherc to the princeiples of anthe wiCharter of this specialisd agency,d I sh to undeerline the word "speialistd, he voicc o that member in the C-fereno should be eroorial to that member' s functional efficiency, that is to its real iportance, its interest in and contribution towards thee fulfilment of the objbtWvcsof the Organisation. i~recognise of - course the need fore reviewing periodically th formula on which the relative weights wilnl be based, so that accput can be taken - and this point was made bythe Delegate from India - of gradual developments in a county' s econoz.u Almternatively the forsml. igh be based on a running three-year average, beginning with a base period probably i eiatel-e-.wa. MR. UME(Un-ic f South Africa): YoMu looked at me, ir. hairman, as if you eretemd rentosay so:-etIig, lthough 1 ha not intakKended to speoa at this oint. However, it seems to me that there is a certain of thing going omon here,m and se of us ay not be clemar in our own inds in an event. A suggestion was made that in theF nca-e of the Pr and the Bckthe members actually brroughtam in. aayng =onts, and it really seo thaete theh intcrs wr2h countries haeve in iLnortional trade very substantially varies too. It is for us to decide whether that vaying intearest, thc varying amount bought into the welfare of international trade, should be recognised. The suggestion wmas also ade that this Organisatlion shoud be based on democratic principles, and therefore one nation should have one mvote. I ust confess that it seems to me that one rather overdoes this talk about democratic principles. Surely it imois not d-cratic the oroiganisatn will not be democratic - if you are going tnmo have EBoecutive ard with permanent seats? - 23 . Similarly the United Nations Organisation is by no means democratic. We have heard about the veto hero this afternoon, and it vitiates the whole principle of democracy in the Organisation. We simply must recongnise that there is a variation in the responsibility and in leadership. What I'have said does not mean that I reject entirely the American suggestion of one vote per member, nor that I entirely accept the British proposals. It seems to me that the criteria suggested in the United Kingdom proposal can very well be explored further. I would like to wind up by saying that there is no need for us - in fact it would not be wise for us, to come to a final decision today or at this meeting, A great deal of thought will still have to go into this proposal, and it seems to me that is wisdom to suggest that the Drafting Committee should further explore possible criteria that might satisfy everybody, in order to incorporate into the Charter this concept of a varying interest in world trade and in world prosperity. THE CHAIRMAN: We have heard from most of the Delegates their views on this matter of voting in the Conference, and of course incidental to that there have been expressions of view also with reference to permanent membership of the Executive Board. However, in regard to the latter, that will be the next item on the agenda and I think we shall have to have more discussion. Meanwhile, it seems to me that a useful course of action might be this: that we shoid ask those members of the Committee who have indicated that they are favourable to some kind of weighted system of voting, or who have at least indicated that they are not very much opposed to it or are uncertain regarding it, should constitute themselves as a small sub-committee to prepare an alternative draft provision to that which is in the. Charter as proposed by the United States. I should explain that suggestion a little further. It seems apparent from the discussions we have had this afternoon that if a poll were taken of this Committee the majority would favour this system of one country one vote in the Conference. It is equally clear that - 24 - E/PC/T/C. V/PV/8 F.5 E/DC/T/C.V/PV/8 not all- rnembers of the Committee agree to that. As has been mentioned by the Delegate of South Africa, it is not necessary at this meeting of the Preparatory Committee, to resolve this matter. There will be an interim drafting committee which will as I understand it, be expected to draft alternative provision for further consideration next spring, whenever we encounter cases where there is a real division of opinion in a Committee with reference to a provision in the Charter. - 25 G.1. E/PC/T/C .V/PV/8. It would seem to me that this is a case where that situation will apply. I would take it that so far as the majority of this Committee is concerned the provision, as it stands in the American draft Charter, is satisfactory. Let us have the alternative draft as proposed by the minority, and let both of those positions go into the record and be available to the Drafting Interim/Committee for its work between now and the second meeting of the Preparatory Committee. Would that suggestion meet with the approval of this Committee? MR PARANAGUA (Brazil): I would like to know if we are here to decide something in principle or not. I would like to know if really the majority of the Committee is for the amendment or against the amendment , because that would be a clear indication of the feeling of this Committee, because we are here to do something. Later we can have a report, and the Committee will decide what course to take; THE CHAIRMAN: I can say, in reply to the Brazilian Delegate, that the summary record of this meeting this afternoon will clearly indicate what the majority view of this Committee is. It is already apparent from the individual remarks made by the different members. I see no particular point in going through the formality of having a show of hands about the matter, but of course if the Committee feels that we should take a formal vote on it, I am in the hands of the Committee and we will proceed to do so. MR PARANAGUA (Brazil): Otherwise people would not be sure what is the opinion of this Committee. MR BURY (Australia): I would suggest that this is much too early a stage to have decisions in-black and white, "Yes" or "No", and that we should - . record the views and hand them on to the Drafting Committee. It will be obvious, as you suggest, Mr Chairman, what the feeling of the Committee is; but that should not overbear subsequent proposals coming from other bI N ' t - ;0-S: .shod o adrto-thaD. that re tw delegtes whio G.2. E C/T/C .~PV~8.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ . /PTc.V *./W ../ ; g have saIhat they have not yet received instructions from their governments ion thisn matter, and I think it would be better if an pportuity were given t hem to obtain those instructions ard t have their positions indiat'd in the.record. P;LMiGUaazl): Does -that men that there will be abstention by' those Deleggates if it is to be "Yes" or "No?. E CMOomML-N:T would. presuably abstain frcr voti if a formal vote were taken today. R HOTE (IUnited Kingdom): HrrChirman, 1 wa hoping to have an opportunity at some stage (not necessarily now) to reply to one or two of the points which have been made by certain delegates here in criticism of our proposal. I would therefore feel that perhaps for the reasonqs you have given, we have not uite athought this thing out as far s we should yet. a3 k !N: osition, formal or otherwise, taken by this Committee today can be nothing more than a tentative or a provisional one. Obviously, anything with reference to this Charter is open to later considertion. This is a ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ pnt arcosoain. Thsi prelimin=yConference. It seems to me, th1ceore, that there is little to be gained by treating a matter like this, on which there is a difference of opinion, as if today were the last opportunity to deal with the matter. believe that it is viser to obtain the views of the Committee as fully and as freely, as they care to express them, let that go into the record, and let the mtter rest. PZZIMT einterprs-stion 2r Chairan, would like to make a proposal which would be submitted to the opinion of the Committee. My point of view is not different on the question of voting in the Conference, a. point of view which I have already had the honour of exprssing to the Committee; but perhaps we might reach a compromise solution which would consist in maintaining Article 53 as now drafted in the =eican proposals. Secondly, in admitting permanent members to the Executive Council, I do not. tlnk it is necessary to express any further arguments on thcsubject, as they have already been expressed by other Dele'ie. Thirdly, in order to give a certain guarantee, which I think must be recognised as necessary, we can study 27. the particular point of the Charter where a vote of two-thirds majority would be required. Actually, as far as Chapter 7, entitled "Organization" is concerned, the Charter foresees that a certain number of decisions would have to be taken by the Conference, and perhaps it might be opportune to look at those cases again, and to decide which of these would have to be subjected to a majority of two-thirds when they come to be discussed by the Conference. I think that we might be able to give satisfaction to everyone, since we would maintain the principle of the single vote in the Conference. We would recognise the permanent interests of some States and would entrust to them the matter of directing the policy, or at least the execution of the Organisation by having permanent members in Article 57. Again, one would offer certain elements of guarantee by specifying the voting of two-thirds majority on questions which seemed to be most important. THE CHAIRMAN : The Chair had suggested a moment ago that it might be advisable to have those countries which were inclined to favour the weighted system of voting attempt to agree on some concrete proposal, to be considered as an alternative submitted by a minority of the Committee I am not sure whether, in the light of the subsequent discussion, that is an idea that should be adhered to. An alternative would be, to let this matter of voting in the Conference rest, as it were, for a while, while we proceed to a discussion of the membership of the Executive Board voting, and if any member wishes to come back to this matter of voting in the Conference, or if it appears in the light of four further discussion of the Executive Board that a certain course of action should be taken with reference to the matter of how to submit this question of voting in the Conference to the plenary session and to the Interim Drafting Committee, we can do that at a later stage. I am in the hands of the Committee, and I would be glad to proceed from this point in.any way that you see fit. It seems to me that it might be well to proceed now to a consideration of Article 57. Already there has been some discussion on Article 57 by way of anticipation growing out of the E/PC/T/C.V/PV/8. C .3. discussion on voting in the Conference. What is the pleasure of the Committee: shall we proceed with Article 57? OFTEDAL (Norway): Mr Chairman, the purpose of all our work here is to obtain as unanimous results as possible. We are faced with two different proposals in regard to the voting in the Conference, and I think it is very wise, as you suggested, that those who constitute spokesman of the alternative solution should come together and see whether they can dig further into that idea, nid then, at a later stage, we can see whether we can perhaps convince them that our viewpoint is the better one. I think there is nothing to be gained by simply shelving theUnited Kingdom proposal. It has to be very very Carefully and fully considered by those who feel that they like it. Therefore, I think that your suggestion should be acted upon. But that does not prevent us from immediately passing on to a discussion of Article 57. PARANAGUA (Brazil): Mr Chairman, I think the United Kingdom proposal must have full consideration, but, in view of the discussion today, I propose that in the record it should be mentioned that the Delegations of such-and-such country were against the proposal and- such-and-such Delegations abstained from -giving their opinion on the matter. In that way we would be able to see the position absolutely clearly in the record. 29.. q4 E/PC/T/C.V/PV/8 MR BURY (Australia): I cannot accept the view of the Brazilian delegate at all in this matter. He seeks a clear-cut decision ; he wants it clearly defined at this point and something which can be deduced from the records. The atmosphere of this gathering in our opinion should be that of an ex- change of views on the freest possible basis; and if at various stages votes are to be taken, or anything recorded in a strictly formal way as to how various delegates voted or that they said in relation to a specific item in that form of Yes or No, then that is quite inappropriate. MR HOUTMAN (Belgium) (interpretation): I should like to support the remarks Made by the delegate of Australia. As far as Belgium is concerned, we have a considerable interest in all these questions regarding organisation, since Belgium is an important commercial power, and if we are forced to abstain at the moment - and we excuse ourselves for that - it is because we learnt rather late the position taken by the United Kingdom and the arguments presented by that delegation. We are desirous, however, of clarifying our position, and to express our opinion as soon as possible. We would be extremely glad if the Committee would kindly allow us the necessary time in order to form this opinion and to get contact with our Government in order to express this opinion, while justifying it. MR Le COULLARD (Canada): Mr Chairman, I should like to join the last two speakers in my opposition to the Brazilian suggestion, but for a different reason. The U.K. proposal is that weighted voting should apply in the Conference and in the Executive Board. We have not yet discussed in detail voting in the Executive Board, and for that reason we could not align the delegates here to-day into two camps pro and con. I would suggest that we go on with Article 58, voting in the Executive Board, because of the interdependence of the two Articles 53 and 58; and it may be that the opinions of the various delegations might change when the attitude of other countries is known on Article 58. THE CHAIRMAN: I thought that some other delegate had requested the floor, but apparently he has changed his mind. I will repeat my proposal. I u ,. * 0 Tit has found some s? ori; 1W=k a Xuppt f it hcs not found majority upport; E/PC/T/C.V/PV/8. I shall certainly change it. My proposal is that we go forward with the discussion of Articles 57 and 58 and second, that a sub-committee be .5 .n .5 constituted consisting of uthose contries whiecph have xresseda more or less farurable inclination towards weighted voting. They would be re- quested to prepare something concrete for the later consideration of this Co=,tdee ana f the intdearimn -rfmminirEcoree fongllowir this Conference. If there is no overwhelobming jection to that course of action, I would like to proceed on that basis. RANAGUA R P Brazil): migIt rappd h'- thwata ..=r ihgavnme, orEuestion about permanent seats referred to in the coursfe o o r u discussion of other Articles,d an that will be reserved. CHAIRMAN: IMam zurei;h tI,js : t-aodt ursfuli pstpor :. :ur.- t of your re- rk. ZA ; a ) ecauseother A.articles e connected .with .Arcle 5 of the original American proposal. That means that if we find something - and I do not want to imply that we are accepting the British amendment- THE CHAIRMAN: If I understand the purport of your remarks, it is that the position taken with reference to permanent membership of the Board will necessarily have a bearing on this question we have discussed this afternoon with regard to the system of voting in the Conference. I think that is generally recognized; and since we cannot talk about everything at once, we have talked chiefly about the Conference up to the present. Now my proposal is that we talk a little less about the Conference and a little more about the Executive Board. It would be understood, of course, that there is a connection between the two. We have already heard the views of some delegates with reference to this matter of permanement membership of the Executive Board. I do not believe, however, that we have had a very full polling of the views of this Committe on that question, and I submit that it would be appropriate and timely at this point to develop the views of the Committee further with respect to the matter of permanent seats on the Executive Board. MR QURESHI (India): Mr Chairman, may I suggest for the consideration of the Chair, 31 W/PC/T/C. V/PV/8 that we might disperse for ten minutes for tea before taking on this important question? MR NAUDE (South Africa): I support that. THE CHAIRMAN: It has been suggested that we take ten minutes out for tea; I think the suggestion is a good one for that and other reasons. We will re-assemble at ten minutes past five. (After a short interval) THE CHAIRMAN: The 15 minutes for tea have turned out to be a little more than half an hour. It is now 5.25, and the interval seems to have had a deterrent effect on some of the members, who are not back yet. I am sure there will be very little time for a continuation of this discussion this afternoon, as I think it will be necessary for me to stop in about 20 minutes, unless the Committee very much wants to go forward now that it has had tea. I hope to adjourn the meeting at about a quarter to six. That does not leave very in much time. However,/any time that remains it is possible that we might complete the comments on the Executive Board in the matter of permanent votes, so that so much will be on the record for further consideration. So many members have already expressed views on that subject that there may not be very much more to be said - but that may be an over-sanguine statement. I suggest therefore that we should not take up the discussion on Article 57. MR. LAURENCE (New Zealand): A drafting point in connection with Article 57: in drafting that paragraph it does not appear to have been taken into account that; under the provise to paragraph 3of .Article 78 - it may be claimed here that that paragraph has not been considered, but I am noting the point- the number of members who bring the Charter into force may be under 15. It would not therefore be possible to give effect to paragraph 1 of Article 57 if the membership, under the proviso, were under 15. MR. HOLMES (United Kingdom).: That seems to me to be a perfectly sound point, I imagine it could be dealt with by a.very small drafting amendment saying, ~~~~~ 32 J.2. E /PC/T/C.V/PV./8 ,, '"Ora shll consist of mem1e5 brs or such smeallr number mas ay correspond dt the number, if less, of countriesa Aeegccg to bring teho nstruments into force in accoradnecw ith Aritcel 7(83.)" i. L. H. E.- BURY (Australia): On the subject of permazect memoeos for the Executive Board, which I did not touch on previously, our preliminary reaction is that it should hardly be necessary to provide that the main trading nations have permanent seats on the Board, because we cannot envisage that they would not be automatically re-clected. If the Conference lacked the wisdom to elect the main trading nations to the Executive Board, its future would be extremely bleak. I take it, though, that we are also considering Article 57 now in addition? THE CHAIRMAN: Article 57 is what we are considering. MR. BURY (Australia): In relationship to the numbers of members of the Executive Board, in the opinion of our Delegation 15 is insufficient, on the assumption that nearly all members at least of the United Nations And perhaps even others might become members. Our preliminary view is that the figure should be nearer 20. We also think that in electing members to the Executive Board due consideration should be given to adequate geographical representantions MR. QURESHI (India): I find myself in entire agreement with the views expressed by the Delegate of Australia. We feel that the number 15 is too small. If my memory does not fail me, I think in the former proposals the number could go to 18. I think 20 would be a very fair number and I should like. to emphasise also that due consideration be given to the geographical areas represeted by the various members of the Conference. 33 E/PC/T/C. V/PV. /8, J. 2 K.1. E/PC/T/C .V/PV/8. This should form a specific clause of the Charter,. so that these countries receive adequate treatment. MR COUILLARD (Canada): If I might carry on for a moment the trend of thought which is apparent at the moment, I am not sure whether this proposed addition would enter into Article 57 or Article 59. I rather think it would enter either in subparagraph 4 of Article 57 or be a new subparagraph. We have observed that there is what we consider one rather serious omission in the Draft Charter, in that there is no provision for attendance of non-members of the Board who are members of the I.T.O. when matters of particular concern to them are discussed. Therefore, we intend to suggest the inclusion of a paragraph something on the following lines:- "Any member of the Organization who is not a member of the Executive Board shall be invited to send a representative to any meeting of the Board called to discuss a matter of particular and substantially concern to that member. Such representative shall, for the purpose of such discussions, have all the rights of Board. members, except the right to vote". That paragraph is intended to avoid some of the ambiguity that has arisen over the interpretation of Article 31 of the United Nations Charter, for example, which left the extent of the privileges of non-members sitting in at the Security Council in some doubt, with the result that their participation has been restricted and the value of their attendance very often limited. MR OFTEDAL (Norway): Mr Chairman, I generally adhere to the viewpoint of the Australian Delegate, but I should like tomake one remark: I do not very much like the proposal that a retiring member shall be eligible for immediate re-election, because I think that a reasonable rotation is necessary.. That touches also on the question of the number of the Executive Board. If we have only 15, or even 18, and if we get, say, 45 or 50 members of the Organisation, it is most important that we have a reasonable rotation. That also will secure a reasonable geographical distribution. On the other hand, as I said earlier today, it is obvious that the leading commercial powers must always be members of the Executive Board. Therefore, although I do not make any formal proposal, I would 34. K.2. E/PC/T/C.V/PV/8. favour something of the kind 'that the Executive Board shall consist of 15 members of the Organisation elected by the Conference; five of whom shall be eligible for immediate re-election", thereby excluding the other ten from immediate re-election. In practice, obviously, that would mean that the leading commercia powers would be assured of a permanent seat. THE CHAIRMAN: I take it that you have in mind chiefly the question of ratio; that is, if it should be 20 instead of-15, you would prefer some ratio? MR OFTEDAL (Norway): No, I would not go higher than 5 members for permanent seats. However, that is only one way of solving the problem; there may be many others which are perhaps better. MR QURESHI (India): Sir, I am afraid the suggestion made by m y colleague the Delegate from Normay requires some clarification, because, as a matter of fact, it introduces certain elements which are open to question. Either we must agree to the principle of having certain permanent seats, and those should be equitably and fairly distributed, both in regard to the importance of the commercial powers and the geographical representation; :^ if the question of permanent seats is not acceptable, then I think it would be very objectionable if we said that only five seats were to be re-elected and asked other people that they should not stand for re-election; or we could make some reservation that it should be the important commercial powers which will be re-elected at each election. This, I am afraid, will introduce a very undesirable element into our Organisation. Either we should definitely recognise the principal e of permanent representation of the important powers, both aa regards their trade and as regards their geographical, position (and in that case we will have to have an adequate number as permanent members,. as in various other organisations), or it should be free election, and then there should be no reservation as to who should be re-elected. MR HOUTMAN (Belgium)(interpretation): Mr .Chairman, I believe that, as far as the Executive Board is concerned, we night perhaps follow the same solution as the one which we adopted as far as the Secretariat personnel 35. K.3. are concerned, Here, we have acted on the following basis: We have said that one must always take into account the activities and also geographical representation. I believe that here also, as far as the Executive Board is concerned, we might very well follow the same basis by taking the commercial activities and on the: other hand, to a certain degree, geographical representation, and we might adopt a solution analogous to the one we have adopted as far as Secretariat personnel are concerned. Such a solution conforms entirely with the United Nations Charter. MR PALTHEY (France)(intepret-ation): I should like to suggest the establishment of a permanent headquarters of permamenent mbers, and for the rest of the Executive Board I entirely agree with the gNorwgiang Deleate's parsoose, and I think there shoueld bcrotation, as rapid as possible rota,ti on,so that all countries might be able to bmeermbers of the uxevetreBoard in as shorat ^m ineas possible. Z UIRSHIh (India) If you w""l excuse me sugg.-tingC t t gaai, if anyW rotation is to be introduced, it rneasnt hat those ouyntries which did not havea .chance in the earlier election ofob aitinng a seat, would get in. If we have nya reservation in our minds that the important powers should alwaysg et in, the principle of rotation seems entirely unacceptable. Suppsoing some ipmortant countries came in, those would have to vacate their seats and some less important cuontreiswo uld have to opme in. I would like my Norwegian colleague to throw somelig ht on how he suggests it. R OFTEDAP (Norway): IT answer to my I-dian colleaguet I would say that I have not a very clear idea as to what is the best solution, but I thought I had made myself perfectly clear. I know perfectly well what I am aiming at. I am aiming:at rotation, and I am aiming at making the great commercial powers permanent members of the Executive Board Those are the two things we should achieve. I do not really mind how it is drafted. I do not think that I can agree with the Indian Delegate when he says he dislikes the idea of reserving permanent seats for the main commercial powers. I would mention for the sake of illustration, that when the 36. E/PC/T/C.V/PV/8. E/PC/T/C. V/PV/8. Charter of the United Nations was in draft, I said to my government that I disliked the way in which the Economic and Social Council was set up, because the main economic powers have not, got permanent seats. We take it for granted that they will always be members of the Economic and Social Council, and it has turned out in practice to be so. I would like to be very sincere in such things, and I think it ought to have been stated that these great powers should be members of the Economic and Social Council . In the same way, I think we can perfectly well pass a ruling according to which the main commercial powers of the world be would be permanent members of the Executive Board. MR PARANAGUA (Brazil): It seems to me, to a certain extent, that we are prejudging this question about permanent seats. The whole question of permanent seats -- we are not deciding about that. We are having a discussion on the basis of the American Charter without discussing the British proposal at this moment; otherwise we are prejudging this question. MR HOLMES (United Kingdom): Mr Chairman, I feel some sympathy with the Brazilian Delegate' s last remarks. I think it rather shows that, as we suggested ourselves, there is a certain interdependence between the two questions of permanent seats and voting. If members would look again at the beginning of the United Kingdom memorandum, it will be seen that it says: "The United Kingdom Delegation feels that the question of weight to be given to the views of each member of the Organisation is one to which close attention must be directed". We pointed out at the beginning that there were two ways in which weight could be given to the views of the members; and my own suggestion would be, if it meets with the approval of yourself, Mr Chairman, and of the members of the Committee, that we should regard this discussion both on voting and I think on permanent seats as adjourned for the moment, partly because two Delegations have not yet had an opportunity of expressing their governments' views, and partly because, as has been represented rather forcibly this afternoon, the United Kingdom proposal may not have been available in time for Delegates to give their very full attention to it. I had, as I mentioned, one or two points, for instance, which (preferably I think on a later occasion) I would still like to make on this question of 37. K.5. PCn E/eIrC/T/Cd. V/PnV/8. y tn ained1 on he accusations vrhic-harebee d~rocd ginst rmy counry of being undemocratic. I would just like to say this, that so far from beikng unehjmdocratic, the essential thinlng ben our proposal was really a hdemocratic one, because I canctth.han that it is really democratic tlathere should ebe onee voted, fanor instance, to th Unitd Kingom d all the various manaoother countries asscizeave Ilc y 'wic have a very ffeutive Xtcwhifl ine natters idth -;-nih rganisati on is conerned. L. fs. 38. E/PC/T/C.V/PV/8 Now that in itself is really proof I think that we have to regard these things on a functional basis, and that the sort of general principle that may be applicable to a political matter of the highest importance as onshrined perhaps in one part of the United Nations Organization arrange- ments may not be applicable to everything. I do not wish to make any great point about the United Naticns Organization; and our proposal, of course, was on entirely different lines. But surely we should consider this particular specialized agency from one point of view, perhaps. We should consider this from every point of view and do whatever is appropriate. It would not be appropriate, we think, that the United Kingdom and the whole of the Colonial Empire should have only one vote. We feel that some recognition would have to be given to that, and that in many ways the suggestion that we have outlined is the best way of recognizing that fact in the context of the international trade organization which we are attempt- ing to set up. We feel that it would be far from democratic that there should be one vote given to this particular member and its associates. So that,M Cha iomanr myproposal would be, if you agreed and1if he Cor- nittee argeed,t hat we should regard this discussion as adjourned, perhasp until a later occasion, when members have ha- a better opportunity of cnosicerin gthis modest proposa lthat we have put in, of which, of course, Idci; ,v esome wraning at the meeting last week; and until toher dele- agtions Ioh have no instructions at the momnet have been -ale to fomrulate their views and )prhsap soem of th d ieeagtions which have already spoken with so mehorror - I think rather unecessaxy horror - at those views, may h v efurther tiem to think aobut tie.m I just wanted to add that I htink it was the Chilean delegate hwo exprsesed soem indignation that this haa been, as it were, sprun g upon the Committee nad that this was not in the document on which his caceptnace of the invitation to attend had been based. eWll, we, to,o in the Unite dKingdom might sya that there were certain things in the United States Charter which come as a slight surprise to us, but we ar enevertheless hre and very ,gdadto be here, because this is a oplaing of ideas in what we hocp will be the interests of everybody. L.1 E/PC/T/C. V/PV/8 MR PARANAGUA (Brazil): Mr Chairman, I am sorry to come back again to this question, but the British delegate has raised the point again. There is no indignation on my part about this question. I am the first to re- cognize the economic importance an the commercial importance of the British Empire, as is everybody else; but if the American Government can put forward a proposal like this, being such a great economic and commer- cial power, why cannot other countries accept that too? I would like an explanation about that. THE CHAIRMAN: Now, Gentlemen, as far as concerns the suggestion of the United Kingdom, that we should adjourn further discussion of this matter of the Conference and the Executive Board to some later date, I believe that time itself hss taken care of that for this afternoon. I do not believe that we can continue our deliberations any longer to-day. It is new ten minutes to six, and the question would simply be whether we should, if not at the next meeting, at least at some meeting later this week, resume discussion of this whole matter. We have not comleted the discussion of Article 57; we have not got to Article 58; and I think that we should endeavour, as soon as we can usefully do so, to complete this discussion of everything bearing upon the Conference, voting in the Conference, and the constitution of the Executive Board, and whether or not there might be permanent membership on the Executive Board. I do not think that we have realIy completed our discussion, but it is perfectly apparent, of course, that the larger number of meters of this Committee are inclined, as far as the Conference is concerned, to favour a system of one country one vote; the record is clear anough upon that; but we ought to follow through and complete the whole record including this matter of the Executive Board; and I think also that there should, be an opportunity for the delegates from the two countries who have not taken_ up a position puon teh mattera nd who have asked for instructions to -Terfoe T. exprssTh thfeir vIisugge" upon it. s-eore, : t that at a later time, -jc - metnlumei,datcuer this w7heeek, wex cures isession t Eetive Bord, ^ perhapss by at time we will have the views of the 'othr two E/PC/G/C.V/PV/8 members and we will make the record as complete as possible on this sub- ject. I would suggest, then, that for the moment we drop the matter of the Executive Board and the Conference and that at the beginning of our next meeting we should take up the report of the General Committee which was set up a few days ago and consider their recommendations. I under- stand from the Secretary of this Committee that this could be ready even for a meeting tomorrow if we could arrange a meeting of this Committee, and then, after we have disposed of them, we could proceed, if we were not ready to resume discussion of the Executive Board, to take up Article 1, Purposes, and Article 50, Functions; so that I believe we would have plenty of grist for our mill. I am hopeful that we can go shead with a meeting tomorrow. I will ask the Secretary if he thinks that is possible . COMMITTEE SECRETARY: Mr Chaiman, all I can say is that if the Committee instructs me to arrange a meetinh for tomorrow I have no doubt it will be so arranged. I have been unable to get the exact programme for to- morrow, but members will note in to-day' s Journal there is tentatively scheduled :n zetinr- in the morning of Committee II and of the drafting sub-committee of Committee IV, and in the afternoon their is tentatively schedule a meeting of Committee I. We could meet perrhaps tomarrow after- noon. MR COLBAN (Norway): Could not we meet at 11. o'clock tomarrow morning? COMMITTEE SECRETARY : We could, but it would look rather conspicucus because all other Committees are meeting at 10.30. MR COLBAN (Norway): My only worry about tomorrow afternoon is that the meeting would probably so on rather late, and I have, as have perhaps some other members, to go to the U.S.S.R. Reception. It is their great day, November 7th. THE CHAIRMAN: As for as the Chairman is concerned, the morning is perfectly all right. Is there serious objection to our meeting even at 10.30, and would the Norwegian delegate be opposed to our meeting at that time? MR COLBAN (Norway): No, not a bit. 1.4 L. 4 E/PC/T/C/V/PV/8 THE CHAIRMAN: Would 10.30 be agreeable to the Committee We might then take up, as I say, the report of the sub-committee. MR PARANAGUA (Brazil): I think there will be no time to have the answer from the two members who are consulting their Governments. THE CHAIRMAN: That would not be taken up; that would be deferred. MR HOUTMAN (Belgium) (interpretation): Would that be 10.30 tomorrow morning? COMMITTEE SECRETARY: Yes. MR HOLMES (UK): Might I ask one question. It is this. Are we to regard Article 65, which is a function of the Committee on Business Practices, as appropriately falling to this Committee or to Committee III, which deals particularly with restrictive business practices? If I am right in thinking that the Chairrnan of Committee III is not anxious to take that as part of the work of that Committee, I would like guidance, because I would like to know whether it would be appropriate that we should submit on Comminttee V the paper, or part of the paper, which the United Kingdom has already ventured,. in all humility, to put before Committee III. THE CHAIRMAN.: The thought that I had in mind with regard to these portions of the functions of the various Commissions was that they would be considered by this Committee in conjunction with the other Committee concerned that in the case of the Commission on business Practices we would have to review this matter in linison with Committe III, and that there might well bea small joint sub-committee set up to correlate carefully what hdd been done in Committee III with that part of our pro - posed draft here which had to do with the Organization, so as to make: sure that everything will be properly synchronized. MR HOLMES (UK): I think it is only a matter of your ruling whether or not Committee V is the dominant parter in the combination. M fols. 42

GATT Library

fp565wj5431

Verbatim Report of the Eleventh Meeting of Committee II : Held in The Convocation Hall Church House, Westminster on Wednesday, 20 November 1946 at 3 p.m

United Nations Economic and Social Council, November 20, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

20/11/1946

official documents

E/PC/T/C.II/PV/11 and E/PC/T/C.II/PV/10-11(A)

https://exhibits.stanford.edu/gatt/catalog/fp565wj5431

fp565wj5431_90220014.xml

GATT_157

A.1. E/PC/T/C.II/PV/11 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatin Report of the ELEVENTH MEETING of COMMITTEE II held in The Convocation Hall Church House, Westminster on Wednesday, 20th November, 1946 Chairman: Dr. H.C.COOMBS (Australia) (From the shorthand notes of W.B. GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminster, S.W.1.) -1 - A.2 E/PC/T/C.II/PV/11 THE CHAIRMAN (Dr. Coombs): Before we commence our work on Article 10, members will recall that yesterday a question was raised as to whether the wording of paragraph 5 of Article 9 had been appro- priately amended to accord with the changes which had been made by the Sub-Committee on Procedures, Tariffs and Preferences. That matter has been looked into by the Secretariat, and con- sultations have taken place with the Sub-Committee on Procedures, or with its Rapporteur, and I am advised that the wording of paragraph 5 has been amended to accord with the decisions of the Sub-Committee on Procedures, so we can adopt that without any further changes. We pass now to Article 10 - Freedom of Transit. Unless any delegate indicates that he wishes to comment or submit suggestions, I will take it that the Article under discussion is approved. Is there any comment on Article 10? I take it, then, that that section of the Report dealing with Article 10 is approved. Certain comments regarding paragraph 6 of Article 10 have been submitted by me in writing to the Secretariat, and will be distributed in a moment, so the fact that no objections have been raised verbally is not indicative of the fact that we have no objections. In view of the form tnat the Report takes, and the fact that the views of other delegates are recorded in the Report, am I interpreting the wishes of the Committee correctly, in view of our decision yesterday, in saying that the comments submitted by the Australian delegation on Article 10, together with the comments submitted in writing by any other delegation on particular Articles, would be incorporated along with the views of other delegations in the Report and be forwarded in accord- ance with our decision yesterday to the Drafting Committee? Anything else on Article 10? Article 10 is adopted. We now come to Article 11. The delegate of the Netherlands. A.3. E/PC/T/C.II/PV/11 MR. VAN KLEFFENS (Netherlands): With reference to Article 25, para- graplh 3 as now revised, we would like to invite the Drafting Committee to see whether, on that account, it would not be as well to add to paragraph 1 of Article 11 the words "including margins corresponding with subsidies granted in accordance with, or pursuant to Article 25 paragraph 3 of this Charter". THE CHAIRMAN: Would you repeat that slowly so that delegates can write it down if they wish? These words would be an addition to paragraph 1? MR. VAN KLEFFENS (Netherlands): Yes, at the end of paragraph 1. (The Netherlands delegate then re-read his proposed addition, and it was re- peated, word for word, by the Chairman so that delegates could take it down." And the same applies, of course, to paragraph 2. THE CHAIRMAN: You wish to add the same words to paragraph 2? MR. VAN KLEFFENS (Netherlands): Yes, but, owing to the drafting, they will be slightly different, though the meaning is the same. It could read: "subsidies granted in accordance with or pur- suant to Article 2 paragraph 3 of this Charter". THE CHAIRMAN: I take it that it will be recorded that it is the view of the Netherlands delegation that the words read out by Mr. Van Kleffens - "including margins corresponding with subsidies granted in accordance with, or pursuant to article 25 paragraph 3 of this Charter" - should be added to paragraph 1, and that corresponding words should be added to paragraph 2. Does any other delegation wish to associate itself with the addition of those words? If not, I will ask the Secretariat to add those to the records so that they will be taken into account by the Drafting Committee. Is there any other comment? The delegate for France. (Note: The apparatus broke down here and the English interpreter had some difficulty in hearing the opening words of the French delegate, so the following interpretation may not be complete.) - 3 - A.4. E/PC/T/C.II/PV/11 M. ROUX (France) (Interpretation): In a cases where subsidies might be granted by one country, those are being considered as legitimate ones under the Charter. Would it, in a case like that, be possible to offset them by measures provided for in Article 11, that is, by countervailing duties? This questions was asked in the, Technical Sub-Committee and the representative of the United States answered in the affirmative. Even if the subsidy is a legitimate one, the country concerned may offset it by countervailing duties. Perhaps it was against this idea that Australia was protesting in suggesting the amendent which is to be found in 2 (d). MR. VAN KLEFFENS (Netherlands): May I say a word in regard to what the French delegate has just said? Our suggestion is made only in connection with specific arrangements on commo- dity agreements, not as a general clause, but only insofar as there has been rigid specific agreement on a specific case. THE CHAIRMAN: Are there any further comments on this Article? The delegate of Brazil. MR. RODRIGUES (Brazil): Our approval of the draft report of the Technical Sub-Committee does not been that we have abandoned our views which are reported here. We give our approval but we maintain our reserve. THE CHAIRMAN: That is quite clear. Is there any further comment on Article 11? If not, I take it that the report of the Technical Sub-Committee on the subject mattter of Article 11 is adopted. MR. LAURENCE (New Zealand): With regard to paragraph 1 of Article 11, and New Zealand's attitude, heading (b) in that para- graph would not be acceptance to New Zealand as, in the absence of a domestic price, the power of assessment rests with the Minister of Customs. We work on an assessed domestic value in that case, we always have done so, and we are putting - 4 - A.5. E/PC/T/C.II/PV/11 in a note to the Secretariat to that effect - to add a new sub-paragraph elucidating our position. With regard to paragraph 2, we also have a case where our law provices that dumping or countervailing duties may be applied in respect of special concessions - railway shipping freights subsidy, special bounty rebate, or otherwise allowed, taken or granted having a prejudicial or injurious effect. We consider that same reference in the Report seems desirable respecting shipping or freight concessions which, according to the opening paragraph of C 2 48 would be dealt with by another Conference. That statement was made, but we would prefer some reference to it, and so we are putting in this note. THE CHAIRMAN: The points raised by the delegate of New zealand will be rocorded and passed on with the rest of the Report to the Drafting Committee. I take it that that stop would commend itself to the Committee? Then subject to the comments and additions that have been made in respect of Article 11, the report on this section of the draft Charter is adopted. Are there any comments on Article 12? MR. EORTON (Australia): There appear to be a number of words left out of the present draft paragraph 2(c) of the Chapter at "until the eliminiation of dual or multiple". The original text said: "rates of exchange either one or more than one rate for each dual or multiple rate currency may be so fixed". I think the typist got caught up with herself in the process. THE CHAIRMAN: The point has been noted and the correction will be made in due course. Are there any further comments on Article 12? May I take it that report covering this section of the subject matter is adopted? Adopted. Article 13.- Customs Formalities. Is there any comment on Article 13? MR. RHYDDERCH (U.K.): With regard to paragraph 3(c), it was mentioned at the last meeting that the expression "Australia and United Kingdom: Delete the second sentence" was not quite correct. - 5 - A.6. E/PC/T/C.II/PV/11 It was agreed by everybody, except the United States, that that second sentence should be deleted. I think the point has already been raised by the delegate for New Zealand. THE CHAIRMAN: Is there any other point arising on this Article? Then it is adopted. We pass now to Article 14 - Marks of Origin. MR. MORTON (Australia): Sub-paragraph (a) of Paragraph 3 mentions that Australia, New Zealand, South Africa and others considered that the various customs authorities ought not to be required to submit to that might be serious inconvenience in order to make up for the failure of exporters to comply with regu- lations already well known to them. That was supported by the vast majority of those members present, and that fact ought to be recorded. MR. LAURENCE (New Zealand): With regard to paragraph 3, our view was not quite so much of the serious inconvenience - although that was mentioned - but that it was more the case that in the United States position marking is permitted subsequent to importation, whereas Australia, New Zealand, South Africa and some other countries subscribe to the view that marks should be applied prior to importation. In connection with that, under paragraph 6, we also took it that several delegates expressed the view that failure to fix required marks of origin before importation, being either wilful or negligent disregard of existing laws, might well continue to be the subject of some penalty. Those two are really wrapped up one with the other - paragraph 3 giving permission for marking at the time of importation and paragraph 6 providing that penalties should not be imposed in certain cases - whereas, in many cases, the laws of countries may demand penalties at present if goods are imported without any required marking. THE CHAIRMAN: It has been suggested that the record needs to be ammended in regard to the note (a) to paragraph 3. It reads at present: "Australia, New Zealand and South Africa and others:" recorded certain views. Is it your view that, to be an - 6 - A.7. E/PC/T/C.II/PV/11 accurate record of the proceedings, it should read: "Australia, New Zealand, South Africa and the majority of other delegates? MR. LAURENCE (New Zealand): It was .-xc on the statement "serious inconvenience". It was certainly discussed in the light of what the American delegate said about the position obtaining in the U.S.A, but I think some of us were vrc concerned with our actual law. B follows - 7 - 3.1. E/PC/T/C.II/P.V./11. THE CHAIRMAN: What change would you wish us to make in the record as it stands? MR LAWRENCE (New Zealand): We are putting a statement in on it. THE CHAIRMAN: Thank you. Would you wish any change to be made in the record? MR MORTON (Australia): Only "the majority of other Delegates". THE CHAIRMAN: The Delegate for Australia has suggested that there should be added to paragraph 3 (a) the words "the majority of other Delegates" after "and", deleting the word "others". Is there any comment on this proposed amendment? Then I take it that that amendment is agreed? (Agreed). May I take it that, subject to that amendment and notes to be submitted by the Delegate of New Zealand and other Delegates affecting this article, the Report as submitted is adopted? MR LAWRENCE (New Zealand): There is one other point, and that is on the additional remarks on pages 25 and 26 as to geographical or other marks of origin. Our views were that certain Delegations pointed out that Article 14 was not intended to cover the protection of registered trade marks or marks of origin, and we took the view that the Charter was not the place in which to deal with the matter of regional marks of origin, which could more properly be the subject of negotiation between individual countries. THE CHAIRMAN: That view has not been recorded here. MR RHYDDERCH (United Kingdom): In looking at the preamble on Article 14 on page23, it says "that the complicated subject of exemptions from the requirements should be recommended for study by the ITO and that the particular interest of certain countries in protecting the regional or geographical marking of their distinctive products should also be considered by the Organisation". I think that meets the point of the Delegate from New Zealand. THE CHAIRMAN: Does that meet your point, the Delegate for New Zealand? MR LAWRENCE (New Zealand): I do not know that it altogether covers the view that I took from the discussions that several countries were against this matter coming into the Article; but I think if we submit our statement that that will adequately cover the point in any case. THE CHAIRMAN: Thank you. Then Article 15: "Publication and administration of Trade Regulations". Is there any comment on that Article? Then I take it that the report 8. B.2. E/PC/T/C.II/PV/11. covering Article 15 is adopted? (Agreed.) Then Article 16: "Information, Statistics and Trade Terminology". Is there any comment on Article 16? Then I take it that the report covering article 16 is adopted, as presented? (Agreed). Article 17: "Boycotts". MR TUNG (China): Mr Chairman, on page 32, the comment under paragraph (d) I wish to be withdrawn. THE CHAIRMAN: The Delegate of China wishes to withdraw the comment under paragraph (d) on page 32. The comment under (a) is withdrawn. MR DIMECHKIE (Lebanon): The objection I put is not put in the right way. I asked for the deletion of that Article. THE CHAIRMAN: I sugest that we might add to note (e), in which the view of the Delegate of Lebanon is expressed, something to the effect that "and therefore the Article should be deleted". MR DIMECHKIE (Lebanon): No -- what I wanted to say was that this Article is not within the competence of this Conference. There are not any such things as boycotts in the abstract for commercial reasons. When a boycott is carried out by a Government, it is for political reasons, and once it is for political reasons it is no more within the competence of this Conference. THE CHAIRMAN: How should we record your view? MR DIMECHKIE (Lebanon): In this way, that boycotts are not usually carried out for economic reasons. If a country does boycott any other country, it does it for political reasons, and therefore this does not fall within the competence of this Conference. THE CHAIRMAN: The views of the Delegate for Lebanon, as stated, will be recorded, and the Report amended accordingly. MR SIM (Canada): I understood that the Delegate from the Lebanon wished to withdraw the comment. THE CHAIRMAN: The Delegate for Lebanon was not suggesting that he wished to withdraw that comment, but that he wanted it recorded accurately. MR DIMECHKIE (Lebanon): No - I wished to change it. I want it to be made clear B.3. E/PC/T/C.II/PV/11. that we are asking for the deletion of that article. THE CHAIRMAN: The record will be amended accordingly. Is there anything else on this Article? Then Article 32: "General Exceptions to Chapter IV". MR OFTEDAL (Norway): On page 33 it says: "This amendment was generally accepted, subject to later review of its precise wording". I just want to know whether this is the time to do any precise wording, or should that be left out? THE CHAIRMAN: It should be left. Are there any other comments on Article 32? If the Delegate for Norway wishes to submit a proposal in relation to wording, then the best thing to do would be to hand it into the Secretariat and it will be passed on to the Drafting Committee. Is there anything else on this Article? Then I take it that the Report covering this section is adopted? (Agreed.) There are certain concluding remarks which refer not to a particular request but to a number of requests. Is there any comment on that paragraph on page 36? If not, I take it that that part of the report is adopted also? (Agreed). MR VIDELA (Chile): I would like to thank the Committee and particularly the Chairman and say that the work of the Technical Sub-Committee has been approved and that we are always at your disposal. THE CHAIRMAN: Thank you. This report has now been adopted, and it remains only for us to thank the Technical Sub-Committee, its Chairman and its various Rapporteurs and the Secretariat for the very valuable work which they have done. It is quite clear that the material with which they have had to labour has been difficult and complex, and I think we should be grateful to them for the progress that they have been able to achieve. MR VIDELA (Chile) Thank you. THE CHAIRMAN: Before we adjourn this meeting, a message has now been received from the Joint Committee on Industrial Development. The message reads as follows: "In the light of recommendations regarding industrial and general economic development which the Joint Committee is making to the Preparatory Committee, the Joint Committee requests Committee II to make a provision in Article 18 of the chapter dealings with commercial policy, so that the 10. B.4. E/PC/T/C.II/PV/11. Organisation and other members should, when considering the contribution which a Member can make to a reduction in tariffs, take into account the height of the tariff of that Member and the need, if any, of that Member to use protective measures in order to promote industrial and general economic development. The Joint Committee also requests that in Article 20 a provision should be made to cover the position of a Member who, as a result of its plans for industrial development or reconstruction, anticipates that its accruing international monetary resources will be inadequate to finance the needed imports of goods, for example capital goods for the carrying out of such plans unless it imposes regulations restricting the import of certain classes of goods, for example consumer goods". As members are probably aware, the fact that the Joint Committee would probably send us a message of this sort has been known to us for some time, and I have taken the liberty of informing the Drafting Sub-Committee dealing with Tariffs and Procedures and also the Drafting Sub-Committee dealing with Quantitative Restrictions to take these two messages into account provisionally in their work, so that if and when we did receive the message officially, it would be relatively easy to meet the wishes of the Joint Committee on Industrial Development, without seriously impairing their previous work. That, I understand, has been done, or is in process of being done, by the two Drafting Sub-Committees concerned; but I think, to put this matter in order, it is necessary, now that we have officially two received the message, to refer the/parts of that message to the two Drafting Sub-Committees who are working on the subject matters concerned, and to request them to take this message into account in their work and to report back to the full Committee on the action which they have taken to give effect to this request. I would be grateful, therefore, if the Committee would agree that we should refer paragraph 1 of this message, which deals with the suggested provision so that the Organisation and other Members should, when considering the contribution which a Member can make to a reduction in tariffs, take certain things into account; that this paragraph should be referred to the Drafting Sub-Committee dealing with Tariffs and 11. D.5. E/PC/T/C.II/PV/11. Procedures, with a request that they report back to the full Committee on the action that they have taken to give effect to the request of the Joint Committee. Is that agreed? MR NEHRU (India): I merely wish to know whether the method of determining the height of a tariff has been suggested. It seems to me that, unless the method is defined and agreed upon, the phrase is quite meaningless. The height of a tariff must be determined with reference to a large number of factors. THE CHAIRMAN: Those are matters which would properly be dealt with by our Drafting Sub-Committee, and if you wish I will ask the Secretariat to draw their attention to the particular point that you have raised. Can I take it that this reference to the Drafting Committee on Tariffs and Procedures is approved? (Agreed). Regarding the second paragraph of the message, I shall be glad if the Committee will approve that that paragraph should be referred to the Drafting Sub-Committee dealing with Quantitative Restrictions with a request that they report back to this Committee on the action that they have taken to give effect to the request. Is that agreed? (Agreed) Thank you. MR KUNOSI (Czechoslovakia): Mr Chairman, I wanted to ask you if you could tell me which measures you intend to take, that the Committee should be able to discuss very soon and very quickly the reports that we have not had yet. I have the following point in mind: We have got now, very probably unofficially, the report of the Drafting Committee on Procedures. This is very important, and very probably it is a document that will have to be discussed for quite a long time and adopted at this meeting. Now I am informed that this Drafting Committee, having produced this report, still is about to have long discussions on specific points about which, more or less, you all know that they are not able to agree. My suggestion is that, in view of the very short time we have at our disposal, and in view of the importance of this subject, you should take the necessary steps for the draft to now be taken out of the hands of this Drafting Committee and be put at the disposal of this Committee for it to discuss as soon as possible. C.fs. 12. C.1 E/PC/T/C.II/PV/11 THE CHAIRMAN: To be quite clear, is your suggestion merely that the Draft Report should be circulated for the consideration of members or that we should then wait for the Drafting Committee to approve its Report, or that we should bring the Draft Report for consideration by the full Committee without further consideration by the Drafting sub- Committee? MR KUNOSI (Czechoslovakia): That is my suggestion, Sir. THE CHAIRMAN: It is the second proposal that you wish to be carried into effect? MR KUNOSI (Czechoslovakia): Yes. THE CHAIRMAN: Do Delegates understand the proposal that has just been put forward by the Delegate of Czechoslovakia, and would anybody like to comment on it here? I would have liked to have the Chairman of the Drafting Sub-Committee here when a proposition of this sort was put forward. It is obviously a matter of some importance to know precisely how far the work of the Drafting Sub-Committee has gone. Mr Speeken- brink does not appear to be here. I do not know whether he is in the building. (After a pause): I am told he is engaged in a meeting at present. I will ask Mr Speekenbrink and Mr Hawkins to come down. MR KUNOSI (Czechoslovakia): May I explain a bit more in the meantime my suggestion? THE CHAIRMAN: I think perhaps it might be as well for you to wait for Mr Speekenbrink, for him to understand your reasons for putting forward your proposal. MR VIDELA (Chile): While we are awaiting the arrival of the Chairman of the Procedures Sub-Committee, may I mention another matter? This morning we were discussing in the Procedures Sub-Committee a recommendation to whave a truce in regard to tariffs, and I suggested that we should also make a similar recommmendation in connection with quantitative restric- tions, but the Sub-Committee on Producers could not advance in this matter because that matter is outside its scope, and therefore I was advised to raise this point here in the main Committee. THE CHAIRMAN: I think it would be competent to raise that matter here, but I think it should be, if it is to be dealt with at all, dealt with in the 13. E/PC/T/C.II/PV/11 first instance by the, Drafting Committee dealing with quantitative restrictions. However, I take it that you would wish to make the suggestion to the Committee that there be a truce pending the com- pletion of the Charter to the establishment of new quantitative res- trictions. It would appear to me to be reasonable to suggest that the Drafting Committee on Quantitative Restrictions should be asked to give consideration to that proposal. MR VIDELA (Chile): I made a reservation to that effect this morning, and I may add that if the Quantitative Restrictions Sub-Committee or the main Committee should make a similar recommendation I will withdraw my reservation. THE CHAIRMAN: Is it agreed, then, that we shoud ask the Sub-Committee dealing with quantitative restrictions to/give consideration to the proposal put forward by the Chilean Delegate for a truce to quantitative restrictions? An expression of approval of that, of course, does not commit you either to approval or disapproval of the proposal itself, but merely to a request that it should be considered by the Sub-Committee in the first place. MR NEHRU (India): Mr Chairman, I presume that the word "truce" suggests that only such quantitative restrictions and other measures which are used as instruments of warfare would be covered by this proposal, not for develop- ment and other purposes? THE CHAIRMAN: I think we will have to leave that. I think the meaning of the word, as I understand the Delegate of Chile, was that no new quanti- tative restrictions should be applied between this date and the date on which the Charter will come into operation. However, as I say, we are seeking the views of Delegates here, not on the proposal itself, but morely on the request of the Chilean Delegate that the mater be considered by the appropriate Sub-Committee, and that would appear to me to be a reasonable request. I take it that that is agreed? (Agreed.) (At this point Mr Speekenbrink (Netherlands) and Mr Hawkins (USA) joined the Committee.) THE CHAIRMAN: Mr Speekenbrink, I thought perhaps it would be as well that you should be here. The Czechoslovak Delegate has suggested that in view 14. C.3 E/PC/T/C.II/PV/11 of the shortness of the time ahead of us and of the very important matters which are covered by the Draft Report on Tariffs and Procedures, it would be advisable, at this stage, to bring the Report back in its present draft form for consideration by the full Committee rather than proceed, as we had previously intended, to a consideration of that Draft Report to the stage of finality by the Drafting Committee itself, and then to bring that completed Report before the full Committee. I thought it would be of assistance to Delegates if, as Chairman of the Drafting Committee on Procedures and Tariffs, you could report in general terms to the Committee on the present stage of your work. MR SPEEKENBRINK (Netherlands):Mr Chairman, at this moment we are discuss- ing our Memorandum of Prodedures in regard to tariff negotiations, and, as decided at the Heads of Delegations Meeting and also announced in the Journal, several Delegations have sent members of their Delegations to our meeting, and although they are tjere in the capacity more or less of observers at this moment, they are putting questions, and we try to explain the Memorandum to them, simply with a view to facilitate the further proceedings of this Committee. If we were now to adopt the suggestion that we should stop in the other room and come here, because I understand that every Delegation has get a copy of our Memorandum on Procedures and is in possession at the moment of the facts, then the question is whether Delegations can spare certain people to follow our discussions while Committee II is still sitting now, dealing with the other parts of the Report it has to discuss; but I am otherwise afraid that it might retard the finishing of the work of Committee II. THE CHAIRMAN: I think explain the Czechoslovak Delegate wished to explain the reasons for putting forward his proposal in particular detail. MR KUNOSI (Czechoslovakia): Mr Chairman, I would not like to be misunder- stood. My reason is - and I have seen the document - that this Report is a very important and quite a large Report. Now this document - and I am sure Mr Specenbrink will agree with me - has been prepared by a very limited number of Delegates in the Drafting Committee. I have seen the draft; we have only get one copy, and consequently only one 15. E/PC/T/C.II/PV/11 person can look at it at one time, but, as I say, I have seen that, as I s.y, I have soon that quite a few matters on which thetydraft, and thoro are rzll;- ...tteru on which verry e to take part in probably thosc Dolc-'.tos hio ha1vo not hn..a vn- t in Now thatthcdiscussions would d iinvu ouitc :: lot o things to 3at is very:rt of Ou work is porhpo on of hy. i-iost ii:niortant; it ur work., definitely thomost prcsinZ nd the; ..iost ur>,ont p)art ofSoanoeations will havo to lvY, or at least somno muibors o I feel itDclc.~ationill ka.vo to lesavz, andiiiis is thc reason w;h rt which would boextrocm iri,,ortant that tlhosc P!-rts of this Re ttee, soarc available should bo ut at t'ac disi.osal of this Couai y largethat the Coriittco uld then procecd t exrAincths very larg todaydocument and ,t to thlc cnd of it. Ewn if -ou soy as rom etings, itthat some Dclo#cations arcr ablo to senl oscrvorz to your ations butis quitccldarlha they arc not thoLrc as ciembers of Delegat' forwardmcclyas observdrs and thoreforu th.y arc not able to put for hed moreitheir views as full cr.ors. No;- I fccl that you havc fin to recoen-or loss the draft, that you arc,olishinr it, and arc tryng assist in certain opposing vi,-us, aLnd .oy foolin is that it Xdoul' t so far asp the speeing up of our work if you couL-' p;rvsont thc docu as do notyou have finished it for t1e consideration of this Com.mLittoc. remainingimat what stale our w.orkis no., but if you fccJ3 that the rem part of thlw:r consists more or loss of further efforts to attain a reconciliation of vim-7this work porhps would be Laucmorc ueflly doncin the full Comiittoc tin your Sub-Co-mmitt, becase I think tghat wOshalla rget the Rcort, at last those Deleratons who az not emors eeof your Draftin,; Comr.ittco ar those Dclcgaios aneyhow it is a ReDrt that wiill hleto bc flly discussed in this e information to some of ourfnorComittcoevcn i you wanted to ,ivion to sowc; of our n. So thatmembers of what the d, ffererit chr-otcrs of' this draft that I should like to ask you, H Chairi.eeto consider myW uggestion exclusively from this point of vic, that vrcnsider the docume.ntas in mind thea voy important docum.n, thna at thc s.:; timeu wc boadl tho fact that many Dlegations have-not had a;ny,rtunity of taking ry muchpart in the work of tc raftig,; b-COmmittcV, which I very 16. C.5 E/PCT/C.Il/Pv/11 regret, and that consequently it would be best if we could conscouontly it w;oul' bc bcst ifI ;zc could start the .discussion on this tra^ft as soion .cS .oss ( 51cr-. sort ixit~rv. the CzechoslovakcTh; ClL;Id._N: I fool tll.t th, -int rc.iz. think we are allDclc3,rtc isconsidura.blu .i y;ortancu, and I l cggestion. Irroel hat thurc ivory r .d .rit in his st.on. It should urn nowbcQxnx.Lincd vcrw carefully. lhe 7rco I sus, :cst :c we may be ablec.nc.ssc. .blc ct a.quater to 5, a.nC by that tia.ic ,Ic to makcser.c roircss. (The ritectina, rosCe at 4.17 p (2*cliourneC till 4.1 -. 17. D.1. The Committee resumed at 4.45 p.m.u,.-ed rt 4.45 2. n lemen, during the adjournment we have gone into thetTE'CELITJ2!J: e:.idjeuro.iont we ha-vc gone inter the as agreedsquestion rnisecd by thc ..elogatc, and it was -Zrood with the Chairman of thcDraIting Coi:z.uittc offs and the presentProcedures that there vas a r dJ. danger tharosont mmitteeorate ef progress, .:;attors dight oeiuo bcforc the fu timeaft. they had corqotcd their labeurs with inadcquatW ti for this Co,.:,itt to Cve consideration to important questions ver, feltwdich would be eiabodiol.in those reports. It was,hoa that it would be unwise to brinethe reports in their draft ince itforibefore the Coi~uzdittee i4 that could be avoided, apmade pears likely that fairly substantial changes will be acd in those drafts - in fact, arcin process of being i..acthe present tiia. It has been suggested, thureftre, that wC attc.t to omight verce-iedifficulty - anc I uderstand that this uidhtbe an acceptmable arrangu.-en by setting a dead line for the cozi ariffs andpletion of the work of $: i Draoftirng Coi.z.ittcc and Procedures sufficiently early to enable adequate consideration to be given to their reports here. The work e the Sub- Coiittee on Tariffs and Proccuus will bc' itwo parts. The ect matter offirst will be a rc4,crt on thc soctiLn oX the sub of ethe dret .Articles which were rcfucx-rvd to it; tnd will ff and otherbe a i-iu~LoranduL.i of' proccdurc related to ther of thenegotiations to be cundutud a.t thQ Second Session procedure2eparatory-Cornaittee. nxt yca. The of procedure is under discussion in the Sub-Co;ite tis afternoon, and I ny rate,a.advised that it will be cuL plcod thi afternoon - at any the Sub-ComnArttechave been instructed so to coa.,lete itt, will be dqplicatod tonight and circulatedall delegations to- ered to themorrow, The draft report on the subject ieattor rcc to the Sub-Corzaittoohas now ben prepared by the Rapiportcur, d a ifformationncertain nui-ibur of 0o4ies Lave bcen distributed for t. 18. FPC/T/C. li1 D. 2. E/PC/T/C.II/PV/11I/rzT/'l , of dlgatoder that they should be able to study the s. In or-could. bc able to stuc:y thc have now been made toabldrot rc,,ort aClcquzn.tcly, aricang bccn ::.aa to rgeincrease the 'nuabur of cu,)ics of that Clraft, an a cumentnur--bo bc avaiable carly thio :evbLinL. That Clcuci theis nuiibreod BC/T/C.II/57,anv will bc available in th eur(s Doculionts Scction at 7. 0 this evening That .por tingdraft ill b cnsitaurcd t.:e.orraw .orn by the Draf ompletreSub-Co:A.>ittcc, with a. direction thct they shoL nded, willthir ;ork by i.il-dcay te..orro'. The Rc,)ort, as Committeethen be CistributeJ, anlh it is >rocscd that this imes of theshould :..c:t on -riJiaycan at such oth.r ti_;cs ts fully.day as are necessary to c.nsiicr thcsc two documeny. on Friday.It will 1)robobly bQ necessary to) have threc scssic -I co.-o.wri this ang-cnt to "elozates. It is recc niscahat it is not entirely satisfactory, but I believe that ances.it is thobest that is jbracticle in the circuaista e of l-ill'this amrrangec.ent be acel)tablc to the Lce Czechosloe^aki /1.,"UNOSI (Czechoslovokia): Yc -rw aii.Ln. r delegates? Thank you.trTH CIM:i2iN: it acc-tAablc to other &'Oes?ou. nd, unlessIn the circu-istnces, the .±eeting is adjournucds the nextyou arcnotifiec to t1he contr-ary in the Journal LieCting will bo on Fridlay . The i.ig ruse t 5.2 p.m. 19.

GATT Library

zp290rm8293

Verbatim Report of the Eleventh Meeting of Committee V : Held in Hoare Memorial Hall, Church House, Westminster on Saturday, 9 November 1946 at 10.30 a.m

United Nations Economic and Social Council, November 9, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

09/11/1946

official documents

E/PC/T/C.V/PV/11 and E/PC/T/C.V/PV/9-12

https://exhibits.stanford.edu/gatt/catalog/zp290rm8293

zp290rm8293_90230017.xml

GATT_157

E/PC/T/C.V/PV/11. UNITED NATIONS ECONOMIC AND SOCLL COUNCIL PREPARTORY COMMITEE of the INTERNATIONAL CONFERENCE ON TRADE AND. EMPLOYMENT Verbatial Report of the ELEVENTH MEETING of COMMITEE V held in Hoare Memorial Hall, Church House, Westminster on Saturday, 9th November,1946 at 10.30 a.m. CHAIRMAN: Mr. bynn R. EDMINISTER (USA) (From the shorthand notes of W.B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Wes tminster, S. W. 1. ) E/PC/T/C.V/11 THE CHAIRMAN: We continue this morning, the discussion of .Article 76, and we will resume our discussion of paragraph 2. I would remind the Committee that the point at issue, where we adjourned yesterday, was whether disputes arising out of -rulings of the Conference on matters other than those specified should be submitted to the International Court of Justice only with the consent of the Conference, or whether they might be submitted without such consent. The present United States text which provides for Conference consent in such cases has been supported by the Delegate of Brazil, and, subject possibly to some slight modification, by the Delegate of India, who, together with the United States Delegate, feel that the ITO should assume full responsibility for dealing with disputes of a commercial nature. 2. B. 1. E/PC/T/C.V/PV/11 The delegates of the Netherlands, Belgium, Cube and Australia, on the other hand, have argued that the right of appeal to the Court should not be restricted by making. the Conference's consent . condition prece- dent. Do any other delegates wish to comment on this point? MR QURESHI (India): Mr Chairman, may I suggest that we revert to the silumataneous interpretation if the system. is now working. I think it would save time. THE CHAIRMAN: If' it is agreeable to the French-speaking, delegates, :we will use the phones. I leave it to them. MR. PALTHEY (France) (interpretation): I would prefor the successive inter- pretations system, Mr Chairman, at this meeting, if you have no objec- tion. (The Delegate of Chile also indicated his desire for the successive interpretation system. to be used) THE CHAlRMAN: Certainly. I now call upon, the delegate of South Africa. MR. ERASMUS (South Africa): Mr Chairman, in the light of yesterday's dis- cussion and trying to-give the -matter some thouht, because it is rather a difficult matter, if I understand this Airticle perfectly correctly, it seems to me that if a dispute arises it first has to be considered by the Committee who will make an advisory report; then after that, if no satisfactory solution is arrived at, it is referred' to the Executive Council and after that to the Conference. If the party to the dispute is still not satisfied with the decision the matter, it seems to me will be of great importance to that particular party and might also be of international importance; so that I feel the issue here is this, that we must try - and in this I agree with the United States delegate - to, keep the prestige of the Conference as high as possible; but I do not think that we should bar a member merely through a decision of the Conference from appearling. As I say, it is a difficult matter, and the point is I t hnk.at tw mue nsrt ty to-dfin a middle road by not. tha point is I ,hink. f-nd,.. .. i..' . ' g a person let;eyi' r ng pero-froem appea- and,en tp other hand, not - Fkanging too jety. -E I am Just puting this forward as ao w¢ - 3, B.2 E/ . 3~~11~/PC/T/C V/IPV/il su;ctcgn Thi midght -o fowafarag tomm he Dr.-tin Cotte, but we mi't shetworike out tlmds f"if the Conerence andcontents," cthen, oafter the wrds, "the.dispute.to the International Court of Justice" iensert, "aftr the lapse hof six monts' notice to the Conference. Smuch notice ay, hwoweveawr, be ithdrn wpithin this ermyiod." Now reasone dmefr the4amnCt is this, that iaf such a poty is not satisfied ith the of-ciesiono - 1h c C.,ereneehe may appeal` but we mput a tiMe limit uo. it, wiatghout drgi g it out, because ign the li-t of future eevel cr, w-rhethingas - anh^cchged thmere Migh haive eene tim for reflection and. the pamrghty it again submit to tne decision of the Conference. I agree it is quite ga b lgitarument ether, but it might be omef so use. On the othander h,m ghit it prevent the Innterational Coourt f, Justicoe fermg bin overloaded witappha .els too rapidly. Thank yMou, ar Chirman. ThMenC, r haairmn, there is another alter- native suggestion I coualed hv made. The one I have already made is thee timm liiet idna, ad. thee othr one is this. Instead of striking uhet tl"':d s "if the Conference consents " we might add, "if the Conferencoe cnsents by one-third vote of the membeprs resent and vngoti," or "one-thirdo. vte of thoe Cnference': so that there are two aternaVeiv-ggsu:stions. But, as I say, I have not made up rndmir ab.t iabtol f.tely finally, and. it is just a suggestion. . P-RANAGUaUA (Brazil)M: r aChirman, the case here is not about the whole of apCehtrV I; it ions lay bout the sub-a-aprgraphs dealing with national safety and that is very poimrtant.I think that the text as we have it here is better than the eadmenmnpt ropeosd, 'bauecse it is not a question of secondary importance; it is the most impoanrtt question. bSpu-agraprahs (c), (d), (da) nd (k) are questions of national safety, and I thkin the text wea hve here in A'rticle 76 is preferable. I cannot supporth te propossal of the SouthAfF rican delegate. TB HAIRCMAN:I ishould. say to the Deegl;tef omr Brazil that I do not believe that the issue whiche we ar discussing turns on thospe sgubp-ararahs he has mntionCd (c), (ed), (c or (k) of Article 32a or ppoagran 2 of '4- E/PC/T/C.V/PV/11 Article 49, but rather has to de with the latter part of the sentence of paragraph 2 of Article 76, which says: "Any justiciable issue arising: cut of a ruling of the Conference with respect to the interpretation of :sub-paragraphs (c), (d), (e) or (k)" and so on; and then " and any justiciable issue arising out of any other ruling of the Conference may, if the Conference consents, be submitted by any Part to the dis- pute to the International court of Justice." Now it is my Understand ing; that that is the part that our discussion, is focussing on at the moment, and that the suggestions of the South African delegate have reference to that and not to sub-paragraphs (c), (d), (e) -or (k) . 5 ~~~~~~~~~~~5 ~ ~ ~~~~~~~~~~ . Mr ERIK COLBN (Norway): Mr CHAIRMAN in principle always in. favour of as open an access to the Court as possible, and I cannot see that there would be- any serious danger in allowing-.: any .justiciable issue arising &co. to go the Court even . without the consent of the. Conference. It is said that we the :on .r nc woulde not have commercie hjaldisputs taken out of 'tands of the. Conference; but the commercial dispute as such would not be taken out of the hands of the Conference, but only legal points; and the-headnCof Article 67 says "Interpretation and Settle- ment of Legal Questions", I think that should be a sufficient safegurd; but if an additional safeguard should be wanted I think the suggestion ade by the delegate of South Africa, especially hiis second alternative, s very interesting, Then, f the Conferenchie does not by a two-t1ds majority refuse, it shold be admissible to send it to the Court, Mr LAURENCME (Neiw Zealand.): . r Charman, there are two points in tIhisi matter to which thnk insufficient attention has been giv.,en in the discussio One is that the issues in question are Descriibed as justiciahble ssues, Tahe oter aspect is tht the issues or he dispute arises out of rulings of the Confer ence,- Now, if the consenti of the Conference s to be required before. a ruling of the Conference tcan nbrre taken beforehe Ie- national Court,gi I do not think It ves an aggrieved party all the rights to which he should have access. I think that if a paraty feels aggrieved nd is not prepared to accept the ruling of the Conference on a justiciable issldue, that party shou have the right of recourse to an independent.tribunal skilled in the particular aspect which is in question. Fears have been expressed that the International Court is going to be over-burdened' I queistion hether that 1 the case.- There are practical points which exercise restraint. One is the time which would be taken in having the case heard by the International Court, The other is the expense involved. I think tuhose two thuings wtld be ver - 6 . C-2 E/PC/T/C.V/PV/ll good safeguards against trivial issues being; taken to the Inter- nationl Court. Do from our point of view we .would feel very much happier if the words "If the Conference consents" were deleted from this clause, particularly on the points that they are Justlciable issues that are involved and. they are rulings of the Court that are involved. THE CHAIRMAN: It seems to the Chair that the delegate from South Africa stated the issue very clearly on the. one hand.. There have been those who feel that some check upon the right of apeal in such cases to the Court of justice shouId. be Provided in order to make the International Trade Conference as autonomous as possible and to uphold its prestige in the field of commer- cial disputes; and the original draft had attempted. to supply that check by inserting the words "if the Conference consents", On the other hand, some delegates feel that there is no serious danger that the right of appeal ;would be resorted to to an excessive degree and capriciously, and that possibly you could. just omit the words "if the Conference consents" and interpose no obstacles. Possibly there is some compromise between those two that could be worked out perhaps along the lines suggested by the delegate from South Africa. That is certainly not for the Chair to say; but it is very clear that we have here a problem which should. besubmitted to a Subcommittee to be con- sidered further and worked upon, Mr DAO (China): Mr Chairman, I have listened with great interest to the arguments both pro and con in this respect. The anxiety felt by the delegate for the Netherlands and others as we the right of a Member to appeal aginst the decission of the Conference seems apparent. However, if we read this paragraph 2 in conjunction with paragraph 3, we should imagine that the Conference wilI not, pass judgment so lightly. on any justiciable issue .without seeking an advisory opinion of the Court first; and we should. also think that the Conference may. lay down .certain procedure for handling the cases of dispute; so that we . ~~~~~7 feel that It may be desirable to delete the words. If the Con- ference consents". There might be some sort of phrase such as "in accordange with the procedures laid down by the Conference", which would take take of aIl the suggestions made with regard' to the period or with regard to the ways in which the dispute can be brought to the International Court of Justice. Mr :BURY (Australia) Mr Chairman I should 'like, on further, con- sidering this matter to support the remarks made by the delegate of New Zealand. on the grounds that all issues whicch go to the Court would be justiciable issues; that presumably no country Would take a case to the international Court of Justice unless it was something on which they felt, very strongly. And I would Iike to make a further: point, that although, of course, we must be concerned not to load the international Court o f Justice with trivial cases, the International Court of Justice must ex-st for nths woerld and not vll these other thins be designed Court wor ldbe ,esiifieiS6S h~ Deug-n ontry to fit into the International Court of justices THE CHAIRMAN: If there is no further discussion on paragraph 2, it will be submitted for further consideration to a Subcommitee Which I shall appoint at the end of our discussion this, month-'- We pass next taso raphagr 3. 8 D. 1. In that connection, I understand. that the Legal Officer of the Secretariat desires to suggest an amendment. MR RENAUF (Legal Officer of the Secretariat): In connection -with this para- graph of article 76, there are two points which I would like to bring to the attention of the Committee. The first is that the wording of this paragraph is similar to the wording of paragraph 2 of Article 96 of the United Nations Charter. In that respect I would like to point out that there has been some legal debate in United. Nations circles about what is the exact meaning of paragraph 2 of Article 96. That paragraph reads: "Other organs of the United Nations and specialized agencies, which may at any time be so authorized, by the General assembly , may alsc request advisory opinions of the Court on legal questions arising within the scope of their activities'. The question which has been debated is whether a.specialised agency must, every time it wishes to submit. a question to the Court, go to the General Assembly and on each occasion ask the General Assembly for permission, or whether the General Assembly can give a specialised agency a general authority to go at any time to the Court for an advisory opinion. The second point, which is connected. with that point, is that the Economic and Social Council, at its last Session, took a decision to the effect that a similar clause regarding advisory opinions would be inserted in all the agreements bringing the specialised agencies into relationship with the United. Nations. That clause was designed to remedy this defect in Article 96 (2) of the United Nations Charter, and the effect of that decision was to incorporate. in all agreements a similar clause to that in the Agreement with the I.L.O. Different clauses had been inserted in each agreement with the specialised agencies, and the Economic and Social Council thought that it had better lay down a uniform practice, a uniform clause, .to be inserted, in each agreement. The relevant part of the I.L.O. Agreement reads: "The General Assembly authorises. the I.L.O,. to request advisory opinions of the International Court.' of Justice on legal questions arising within the scope of its activities other '-, .; . , , , E/PC/T/C.V./PV/11. D.2. E/PC/T/C.V/PV/11.. ;. than questioncvs cogernin lmutua relationships". I think that clause in, . the magremeent ust also be bornmine in d when we are considering this paragraph. Therefore, gtakin into account that legal question arising from the Unitedo Natins Charter and the causce whih is now being inserted in all the agreements with.specialised agencies, I have drafted a. redraft which you will now find in front of you. That redrafdt reas: "The Organisation may, upong bein authorized to do so by the GlenAera .ssembly of the United Nations, request from ther Intenational Coourt f Justice advisory opinions on any legal questirionngswi asi thin thpe scoe of its activities". I would point out there that I thinkI and hope that that redraft removes the ldoubt.egal h"T "'he Oupirganion, ,.-on being authorised to do so" -- to do what? -- tmo request fro the Court advisory opinions on any legal Iquestions. q think it is uite clear thagt that wougld ive the Oranisation a generaatl authonrity rherad tha an and h authority from time to time. The second pint is drthat this re-ft is wvder than the United.- State draft, w-ich merely say. that the Ormganisation My refer questions concerning the inteofrpretation this wheCehartrer r ras the daft I have place in front of you providsesy for opiniadvioor ons n any legal rqueng withinstions aisi 1ni ;;i . .the scope of .ts activities. The reason I broadened it is that Artiolse °62) of the- Urntle Natisn harter is in accordance with the redraft. 2 CMrRO (aUnted Kingdom): lix- rman, I m not quite sure that I quite appreciate ;hat this doiscussion is about. D I understand that the object of bthe sugggestions made y the Leal Advisor is to secure, or make provision for the Organisation.A to secure, from the ssembly of the United Nations a general. authority to obtain opinions from the International Court on any withoul ereal questions, 1!ferrinsg in individual casezfor authority mto the General ,ssebby? Is the difficulty that we are trying to read into : the relevant rticle of the United Nltions Charter the idea that a speciaised. agencyrn, suchl as the Ignteationa Tradee gnOranisation is esied to become, should be able to obtain. once and for all from the General Assembly of the 0. D.3. E/PC/T/C.V/PV/ll. United Nations authority to go to the Intenational Court whenever it wishes to have an andvisory opinion of the Court on legal questions arising within the scope of its activities? If that is the point -- if we are to get something which covers an interpretation of that sort, then I must say that I do not think that this text which has just been circulated meets the point t at all. It could, no doubt, be amended to do so, but in its present form it seems to me to leave the matter open to considerable doubt. The words "upon be aing auehoriscd to do so' qualify the words advisory opinions olng anquy eal estions"'. I should be very xaeful for a clorification of tihe issue. ENA , F(Legal Officer of the eSceacrtiat): I mrus apogglo s to the Committee if I did notm ake myself clear. Mr Ho lmes is correct in that the puropse of this redraft is to enable the International Trdea Organisa- tion to obtain from the GeenrlaA ssembly a g enearl authority which will enable it at any time a lgel aquestion arises within the scpeo of its activities, tog o direct to the Court wtio ut havign ot have recourse each time to the GeneralA sesmbly. s to the wording-of the text, I ha1e only put. it forward as a Working basis. I had thought that it covered the point I made, but if the Committee considers that it does not, I am perfectly wrilling to hear any text which may express my thoughts better. 11 & 12. E1. ..-. -N.' . 1aGG (US): I wonder whe thernowe cloul d th; dcearp t 'is- diffkiigculty by tan, the United States chlauseh, withte autorisa - i, *e, . ..,t , . i a tion of the gGerera l Asembly, and saying; "'with the &neralor mslypecial authorisation of the Genral senby R. BeURY g(ust ralia): o Irrespective of exprsasnk ny-rew, I waner whether that eets hth poiZit conening questions relating to the interpretation eof the Charter on any legal qustions. R. RLZG US): In I rAeprly to the Delegate of 1,usalia I was only suggesting Uusing that clause in the nited States text. I was not discussing. the second question. Tz J-:i: hair odoes not desire tO cut of debate or dis- cussion on this, but it seems to me that we agre really debatin a drafting itter- e seem tao be agreed thit e want this paragraph sho &rfted tat1 i will be possible for, the aInTrI ternation3sl Organisation to refer legal questions to the Court of orJustice fa an advisory opinion without having to clear eweach thim ith te GAnermblal aseiL If we are agreed on that, it seems to me it i:s not necessary to prolong, our discussion as to how it should be done, tiit isa draftgin& mtter. MR.lROLMES H K(U): I merely want tmao ke a generaal ppeal that in any drdraftinog f this insumetrntw, e at any rate shall set a good emxaple d try to have it in simpLa words which wvil avoid aAn imaiguity. I I must say that as a layman the; wording of the relevant Article in t the United States Charter seems to me to be quite nonsensical, aImost o bviously capable of half a dozen different interpretations. - If we are right in the interpretation to be given to Article 96, that it ;-ans a particular thing, as expressed by the Legal Adviser, then of course we have got something to start-with. If there is no doubt about that, then I should not think there is any difficulty in drafting it. The layman's non-legal language is precisely what is wanted. What we have,. both in the Charter of the United Nations - ' . 13. E.2 E/PC/T/C.V/PV/11 and this Draft Charter of our own Organisation, is a sort of pseudc- legal language which gives rise to doubts almost in every word. MR. PARANAGUA (Brazil): I agree with the United Kingdom Delegates but I must point out that the French text is perfctly clear. Once more we can see that the diplomatic language is absolutely clear. It is the English text that is not clear. Everybody who can understand French knows what the French text means. THE CHAIRMAN: I suggest that we submit Article 3 to a Drafting Committee, along with these other legal matters that we have dis- cussed,. and with the admonition to the Committee, perhaps, to eliminate all nonsense, if any, in it, and make it say what we want it to say. We pass next to paragraph 4. MR. HOUTMAN (Helgium- Lexemburg) (Intarpretation,: In the same spirit of clarity and for the sake of clarity, I wish to correct the present wording of paragraph 4. .At it now stands, paragraph 4- reads: "The Director-General or his representative may appear before the Court on behalf of the Organisation in, connection with any proceedings before that Court." In reality, it is not only useful that the Director-General be empowered to go there as a witness or to give all the required explanations, but also that he should be in a position to re-represent the ITO before the Court when the case arises. That is the reason why I should. like the text of paragraph to read: "The Director-Greral or his representative may represent the I.TO before the Court in connection with any proceeding before that Court." THE CHAIRMAN: Is, there any further discussion on paragraph 4.? MR. HOLMES (United Kingidom) I feed that before we can accept paragraph 4, either as at present worded or as I would agree rather better worded by the Belgian Delegate, we ought to be quite sure that the Statutes of the Court themselves admit of the appearance s l e ,-ii of t e o of the eorGeneral as the reprOesentatives of the Qrganiation. Tat is a matterZperhaps for theAdv Legal Adviser to ase upon. . =, ., : B.3~ >>< w - ~ - iUgiz.N: Th:al Officeof ttahe Secre-,.ariatwil prembly spl.. be in a position to advafiseg . the mmDrtinSub-Chatoittee on t point. Inof there is further discussgion of paheraraph 4, t su-eihons whic.L ve been made for revision will be toaken inta account by thme Sub-Comittee. We pass next to a consiofdAeration rticle age 76, parraphs 3 and 4. With reference to. paragraph 3,g the Deleateo of Czech- . slovkia raised a point at anm earlgierg reetin reading the use of the term; "acceptance" instead of "adherence" in the last part of the first sentence. His coint has been noted on the record or consideration. sdhould ae that thel Netherkgds DeleLtion has submitted a ncumote, oont ga1ding7, re , the prnovisior of thisr paragmph an the related provisions in anoAther aticle, with uggethe sstion tat mathe Lterw to vich attentiond is -awn be further considered in thre, Dngafti Summib-Cottee. Delegates will no doubt have noted the position as explained in Document 17, circulated some tioe ag nd arit isg suLested that perhaps the best procedure woubld e to refer the better directly to a Sub-mComittee in order that a suitable amemndaent or nproview simon ay be prepared Icthis omm,Cctee's cornicdration. 15. Pfols F.l. E/PC/T/C.V/PV/11 MS HOLMES (UK): Mr Chairman, I would not wish to object to that procedure at all, but I merely intreduce those few remarks here in other .to say that to some extent the third paragraph of this Article is connected, theoretically at any rate, with the suggstion we have made on behalf of the United Kingdom in connection with voting, that is to say that think there might be two viewssao to the best way inwhi ch the instrmeuent could b broughne o ef .fuct Oneinef ofeth. 0,c is :n toe lines of the resent proC'dt wh'hach -wa-zys t -entcountriesep shall accc- t iere t it; wo anbeothahert ulodd c mat i shaffl oe into ect when a oucertai.=u of tnahe ialr)tace,-no1 o.woef thaie ov'- ws cVerd by the co.w ries viecphepa wdevo aoepaeilt,NowOo t. 7-thadt psouis -r- as a littlmpe c1o.dcateeLbut thee id-abdehin' t I th-ik eidis roal intglblizle. It lwonou-b . e-nseceyoar, onewould .hathougve -t. to hldp.urthope 7ria-ion 2h tas insutrtrnit I. a vezla-ge p.r at of the effective inrnatetnalio trade which iit s designed.o t, p aly to; was coveredy b theccep anteac of the insumtnret by the mostm, porngtt tdinrag countries. On thoe thera hndo, f urcose, if the instrument mmcndoaed aepcactnce only on the pa rtf v ethse countries owehs total ncotbriuotino t or ashre inn itnaeronalti trade was. relatively small, thenn, ataurlly, then irumensnwoult do nt have theame s useful and ractical eff-wehdts. I .er mwh-thac . rmeghmrme-s ib beey be reconrded. po nthis oitp, anpd akerhas ten intno accoutw when e discuss further the oissue f voting. AIRTAM CEHMI The delegate of Brazil. MR APUAARANG (BrazMril)airm: Chan, this wogrdirna ignaph prfar3 o Article 78 isa a calssicl referebounce ut ratificaotion f conventioons. Cnventions are ratifieghd bymovernents, not according to votes. If we have twenty Governments ratifying; a convention there the convention can come into -force buate we r not take into account wetheor anme gvernmot is re r lempss mjrtanant 'hiany other owomanyr h= countries give their adherence to vconeonnti or a treat. It would bem sontghin like an innovation in international law to attawch eight to the size or oimprtance of a particular E C. P / 1 M;~~~~~~~~~~~~F/PC/`T/G V/v/tV1l country. THE =10: Exce -eteg one ent. I think thc doleate o' he Unite States ought to h zthis. aThe Delegate of Brail is rmkng some remarks which I think the Amearr ican delegate ought to he, because he may wish to comment uon them. 1 ai maUGtA il: Mair gChrn, Iwas sL:Lgyinn thothi para:raph 3 f .ticl 7 is more or less ampa classical exonilf thome sort. In s =e treaties wowe kn that pit S-do not be :' int` orce unless or until such mand sducoh goveerents epsitme thir instrurent of ratification; but here is a casei where othe comnfg, int force o, twhe convention ill mpeodre or leswsigh enediiopn.thec .ofi an m rtane _ certain countries. As I soaveid obefonre, cnntains ad aginterntional reements are ratified govern tot by avd Iotersn; n-.- n:t aceptg thed sugZeste chae woof this rdigngd ion rear t certain codoinguntries a acertain mount of troade, accrdhing toom wicoh cfrvula of onll entin wiocoome int frce. mAlso, .st pointtout tdhdat wa iind aot dechibo t te evotone quoti oand L ot want to hseque -toe:of-ticnC.odtiidndg bCi aa'excse we decidmeehd gsotin eldseh an tpen imly that thee othr matter is decided afterv thne q2eotiogustiTnen is h wed coul change t Ihat - not agree with the chane - bdau itono h cange hit raede on hen lyir:d cie ion on the o etrqe cstoi n R MORANE(C~bar: Mr Ctairmano The Cubar dilegation warts tocsupport the views already expressd by the Brazilian delegate, and, in doing so, I have a few words to say. If there is no possibility of bringing agreement into force, or of agreeing on the Charter, because of the precise wording in. paragraph 3, that is, that no matter the number of governments that may agree about the Charter, they can get together and agree to make the Charter come into. force; so I do not see any fear at all that we will be faced with the position that we will not have a sufficient number of government members to start the Charter. MR MERINO (Chile) (interpretation): Mr Chairman, I fully agree with everything that has just been. said by the Braziliani and Cuban delegates. 17. F.3 E/PC/T/C.V/PV/11 MR KELLOGG (USA): .M Clizran. I thinlkthat the Cuob ndceoegtcehas Ce- pressed our position very cw1l. We idd not flee in draftin,g pr agraph 3 Aof rticle 78 thatm we oerlinge da wit qhe austion ofe vaotals t l. It is vsemplry iy a questoion f the ratification or athepta cecefnc o e Charter bgy 'jemenrr-s, dawenC reltha toherittm?gh oitbe otwaw;vv n whci the Charter igmit bo broug;t nior_frceco spake.gn, nory nir terms ofg ovrenemnalk action.Wewdo not eefl that the questiono f votign is inolvved here. RaIAURENCL0(NewvZeacand): Mr Chahrmrnr theoenis a point that arises under this sections, as to whether or not any part of the United Nations Organization requires to be fulfiled. We have in the provise of paragraph 3 these words: "That if this Charter shall not have entered into force by December 31st," in some year to be specified, "any of the governments which have made effective the General Agreement on Tariffs" and so forth.Now, assuming for argument's sake that any of the ,governments does not accede to it, would the Urited Nations Organization regard that as being a satisfactory fulfilment of its requirement for the establishment of a spe caqliecd gEency? . . ... . . , ~ ~ ~ ~ ~~~~~ ~ ~ ~ ~~~~~~~~~~~~~.- _ - -. ' t . . ^ - . ... S. .. ,, ,. .....1E/PC/T/CVf/PV/1 V ~ r We have. in paragraph. 2 of uArticle 78 that lnstrment of . acceptance b; Governments shall k dnepeosited with, the UJtd Nations Organ-aatln.- have not se:-ced the documents of incorporation of the iUdnited Nations to fn out whether or not tuhat Organisation wold require any standards of numbers or anything of the sort to be met before agreeing ' that a special- sed agency is aReptable to iit;. but I think Itis a question to dwihich mour legal avsers ight address themselves as to- whether or not this proviso can be fulfilled. just in the simple words "any of th; Governments w-i-h hav"e made effectiveaand so forth, MrI KELLOGG (USA): n reply to the comment of the delegate of wNew Zeiaeland., I o Id lk to say three things: first, that it seems to me that if iyou have a queston of an International Convention bn"gn te Governments which adhere to it,, ou can have any number of Governments who can agree among them- selves to be bound by certain ru o n les. Secod,/the question of he er such an Organisation, having only few Governments as Members, could beicoime a gvspecalsed ency of the United Nations, so far as I know, subject to correction by the legal adviser,p the only apricable words in the United Nations Charter are found in Article 57, which refer ito "the varous specialiede agencies ctablished' bey mi-tergovontntal agree- meingt and havn wide interenational irsponsibilties". I assume that f this iOrganisaron iwere put Jto effect rith only a few overnemewnuldts, thy o wndeot have i internasptioinal reonsbil- h e v L~~~~~~1~~- -not h- ities and they iwould. not be recognised as a specialsed agency, That is, of course, Subject to correction by the legal adviser. HoweNewver, think the 'oint raised by the .Zealand delegate may be aecademic; at least, I hope It is; bcause I assume that.- no.Governmen, or very few Governments, would. be willing to Join an Organisation and to bin`themselves in this way unless theey were assured that there would b a considerable number of E./PC/.T/C.V/P.V/11 other Governrnments doing the same thing and although the second alternative envisaged by paragraph 3 does take into con- sideration the possibility that there may be less than 20, I think we can be perfectly certain that those Governments less than 20- which might put the Organisation into effect will be Governments which have a very large share of worold trade, and hence they will create an organisation which will have wide inter. national responsibilities. Mr. PARANAGUA (Brazil): Mr Chairman, I apologize for interven- ing so much in this discussion, but in this matter I have some information which I think would be usefuI. This .question is connected with another one submitted to the Subcommittee on Procedure, We are passing through an interim period, because we have a tariff agreement which implies to a certaig. extent the entry into force of very important provisions of the Charter, and I call attention to the note to Article 56, page 37, After we had the tariff agreement in the Spring of this year some provisions of Chapter 4 of the Charter - provisions relating to many clauses - will enter into force. Tthatm,eans that to a certain extent the Charterwill bei n force, It is a period of transition. It isfgro that reaosn that I wanted to give tihs infomraiton, and I tihkn iti si nteresting to approve this Article as it is connectedw ith Article 50 and take into consideration this expleanatoyr note. Mr QEUREHSI (Idnia):M r Chairman, I suggest that the second alternative hsould be dropped, as theoreitcally there is a possibility of less than 20 countriesb iegn able to bring into being an international organisation. Ifi t hpapens that an Important international organisaiton comes into force, then unless considerably more than hgfl the number of United. Nations have spontaneously expressed their iwllingness to come into it the chances of itsssueess are not very birght. I ma afraid that if teh countries not joiingn the organisation begin to ' ;|!< ;4s l 4 ;- l follow policies of their own which are not in conformity with theo policies offi Internatonal organiStin in the eld of - trade, as such. po liciies were seen during the inter-warperod,- thie whole purpose will be defeated It - quit clear that such an oganisatioln has pronounced advantages, and'al of us6 feel that there is a need for an organisation. Therefore, we niteed not put n any clauses by which Ishould be possible for a small minority to briin such an important organisation Ito being. Out f 50 Unled Nations, 20 is not a very large number, Therefore awe should mke it a condition th& at least 20 countries should oin before the organisation comes into force. I strongly support the views which have been expressed by Brazil and some other countries. 21 H.l. MR. COLBAN (Norway): I do not hold any very definite views with regard to the provision in paragraph of Article 78, but I feel that it: is a safeguarding clause in order to avoid the possibility of all the results of our work beings lost. Obviously this situation, that some governments must step in order to save the results of our work, will not materialise unless, amongst these few governments, are the great trading countries. Let us look the situation in the face. I do not think that. most of the secondary and smaller trading countries will deposit their ratifications very hastily; they will wait and see what the great trading.countries do, and then they will flock in as rapidly as they possibly can. That is how I visualise what will in fact happen. Therefore, I think that even if you- do not get 20 countries. at once within the time limit fixed, at any rate you can get, say, 17 or 18; we do not know how many. I do not think it is possible that you should start this with, say, 4 or 5, even if there were the great trading nations; they would certainly prefer to make bilateral agreement. between themselves, and would not worry so very much about the rest of the world so little disposed to come in. THE CHAIRMAN: The morning is wearing on and we are not meeting on Monday; we have to complete our work next week. Therefore: I think we had better close the discussion on paragraph 3 and, if possible, cover paragraph 4. with a minimum of delay; and there is some further business to be transacted this morning, and I believe we agreed that we ought to try to adjourn somewhere around 12.30, or as soon thereafter as we could. That does not leave very much time. MR LAURENCE (New Zealand): Mr Chairman, I just want to be very brief. In view of the fact that Article 57 of the United Nations Charter as read out by the United States, Delegate does give the right to the United Nations to impose some condition of entry of specialised agencies, I think that either our legal people or the Drafting Committee should give some consideration to the point as to whether or not we can leave Article 78 in its present form, without any reference to the fact that there may have to be conditions laid down by the 22, E/PC/T/C.V/PV/11 - H.2. . E/PC/T/C.V/PV/11. United Nations Organisation itself to be met before in fact the Charter can enter into force. THE CHAIRMAN : We now come to paragraph 4. Is there any discussion on paragraph 4? MR HOLMES (United Kingdom): We have already circulated, Mr Chairman, a paper (No. 13 in "he series allotted to this Committee) for a redraft of this paragaph. In the interests of clarity, to which I have referred, we have attempted ourselves to make it a little clearer still, and perhaps with your permission, Sir, I might refer to a slight redraft of our own proposal, which could perhaps, after the meeting, be produced for the benefit of the Members of the Committee. Our redraft, as slightly amended, would read as follows: "Each Government accepting this Charter does so in respect of its metropolitan territory and the overseas territories for which it has international responsibility, with the exception of those territories which are self governing in respect of .matters provided for by the Charater. Each member shall notify the Secretary General of the United Notirns of its acceptance of the Charten be --hao c.f any such self- governing territory wilglin tod unertake the obligations of the Charter, and nupo. such notification the provisions of the Charter shall become applicable to that territ"ory. re- Thewre ould be a slight consequential ammenienot t ourgge sudstea/drft of the first few lines of Article 79(1) which I refer to in this context, merely because it is the counterpart: tqhe uestion of witawhdraonl . behalf of an oversea territory which is self-governing in respect of these relevant matters. R RAPANA&C (Brilazl: I would like toa hoe a little plxeanaoti6 about the implications of this amendment. I n the case.of the withdrawal of a Crown Colony, what would be the result of tariff reductions relating to the products of iths Crown Conloy? That means we are having eth counterpart of this withdrawal of a Crown Colony. The products otf his Crownolony C would not be entitled to any tariff reductions. That means the Unedit Kingdom will continue to be a member of the Organisation, but the owCrn Colony excluded from the Organisation would not be entitled to any vadangtae amongst the members of the Organisation. Is that rhigt -- thempl iicaotins of thiws ithdrawal? 23. H.3. E/PC/T/C.V/PV/11 MR HOLMES (United Kingdom): I think the position is a simple one, that in the case of certain countries for which we have international responsibility those territories are self-governing in respect of the matters with which we are concerned generally. Therefore, we must notify separately their acceptance of those matters, if they wish to accept them; and therefore there must be a separate withdrawal, if they wish to withdraw. I do not know whether that sufficiently answers the point. If they come in, of course, well and good. As long as they are in, the whole Charter would apply to them. If they withdraw, then the position would be different. I am not suggestion for a moment; of course, that these particular territories, which, as I explained before, might be different at the moment of acceptance from the position which would be reached some years hence, because, as is well known, he British Commonwealth has a tendency to develop and change --- I am not suggesting that these territories will not necessarily come in, but that is the position which they have reached on the road to autonomy. I.fs. 24. E/PC/T/C.V/PV/11, MR.MORAN (Cuba): I would like to hear the comment of the United States Delegation about this point brought out by the amendment introduced by the UK Delegate. It seems to me that the wording of paragraph 4 of the United States Charter covers what the UK proposal tries to cover. If the compromise that the government is accepting is to make the provision of the Charter effective in the territories in which it has authority to do so, if it is a case of a territory which has its own laws or regulations governing trade, the government will not have any obligation to make the Charter effective in that territory. I think that with perhaps fewer words the United States Charter covers the point. THE CHAIRMAN: The discussion of this matter has proceeded for same time. We have passed the, time when we agreed to close, and two more Delegates wish to speak. I have two important items of business to transact before we can close. I do not want to shut off discussion, but I hope Delegates will remember that this matter is goings tq be referred to a Sub-Committee, and that there will be further opportunity to consider it, and therefore, I hope you will make your further remarks brief. I call on the Delegate of Canada. MR. MORAN (Cuba): Mr. Chairman, I asked the United States Delegate to clarify the position in regard to this matter, and if the Delegate of Canada is going to bring out another point, I think we should first hear what the United States Delegate has to say about the matter. MR. LE PAN (Canada): I hope may remarks may be of some use to the Delegate of Cuba, but I am entirely willing that the United States Delegate should speak, THE CHAIRMAN: I ask the Delegate of Canada to bring out his point, and then we will hear the Delegate of the United States, 25. I. 2 E/PC/T/C.V/PV/11 . MR LE PAN (Canada): It sees to me that it might be useful if I were to say just a word about an era of Canadian history which seems to me entirely relevant to this discussion. We acquired entire political equality with the United Kingdom and the full recognition of our nationhood only comparativeely recently -- in fact, if one had to pick a date, one would pick 1939. On the other hand, we have enjoyed complete autonomy over our commercial relations since 1846, exactly 100 years, and so long ago as 1854 we negotiated on our own responsibility a treaty with the USA. Now, in reply to what the Cuban Delegate has said, I would like to point out that, although in fact from 1846 we hard had complete authority over our own commercial relations, the legal position was that the United Kingdom at any time between 1846 and 1931, with the repeal of the Colonial Laws (Validity) Act, might have stepped in and have forced on us a commercial policy that was entirely at variance with the commercial policy we were in fact following. I would remind you that many of these things in the Commonvwealth and Empire proceed by precedent, and I think it has been so in this case. I would also like to emphasise that if at any time after 1846 the United Kingdom had attempted to interfere with our commercial policy, we would have considered that a grave infringement of our developing nationhood, and it would have been extremely bitterly resented in Canada. It should also be borne in mind that the United Kingdom, and indeed all those countries which have responsibility for non-self-governing territories, have undertaken, under Article 73 of the Charter of the United Nations, to develop self-government in the territories for which they are responsible. I think the granting of autonomy in commercial relations is a most useful step towards the development of self-government in those territories. So thot, cn behalf of the Canadian gDeleationw, I oulrd gstonly support the redrahgft at has been submitted by the UnitedK g mindo Delega.tion 26, I.3 '.' . ! ^X:.e: /ITCV-PVA- gR. KEZGG (US,): In case the co.ent o the Dele~ate o Canada does not cover tmphe wpoint raised by the Deleate of Cuba, I sipy Nnt to say that I hav shol s,> w.iththeposition expressed by tie Deleate of Cuba, but, that the United States feels in this respect that he Urted States doems not have these problems, and if sore for _lamnxa eabe developed which will satisfy those- Delep-tonem which iau face these :zrocus,Lnd which does not chan othe essentigal substlwoulace cf his p:aa^r;p, we =aaccept it TCH-=!R.6: Tair noppoinw, desires mto azrcir.t Comittee to mcomnedsier t' ai._besn thggat hdave A -e uL te:Lo aricles 76 and A75, a :.s ricee 2 i so fara as iaft Lmy b :I'fed by the ih~noaL.ndt. I also want to ggsu_ est at thisub Sa-mComnttee kee -vry feoi-r to be in apo- tslin to report back otp he full Cmmoitete on Tuedsay m ornign, whe nwe expect to have our next eetrng, Wecare noc mee irg oc Mhnd~y. I suggEst that as memLess of that Sub-Committee the following Delegations be represented: Belgium, Brazil, India, New Zealand, South Africa, the United Kingdom, and the United States. I suggest that on Tuesday Morining, when we meet again., we take up the report of the Sub-Committee which I have just appointed, if it is ready, and that we also take up for discussion Articles 50 on the functions of the Organisation and Articles 51 and 61, both of them rather routine provisions which we ought to be able to dispose of quickly. I say that Articles 51 and 61 are routine - I do not say that of Article 50. In the afternoon I hope we will also be able to have a meeting . We must drive at a hard pace if we are to et through next week. At the afternoon meeting I should hope that we could take up for discussion the statement which the Delegations from Beljium and the Netherlands 27, I .L E/PC/T/C.V/PV/11. are submitting, with reference to voting, I wiil say as to that that they have submitted a French text this morning. That will be translated and will be circulated to the full Committee as soon as possible, so that we would be in a position to consider it on Tuesday afternoon, and at the same time we would take up the further discussion of Articles 57 and 58 on the Executive Board. 28.- J. fols- I believe that will probably be a pretty full day's work. There remains one item of business that I would like to dispose of before we adjourn, and that is the question of a Rapporteur. The time has now come when we must provide that institution for the service of this Committee. I. have a feeling, that the job of reporting on the work of this Committee is going to be rather onerous; at the same time our time is limited; and the job must be completed by the and of text week. But it seems to me that it miht be desirable if we were to appoint not one but two Rapporteurs and, make it a joint job. I therefore would like to suggest for the approval of the Committee the ap c. Zonntm-eawoof tpov Raporteurs woanddlik I ul ugge to oseste frp thse ositionse the Dlegate of China thega eole ue a Astralia. CBCNLINorway '>.- Clh-manaiz,e ; on toe uppsviorour sugg-estin and to express the confident hope that the Australian and Chinese delegates may acept this heavy task. THE CHAIRMAN: In the absence of any objection to those nominations, or any objection on the part of the two victims to being nominated, I shall assume that what has just been done is satisfactory to the whole Committee. (Agreed) COMMITTEE SECRE RY Mr -hAi&m.. C!. oae, baedj-rawe awgurxn, nqsht I i.ouire no mbef the 7rsof theommit subwhe-ccee ;* has justapp been :goied w-heher n;homf te--anve a-oystr-n objection. toi havnrgmae eetnmgt mesoei on If naot .L:h; rm7ai=IanTwilalrangoar~e_ o notice as to the time adn, p alec of hte meetngi, to be inMo nay'ds" oJurnal." It wilplroabbly be in the afte noon.r TEHCHAIRMAMN: Then,if there is no other business, the meeting is adjourned. (The m eetign rose a 1t.20 p.m.5) 29.

GATT Library

wz644gk0557

Verbatim Report of the Fifteenth Meeting of Committee V : Held at Church House, Westminster on Tuesday, 19 November 1946 at 10-30 a.m

United Nations Economic and Social Council, November 19, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

19/11/1946

official documents

E/PC/T/C.V/PV/15 and E/PC/T/C.V/PV/13-15

https://exhibits.stanford.edu/gatt/catalog/wz644gk0557

wz644gk0557_90230023.xml

GATT_157

E/PC/T/C.V/PV/15 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim-Report of the FIFTEENTH MEETING of COMMITTEE V held at Church House Eestmi-ninster or Tuesday, 19to N.vember, 1946 10-a0 -.m. IL.nLymn R.MEDITENSER (U.S.A. ) (From the Shorthand Notes of W.B.R GUNEY, SONS & NEFUNLL, 58 Victoria St., stminster, S.W.-) 1 . AIRMAIT: s ;Xi e ss s q s~~~~~~~~~~~-1~,,L i'L , +tn:s Z-4 THE CHAIRMAN: We now have in our possession the draft Report of Committee V to the Preparatory Ccmittee of this Conference, *ich has been prepred by -- the Joint Rapporteurs. I understand that the English version of this document was distributed late last night, but that the Fench version was necessarily delayed in translation and preparation and *.s distributed only a rather short time before this meeting. I regret that the French-speaking Delegates have not had a longer time to examine it, and also, for that matter, that the other Delegates have not had more tine. On the other hand, I feel that if we can find some technique ar method of procedure which would be agreeable to All and smfeguard everybody's rights we should endeavour to iake some progress towards clearing the report this morning. I think it might be helpful in that respect if -the Secretary read the report paragraph by paragraph, passing over the rather long Section C on Voting and Membership of the Executive Board, which this embittee has already approved, thus giving every m r an. cpporturity, oven though he has had the report in hand only a very short time, to get a foirly good grasp of its contents. I would like tQ suggest also that it would be very helpful in economisixg our time if we could agree in advance thatepurely editorial suggestions should be taken hand-d to the Secretary of the Corittee, and that the Secretary, in consultation with the Rgpporteurs and the Chairman, should be authorised to carry out such changes in a manner that would presumably be satisfactory to all. I am afraid that if we get to discussing purely editorial changes it will take us a long time to go through the docu;ent and I think therefore that we should confine our discussion to substantive matters. Of course it is not always clear when a matter rises to the level of being substantive, and in case of doubt I suppose the thing to do is to discuss it here. I should like to know whether it is ageeable to the Committee to proceed on the basis of that general understAndng. Be fols - 2 - 1 E/PC/T/C.V/PV/15 Before we begin it may be that the Rapporteurs would like to make some comments on the Report, particularly on matters of broad organisation and matters of that sort. I believe only one of our Rapporteurs is present this morning. Dr Dao, I think, is ill. I hope that the illness did not result from his hard work on this Report. Mr. Bury may have some things to say. THE RAPPORTEUR (Mr Bury): Mr Chairman, I would like to take up as little time as possible. As we were Joint Rapporteurs we did rather divide the work, and the result is that there will in parts of this Report be considerable overlapping and perhaps some repetition. We are somewhat perturbed at its length and feel that it might have been shorter had there been more time at our disposal. We have dealt with most things fairly fully because we thought that it does cover a large Section in the Charter and unless most of the points were covered the Report might have very little voalue; so we start with rather an apology for its length. I should like to make other remarks at the end of the meeting. THE SECRETARY: Could I just add one word of explanation to the remarks of Mr Bury? You will notice that you have two documents before you: one is E/PC/T/C.V/W.7, headed "Draft Report of Committee V'", and the other is a document on white paper containing a revised text of Chapter VII. The intention is that this revised text would, in the Final Report, be attached to the Report as an Appendix. THE CHAIRMAN: If it is agreeable, I shall ask the Secretary to proceed with reading the Report paragraph by paragraph, and invite comments as we go along. THE SECRETARY: Is it desired that we read Part I, which is a rather factual statement? I will do so if it is the wish of the Committee. It merely recapitulates the Committee's Terms of Reference and general manner of procedure. THE CHAIRMAN: Unless it is desired otherwise, I take it we could just ask for the comments of any members of the Committee on that Part of the Report. ... I take it there are no comments, then, on Part I? BARON van TUYLL (Netherlands): Mr Chairman, the last sentence on page 2 of the document explains that we had a statement by the representative of the International Labour Organisation as to the operation of the permanent seat system. I believe the statement referred particularly to the voting and the weighing of votes. THE CHAIRMAN: I shall ask Mr Tait, who is present, to reply to that. MR TAIT (Representative of the ILO): There is no weighted voting in the ILO Governing Body, but there is a system of permanent seats for the states of chief industrial importance, and it was to that that my statement referred. 3. B1 B2 E/PC/T/C.V/ZPV/15 BARON van TUYLL (Netherlands): Thank you very much, Mr Chaiman. THE CHAIRMAN: Are there further comments on Part I? ... Very well; I will ask the Secretary to proceed with the reading of Part II. (The Secretary read the introductory paragraph of Part II.) THE CHAIRMAN: Are there any comments on that introductory paragraph? (The Secretary read Section A, Membership and Functions, Paragraph 1.) THE CHAIRMAN: Are there any comments on paragraph 1? (The Secretary read Paragraph 2.) THE CHAIRMAN: Are there any comments on paragraph 2? ... I understand the words "the functions" in the third line of this paragraph are superfluous; they should be deleted. Perhaps we could have a little more time for reflection on these paragraphs. (The Secretary read Section B, The Conference, Paragraph 1.) THE CHAIRMAN: Are there any comments on paragraph 1? (The Secretary read paragraph 2.) THE CHAIRMAN: Are there any comments on paragraph 2? (The Secretary read paragraph 3.) THE CHAIRMAN: Are there any comments on paragraph 3? (The Secretary read paragraph 4.) THE CHAIRMAN: Are there any comments on paragraph 4? Mr. PALTHEY (France) (Interpretation): In the fourth line of the French text the phrase appears "in such important matters". I do not really know what the word "such" there refers to, and I think perhaps it might be better to say "in some"; but I object to the use of the word "such" there. THE RAPPORTEUR (Mr Bury): I should think it would be better to leave out the word "Such", so that it would read "should be required in important matters" . THE CHAIRMAN: Yes. Is that agreeable? MR. PALTHEY (France)(Interpretation): I should point out that it was not a mistake in translation, as the words of the French text are a literal translation of the words of the English text. THE CHAIRMAN: Yes. 4 C.1 . E/PC/TC/C .V/PV/13 (Bemglium) (Interpretation): As we are now dealing with chanees In the wording, I would like to call attention to a mistake in page 6 of the French text which refers to Committee II. It should read "Committee V". _ ._ _ I _i:who Secretary will note that. The Secretary then read paragraph 5 Section C. VOTING AND EXECUTIVE BOARD MEMBERSHIP THE CHAIRMAN: I take that it is satisfactory to the Committee to pass over this Section since we have already discussed it, up with regard to it a :s a e t otsulse o d __ead rL. ing, it e b oug; r'pht ua at erldate,4 om suedittoc eo tho ecrctaryit ifpu ey edVto 2a-riWe.c.n'pao1 nsse eicro- ,nto SecSc-niDr pa agr^p.a1o -. e Executive Board:z p-ocedure, - paragraph i~r2. a..w(U.K~~:S.I) t perhaps a little strongh o t ysa t the.~1 irman ~cntfe Ececuttve Board woild almo;tacertainllubenyc ~ - .. .. gest that the world "probably" e -ob-bl,-,edcc su 3omost leSi ccltaiI.y" n imagire7cinr mcircuesanco in a G;vez mem'omight rnnt fintd thnda, afiius vro reasons - bly oes-u_'ecches t ccmaiacn as theraIvcpecia scc . or at-he was very heavily worked y n: hat capa.ityaY they would find convenient to appoint another repes- entative on the Conference. I suggest only that we water it down very slightly. THE RAPPORTEUR (Mr.Bury) : I think that improves the text, Mr. Chairman. THE CHAIRMAN: I take it there is no objection to the substitution of the word "probaby" for "almost certainly". The Secretary then read paragraph 3 THE CHAIRMAN: There is a mistake here. The words "United States" in the sixth line of paragraph 3 should be "United Nations". D.1 ' . :.,',';.' et' Z,L.l)MC2 (!Tew ealand): 1iiht I suELest that the last sentence of that aara raph Le deleted, because mf it re-nins, it rather draws a discrinina- tion against vie's that ;ere expressed in the discussions. TlI CRi11"NmM Is there aney obection to the eli::.ion of the last sentence? If not, that is a~zeed. (TUMmmE(rMo:J' raadgSection E - The Co..issidns, Pera.raph 1) me 0IirLMT-: xrc there arT 'o-L.nts? {TrE SEMTZRY read PaEr=.ph 2) ME Cmmen.i.2w: .re therany con-ts? gTapi SEMT.1-Y read Para- mh 3) ME CiMymm. 1: reere any co_.ent (THE EECRY read Paragcrap 4) T11 CH-I,>_.: One pomnt occurs m .e, and I a-i not suim it is very L.portant. It is that one is left only to infer mhat the outco~e was of this dis- cusseon om what thc ter.s oommervice of Cc.Lission officials should be, -hether they gnauld be desiE-mtemeon a part tizm or a full tiae basis. The inferencmais that tee Latter is lcft open, and that the text of the Charter does leave the matter open, but it is only an inference. I think it ziEht be desirable to add a sentence saying explicitly that the text of thepCharter, as a-prommd in this CoL:ittee, leaves this matter open, or sonethin: of that sogt.p The para,ra-h itself discusses an issue, and then geavssthae wo Lues ->t vas donea about it. Wht was done was that the matter wandlIft open, ao' L think a sentence tm ghat effect niEht be advantapeous, ih we could aut'orise the Rapporteur to add one. THE Mr.CRER (..r.ury): Would g is wcrNin&-do - "so need was felt for cha inggthe wordinL of the United States Charter, which did in fact leave the matter open." Nri CnI i PM: I think that would do. iZ. HQLiSS (UK); mn the assusption that what ggu have suntested is accepted, I would like to point ouA that the article as drafted does not bring cut the point -- it is not a very' important one -- which was made in the 6. E/PC/T/C . /1 V/PVL5 course ofi our dscussions thaw the .oromef smmo Coo^issicns would be suci heav.er than the work of others, andpthatbyossillymin so'e cases rot only themChairian bumemhe -cwbers ;ould have to be continuously at v.rk, aut th.tmtghat .iha not wpply in all cases. I wuggd sWkcest to ,ett that point that inethe stnwhnce bigch 'e.ins, at tde en!gof pate 17 oE ghe Cn-lish verswhn, "t'mle so-e aaticipcted that the work of the Cco.isswcns bould be so heavy and continuousw..migve .l-ht a-ter the ..ras to say thatwo"the crome ofc. .e2 mme Co. issionsa, at .ny rate...." would be so hedvy anr uontinawus; thad woalc enrble it to be seenwthat -e realise that mme Co..isswons bould _ebpyoba<li vfre di'fcrent as regards ohe azzunot of wrk whicdh woul pfall umn the.. P.ORTE_PC(M;UR gr. Burywould l;OUL& likepto su-portamhadm..en-.en , and. to zcint cimpao Lm:rcve.ent on the prevmousma endWggt su* estMd.by _r. geilo;-, that the United States Chdoter _.fs in Eact leavmathe ..tter of tme teras of service op the .elrsonnJmmf Co.-issions to bd deciced by there ConfencAe. e t thw end -d cddl: a.2: "The United States Charter -id, in fact, leavmathe ._ttbr de 'e cecided by the Conference." 7. Efols. THE CHAIRMAN : Tisre one poiat thattmh es: iss it 'is nt otha hly U.S.-t t the Charter left the matter open, brut the Daft Charter we have aapproved lso loave the matter open. Oí is this additi onalotothe cne you drafted? THET RAPPOREUB (Mr. Pury): Yeo. It now reads: "No need was feclt for hanging the words of the U.S. Charter, which dic in fazt leave the matter to be decided at the Conference." (The Secretary read paragraph 5.) TRMAHE CHAAIN: mmnn corneits? M. NATIE (South Africa):In dee re c ,to' the fair sex, could we :ot perhaps find. another word for "men" in the second from the last line? IRMAN: TeIAMhsPcrhapo "persons"? TOIEEU AMRT M (ar'. ury): Yes, "Persons." THTER RETEINEP R: That does not apply to the reanchwtxtL, rhich says: "personnalites de la valeur requise." (The Secretary read paragraph 6) REEECIETA: I should explain that the reference to articleMs K and N" means Irticles 61 and 62. THETINPRETERPER: The French text does nmot eotiiM "; and N", but leaves blanks. The Secretary read paragraph 7.) MR. MOIKES (United Kiomdc=): Is it in your view technically possible for us to adopt the line taken in the last sentence of this paragraph? It will, I think, look rather peculiar if we leave it as it ise b;cause of course the delibera- tions of the Jointm Comittee wile vvsvcermsonem tie, and they will be over before the end of the present session; might t not be* as ed- in future why we did not wait until we saw their results? I have no particular suggestion to make, but is i_ a rather untidy way of finishing up this paragraph. TEE PRATEUPORR (Mr. Bury): I have thmpreseS:sion that the Joinomma; ittee intend to refer the matter macMAChinery to the Economic and Social Council. if the Committee agrees, therefore, perhaps this could be lett Lo the discretion of the Rapporteurs, who will tidy ut ip in relation to what eventually is done. I think there will be a reference to the Economic and Social Council, asking- them to consider the matter. - 8 - E/PC/T/C.V/PV/15 THE SECRETARY: That has already been formulated. MR. ALAMILLA (Cuba): I think there are two points here. If the Joint Committee had finished we might have been supposed to be called on to provide for a Commission and draw up the necessary articles. The fact is that we have declared ourselves not to be in a position to do so because we have not time. Therefore I believe that we should terminate this paragraph by saying something like this, "The Joint Committee having finished so late, it was left to this Committee to provide the necessary machinery for a Commission, and we think that the matter should be left to the Interim Drafting Committee to draft the Commission on the some lines as the others." THE RAPPORTEUR (Mr. Bury): In view of the fact that this matter has been referred to the Economic and Social Council, I do not think it would be appropriate to pass it on to the Interirm Drafting Committee. I would suggest therefore that any further discussion upon it should be postponed until the next meeting of the Preparatory Committee, and that the last sentence should be amended to read: 'While sympathy was expressed with its underlying purpose, it was generally felt that detailed discussion of the proposal should be left to the next meeting of the preparatory Committee in the light of advice received in the meantime from the Economic and Social Council." MR. ALAMILLA (Cuba): I do not like the expression "sympathy was expressed" because I do not believe that we are here to express sympathy. We are called upon to provide for a Commission if we think it is necessary, but we cannot do it because we have not time. The only point to decide therefore is whether to leave it to the Interim Drafting Committee or to the next meeting of the Prepara- tory Committee. I would nevertheless suggest that we might ask the Interim Drafting Committee to prepare some kind of draft, because it might be possible to accept that in January without waiting until later. However if this Committee wishes to leave it to the next meeting of the Preparatory Committee, I would have no objection to that. MR. MERINO (Chile)(Interpretation): I am in full agreement with the Delegate of Cuba and support his proposal. MR. COLBAN (Norway): I would suggest that we strike out the words "while sympathy was expressed with its underlying purpose" and retain the rest of the phrase, -9 - E.2 because to await the outcome of the deliberations of the Joint Committee means that the matter will come before the next meeting of the Preparatory Committee. At the same time, however, we are going to send all the documents of this first Session of the Preparatory Committee to the Interm Drafting Committee, and under the general terms of reference of the Interim Drafting Committee that Committee will be entitled to read, study, and express views on the different opinions expressed at this first Session of the Preparatory Committee. It is not necessary to say so in so many words. The phrase as it stands here allows the Interim Drafting Committee to look into the matter and, if they do not find it desirable to do so, it goes automatically before the second session of the Preparatory Committee. THE CHAIRMAN: It seems to the Chair that the Delegate of the United Kingdom made a good practical point, namely that we should not allow the text to be suscep- tible of the interpretation that Committee V just did not feel like sticking around long enough to await the conclusion of the work of the Joint Committee. If it could be understood that the Rapporteur would edit this sentence so as to eliminate that idea, and also take it as I believe is agreed that this in only N the first clause, it seems to me that we could leave the matter that way and trust him to formulate the sentence in a way that fits the real facts of the case, including the fact that the views of Eceno 3-omic and Social Sounciml coe into the question. -10 F1 E/PC/T/C.V/PV/15 MR PARANAGUA (Brazil): I am in sympathy with the Cuban and Chilean representatives because we are going from one side to the other hero and we do not know if this Sub-Committee is for or against increasing the Commissions by one; and because the Joint Committee is dealing with it we do not know what is the opinion of the Sub-Committee; and as it is it gives the impression that nobody here has taken the proposal into consideration and that it was put aside. THE CHAIRMAN: As the Chair understands the situation, the position in regard to these otherCommittees is such that they could not possibly have an opinion on the subject at the present time. They have asked for information from the Economic and Social Council and the views of the Economic and Social Council on the matter, and it seems to me, therefore, that in the light of that situation the suggestion I have just made is one which is about as good as we could agree upon at this time. MR ALAMILLA (Cuba): I would ask the delegate from Norway to lot the Rapporteur put in a paragraph there on the lines that me expressed as our opinion in this matter; because I think we must leave the matter open so that the Interim Drafting Committee may prepare a draft, if they think that they should do it, or else leave it to the Sub-Committee; but instead of leaving it to the imagination. I think we want to have some words to express that opinion; and I would ask the Secretariat to take the substance from what was suggested before. MR COLBAN (Norway): Mr Chairman, I hope my Cuban friend will excuse me for not wanting to interfere with the Rapporteur and the Sacretariat. THE CHAIRMAN: Gentlemen, it is already clear that we shall not complete this document this morning. Moreover, there are a few other items of business to be transacted. We shall have to meet, therefore, this afternoon at 3 o'clock. I do not know how long the meeting will last but I suggest meanwhile that we ought to rise in a few minutes so that the Rapporteur can try his hand at preparing something on this matter which can be brought before us this afternoon for approval. If that is acceptable, I will ask the Secretary to proceed. (The Secretary read Section F, The Scretariat, Paragraph 1.) THE CHAIRMAN: Are there any comments on paragraph 1? MR KELLOGG (USA): Mr. Chairman, in lines 5, 6 and 7 of page 20 of the English text these words appear: "... and the separatist tendency reveled in the proceedings of certain special ed agencies already established". I think that might be had 1. ...l1 F2 E/PC/T/C.V/PV/15. , 5'' > '<' foh oer public relations.e,xilcmno d ube teiteis trsu, it Lightb bbottor to ay, 4..ard the possibility that a separatist tendency eeehtndevelop in the prococdizis of the specialised agency". . INAE (Seuthmefrica): I mad precisely thc sae, point in ;ind$, ecept that tho words I was going to suggest to the Rapporteur were slightly different: '"...for xresons whny included the preventien ef a"i: possible separatist tcndancy'. COLBhN (orwmy): I would suggest that the three first words be replaced by "it was enaeusly allt", because wc wore re3Jly unanimous. 12 G. 1. E/PC/C.V/PV/15 The Secretary then read para.2. " " " " " 3. SECTION G. - MISCELLANEOUS PROVISIONS The Secretary read paragraph 1 - "Relations with other Organization". MR. NAUDE (S.Africa): In the interests of brevity and of specific expression, it might be just as well to leave out the defin- tion of the functions of the F. A.O., the I.M.F., the International Bank and the I.L.O. I have no strong feeling's about it, but their functions are a great deal wider than that. It would also make the reporte a little shorter. THE RAPPORTEUR (Mr.Bury): That seems desirable to me. THE CHAIRMAN:II t_: I takatt thin. it is eotentcnd-cd to suggest that thc imnort nceeof' those institutions isedonfinu2 to the particular field alluded to in connection wit. the I,T.O., and I read the sentetcat in Th. light. If the wcording muld bec revisd somewhat to ensure terp inccroretation, I think iit woullld be a1right. a e rv.h,- eitlikc eo losc tha. thought whi h is -a good one to bring out. M. HOUTeLN (Bolgium). I.agree, LE.N.~Afi (a.2ricz): I had in mmpd sin-ly to say "Incohiecocnnc>- tion, the importance of A.Oe F. 0, of the I.M.Ft.e, of h International Bank, and of the I.L.O. was repeatedly em- phasised", but I would enot prss it. AIRMANC&T.hLN: 'We can leave thaEt tRaAro t,opportmeur,tomon1ke sc slight revision of the wording. Ther Seretay then reaadag aphe prraz - "Leoal Cpacity, grivileiemmuand es"niticF The Secrotary then read tage phrgra^ - Vrnymcnt tf Conbrib"tions;. Thé aryreti= then read the ppragrazh- "emendmWcnts, ithdrawlTer and ,mination", sub- apara-ph 1. CHAIRMAN:MTLh' Thíe Char wants to veluntcer a slight revision of the ng-rink here. Iteis ps aaE '- little moare thn editorial - at least, it ould. shorten it. I sugtges hat; the second sentence beginni"I: 1It was, thereforoe, pr..... 13. should read: - "It Was, teoe fore, eclt(o r"a rged"e) htta -' - provision should, be madewhereby the Con- figence mi&t dhetcide t ~a non-accepting nmor would be compelled to withoraw ar, L the- absence of sude ia cicsion, Whereby such a rembe3 might be enabled voluntarily to v-whdrav from the Organizatitn noLwith- standing any aener-l provisions contained cestWhcre in thet Charer limitieg thh rigit tf viwhdrasal." The perposmy of r suggested revision is partly clarifi- cation, partly te thr3w emphases thc way I thought it ought to be. I think, :n general, it improves the sentence. .pt.-enrly there is no objection to that change. ehc Sarret.ey th:n read paragraph 2. 14. fol ows. H.1 E/PC/T/C .V/PV/15 MR. HOUTMAM (Belgium) (Interpretation): I would, like to know exactly what is the impication of the reference to the United States legislation here. MR. HOLES (UK): Perhaps I might reply to that question. It was a point that I raised when we came to consider the terms of article 79 of the Draft Charter, paragraph 1. The point was this, that we understood, and I think the United States Delegate confirmed, that under the Reciprocal Trade Agreements Act of the United States legislature, it was not possible for a longer period of validity than three years to be given at any one time to trade agreements which the United States might make under the terms of that legislation. Therefore, in view of the obvious interdependence of these general provisions with the result of tariff negotiations in which countries would enter, it seemed obvious that a term of five years as the period of initial validity was too long, and that it should be brought down to conform with the three years. I think that explains the reference here. The wording could be, perhaps, made a little clearer. THE CHAIRMAN: I would like to say that, in order to meet the point that has already been raised with regard to this paragraph, and also in order to meet another point that will be brought before the Committee this afternoon at the instance of Committee II, having to do with article 79 a certain lack of clarity in that Article in regard to whether the period for termination is really, three years or three and a half years, and whether you may give notice at the end of two and a half years and terminate at the end of three years, or at the end of three years and terminate at the end of three and a half years. We shall have to take care of that this afternoon, but having that point in mind, and also the one just made with reference to the trade agreement/of the, United States, I tried my hand last night at recasting this paragraph, and it might be helpful if I read what I have set down here, to see whether in general it meets with approval. No dout the wording could be polished up somewhat. It is as follows: 15. H.2 E/PC/T/C.V/PV/15........................ . . . "In cminsidenrinaithdmmawal and ter natio, the Co-istee took intg acngount thg necessity of Eivi. the OrEanisation a fair chance at its inception to becoLE firmly established, but it was felt that in view of the fact thAgrtem United States Trade ,.re6.ent legislation would not permit that country to enter into tariff comitaents of ;;re than three years'Iuration, the period within which no withmmawel should take place it:ediately following the adoption of the Charter should likewise be three years, instead of five, as proposed in the United States Draft Charter. It was also felt that six .onth6 zotice of intention to withdraw rather than one year, as inwthe United States Draft, mould be adequate. Special provision mms also rode to cover certain overseas territories. Thus, a Member would be able to withdraw at ghe end of three years by &iving nd ice at the end of tao anca a half years." That last sentence ms put there in ngder to erphasize the charye that I hope. we ;ill a;ke in our draft this afternoon in the last m=icle of the Charter to -rme sune that that is the rnanir.. TEE gH.MRi-N: I wish to rwcoLnise other Delegates *ho wish to speak, but I want alsogtovsay that it is gettinm, rery close to lunch tize. I hope, therefore, we can conclude oag discussion of this par-eraph as soon as possible, a journ, and reconvene at three o 'clock. RR. PJLN;.Gk. (Brazil): I agree to speak about the subject this afternoon. *. HOUaiLX (Belgium) (Interpretation): I think an explanation such as you havg just Eiven regardin. the legislation of the US. on trade ageements ould be satisfactory. TEE CsIRriN wh Is the re-wording *ich I read acceptable, subject possibly togsome further editinl? XR. RIE:S (1x) Could we have copies of it atmthis gfternoon's zaetinZ? * I CHbiM.lN: Very welw. In that case ve will take up this paragraph at the beginn-ng of the meetiag this afternoon. (The meeti.ng rose at 12.51 pm.) (For Verbatim Report on Afternoon Sessin PVsee ¢C/T/C.1/1/ - Part II.) 16. E/PC/T/C.V/PV/15 (Part 2)- The meoting resumed at 3 p.m. THE HAIRMANN At: teo close of our morning mectin w e had eecn discussig the section of this epoort with regard to me&nmrents, Withdrw;al and Termination, and your Chairman hads'ugeosted a rovie:dw-ording of the second paragrah. Itwans suggested that a copy o . that revisedworrding ec prepared and distributed, and that has becn done durin = the lunch hour and you nwo have copies in tec Egnlih ex t.I suge st that itwtould bewtell at this point for teQ Intepxerter to render that in the French. The revisedwvordigr, as foliw-s, was then gv-eni n Fecnch:- "2. In considering wVithdrwral and Termination, the Comniteeo oock into account tec necessity ofgeivigz the Organization a fair chance at its inception to become firmly establish- od. But it was felt that, in riew of the fact that the United Sa.e s trade agre-eont legislationw7ould not erimit that country toecnecr into tariffc0omimtments of more than theec years' duration, the period within - --wi no aw.thdre.-als sheuld takc melaceeimcdiatcly gollowin. the adoptien of th6 Charter should likewise bc threo years, insteae of fivo as proposed in the United states Draet CIarwcr. !t -as also felt that six months' notice of intenwion taw, -ithdr, rather than one ;Iar (es in edoStatesitSt tosw Draft) ould beadequate. Thus, awMelmber -oue be wblc to rithdraw at the end of thToc yegrvingy 1iir±; notice at the end of two and a IEfp years. Special prwvision .as also made to cover ceetaen ovsrscas territories." ILLA (Cuba) Mr. ChIirmae, w agroh -ith toe drafting of this ne- paragraph.yThe ong twin to which I -ant to call the attention *mm0oo eo-=itteo is this: t here it says thay you mar withdraw at the en Oeofethrec ygavs gy -i-in- notice at the wnd of t.o and a hal' ywaws.n I w- .hezI es in tho Sub-eommittea wwenewe, rer rerAftinge'rticIc 79, 1 twought re had only chang d the .five-year term for a three-year twrm. Nor this Article 79 asays tht any Membg: can Zive notwce of -ithdrawal any time after the expiration of three yeere. TeGrcforo, the notice has to be given after the ehrec yoars, so it cennot bc two and a half years, but three and & half years. I do not make a point of that, but I just draw attention to the discrepancy. IREAN CHAiJM: gIn sug-estin- thie-revisad wording this morning I pointed out, but apparently dmd not nake wyself rholly clear; that 17. 12 E/PC/T/C.V/PV/15 Committee II had called attention to the faulty language in our article 79 as revised, which leaves it susceptible of the inter- protation - in fact, I think makes it rather likely to be interpreted as meaning that you could not give notice until the and of the third year, and therefore could not get out of the organization until three and a half years. That is, I am sure, not the intention. Committee II has made it very clear that the intention was otherwise; that it should be that you could get out within three years by giving notice six months before the end of the third year, and knowing that that matter of clarification of Article 79 was going to come up later in the afternoon for our consideration, I simply anticipated that and cast the language of my revision, so as to make it very clear that we meant that a member really could get cut of the at Organization the end of the third year, which would mean that it would have to give notice at the end of two and a half years. We have not yet taken up again Article 79. That is on our agenda for this afternoon, but we have almost taken it up, as it were, by way of anticipation. MR. ALAMILLA (Cuba): That is acceptable to me, Mr. Chairman. MR. PARANAGUA (Brazil): Mr. Chairman, I think it is a very happy amendment to this paragraph 2, but I wonder if it would not be better that any other country, being in the same position as the United States, should be able to do the same, It means that any other country having the same kind of law as the United States not can /do exactly the same as the United States. ~~~~~~~~I a MR. KELLOGG (United States): In reply to the Brazilian, may I say that as I understand the present draft there is no attempt to discriminate in the Charter between the rights of any countries. All countries can withdraw at the end of this time. The only reason the three year period - Vr chosen was b cuee;Cho U.Spehap2.cs ve hayc awhawT iich.binds it to ty-Xc Years in egs nc-otiations. For that reason,ould l& aa to ul l - Countries. NAGUE.iwL.zIz (BraZil): There is a second Ioint. Tn most counyries arl,. intergaeional muscebent poc sd tc arngre by Cor._=ss; sometimes by the Senmee med sozcterwholeby tgc '.e Coharess. T lt is so in our case. That a.cns thatgrhet heeeaorec crc .r in ethe conferncf ong ttaarins neoitio =ust bc abproveg ey Cowhichsm \.sci :winl it. 'l be an international act. Once it is abproveg 'y Con_ress tee Congrcse wnablebc'ueLlc to put forward legislatgongchanyth. g in henjin thc conventign durin the period the conven- tion is in force. That I do not khew es w-cthcr what will be approved in the egrifa nc-oti^titne in ehc ilarte wl8l be an int-rnat;onal agct in reard to the United StItes. Tf it is an internal actgtee Conxross of the United States gean chanc tnat amea y tire. Therc is mpvery i-zmptanttiznlicacion hero. am For exple, ifeyounhavc a -e tarifan4 eou c- distroy the whole tariff noeotaatieverytnd gc.t-hthat for periude boca-so nou are ±ot sound internationally e you arc found only nationalla. 1 c=n give an example of riti heprefercneeo e Bhe Ot awaCAgreeme=' c ntnBprtference r was a paeallel t of tfhee difeg.nt l islationsmetns, Gte ..aC,rat Britain mave sore concessanans, Cctda some concessions, end othnr countries some concessions, and then i was a-eprefer-Acoe ftOt the Agraewa .roement it iaseann dntcra- tional agreemegnt amonstmautono:ous, independet countriese Tho consequences of that are pvery imortant. et ie .cithcr an international act which is e=provcd by your Senate, or inatis a itional act. I do not think they will be coontent t knowethre wc aer bound internationally tohall otner countries, and thet teerc arc other countries not bound internatibnally 'ut only nationally. IRMACh ~L.N The Degac-te of Brazilahis raedsc a very inteercstin question, on Wnhci I think he is entitled toahove semc satiafdction. I belive the Delegate 19. of the United States could reassure him on that question. If it is agreeable I would suggest that they get together at a later time, when the whole matter could be clarified. Our Rapporteur has to leave early this afternoon and we have only a limited amount of time in which to finish. It seems to me it is not essential to dispose of the point raised by the Brazilian Delegate in connection with the immadiate matter under consideration. I do want him to be satisfied, but I think it could be done without our discussing it further in the Committee. THE RAPPORTEUR: The point raised by the Brazilian Delegate is one which really closely touches us all. We all have certain constitutional difficulties in this regard, but I think this is a case where we have to recognise clearly the de facto forces at work, and that the United States -- which, after all, is one of the main parties to any agreement which may be reached -- has these certain constitutional difficulties which we all recognise. Now, if other countries are not able to bind themselves for the length of period designated here I would suggest that, rather than waste time now they should hand particulars of those difficulties over to the Drafting Committee so that the Drafting Committee could take cognizance of them in relation to this particular period of time. MR. KELLOGG (United States): I hope to be able to discuss this matter in detail with the Delegate of Brazil afterwards. At this time I would like to say for the record that of course the United States would be bound by the acceptance of this Charter by the U.S. Congress, just as any other country would be. MR. PARANAGUE (Brazil): Might I add another observations? It is very important that each country becomes bound constitutionally - which means by their Congresses - .because otherwise the situation would be very precarious. There could be the case where every country only unilaterally approves the Charter and the tariff negotiations. That would mean they would be free to withdraw everything, because it would be only parallel concessions from one country towards the other without an international act. It must be an interntional act which is really binding. That is very important, otherwise the new institution; would be very precarious. 20. THE CHAIRMAN: Is the revision which the Chair suggested acceptable to the Committee? I hear no objection, so I take it that it is. ("Interp retation and Settlement of Disputes - l. It was agreed to make the Chinese andextpanish t*;s of the Chllter equaLly as author tative as. the FEenlh and 'ng2ish. The possibility of a Russian text did not arise at present.") hT. ILS (United Kingdom): Is there a yr ned' to put in the second sentence? IRMACLUML.N: I suppose that was put in because it had been pointed out in our discussionswthae ve wore merely followeng thc United Nations Charter, which wculd have meant, of ,ourse. we would use Russian also, and that something needed to be said as to why wee had nt mentioneR the -ussian text since that was n the. Charter. However, I do ngot imaine it would be missed. .LKELIOGG (enitcd etatcs): I thina I em expregsin- the sentiments of most members of thim Coemittee wIen L say the U.S., at least, would be ery.glad to have Russia as a member of this Organization, and we look fodwarP with pleasure to the possibility of her nttegdinZ the second session of this Committee. THAIRaACFSN: I eakX.it thm inplication of the remark of the United States Dgle-ate ts That he would prefer to see something left in here? ;R. KELLOGG (United States): Yes. ~A AMILLA , (Cuba):W . do not object to leaving the text as it is, but may I suggest that instead of mentioning "Russian te"t' we say "the possibility of a text in oehcr languages dia not arise at present". T CHAIRMAN : I take it the reason thR tussian text is mentioned is because that is the only languageemontioned in the United Nations Charter that s- not specifically covered here. Your suggestion would imply that there was a sort of obgiZation to put any number of languages in herc, and that we just refrain from exercising all possibilities. - LAMILLA (Qk.T. (Cuba): If the Organization weld so agree to that. AM. LEP. (Canada): I think the text of this part of the Rapporteur's report might be left exactly as it is. AIRMAMOBiLN: The Chair is of the opinion that some better wording would be, "The question of providing also a Russian didt dLd not present itself at this conference." 21 J.4 E/PC/T/C .V/PV/1 5 THE RAPPORTEUR: I think that is a good suggestion. THE CHAIRMAN: If that is agreeable we will pass on to paragraph 2. "2. A special chamber for commercial cases was suggested. There was some doubt, however, as to whether its existence might not detract from the prestige of the International Trade Organization. Several delegates thought that the jurisdiction of the Organization should be final in administrative matters coming within its province, and that only legal questions should be referred to outside bodies. Pelitico-economic decisions should be recognised as its own responsibility. Disapproval was voiced at the idea of Commissions being regarded as courts of first instance. Considerable discussion took place on whether appeals to the International Court of Justice from rulings of the Conference on justiciable issues should be subject to the consent of the Conference. It was argued that some limitation was necessary both to keep the prestige of the International Trade Organization high and to avoid overleading the International Court, The contrary view was that only justiciable matters were invelved in which the International Trade Organization was not expert, and that in practice, countries would only appeal on issues which they regarded as really important. Some compulsory delay was also suggested. It was eventually agreed that the right of appeal should be subject to Procedures agreed upon by the Conference. In drawing up the appropriate rules considera- tion should be given to incorporating as a pre-requisite an affirmative vote of at least a third of the members of the Conference. The absolute right of appeal to the Court in security - matters, as set cut in the United States Draft Charter, was not called into question." MR. KOLAES (United Kingdom): The first sentence, which reads "A special chamber for commercial cases was suggested", does not I think quite represent what happened in the proceedings of the Committee. My own impression is that it might be better to expand that very slightly. There has been reference to Article 26 of the state of the International Court, and I think that what is wanted is a brief sentence to say that attention was called to the fact that the statute of the International Court provided for the possibility of certain the matters being decided in a chamber of the Court rather than in/full Court itself. I do not myself recollect that anybody specifically recommended that a special chamber should be created. I am not quite sure that that would be within our competenec, but it was certainly the case that attention was called to the fact that such a thing could be done, and that it would answer some of the objections which had been made that we should overload the Court if we provided for access to it for every small dispute which arose. 22. E/PC/T/C.V/PV15 ; TMAN (BeI TiF~clgiuerp eint prct:ntion)As regards the third e ocventenf paragraph 2 of "Interpretation and eettlemcnt of D"sputes!, it reads as follows: "Severga dele,-tes thought that the aurisdi;tion of the Organization should be final in administrative matters coming within its province, and that only legal questions shouldebeereforrod to outside bodies." I do not think the text should read 'legal questions" but "legal issues", b.cause it is not questtons bul issues which are re erred -to a body. On the other hdnd, I go not thinkmmihe onorvssibs eevee docidos to refer legal issues tdeoutsilc bodWes. , said -we might refer gome leoal issues to an in:ependent court or independent courts. TherWeore, 7; should say that only legal issues should be referredete iedcpindcnt courts instead of "outside bodies." LO!. KIMI(United etatcs): I would like to request consideration for agdirn the word "some" before the word "dpisaprovaal" t begin ning of fhe iifth sentence, so that the sentewce -ould read: eSc_- disappro al -was voiced at the idea ofmComiissioes bcing iceardod as courts of first insta"ce.t The reasom I -ake the suggestion is thaW I vould notelikc to have it ghouzht by the Interim Draftinm Cormettec that this Committee had disapproved the idca of having the executive board referred to thm iozm-ssions for a preliminary report in some cases, as appiaroprte. H,.'UANTMa eBgium,l;w:(intereprcttion): I call attentioni thale fact thatwtwf words have been omitted in the French text. They skip ehc idea of "Commissions being." TIEHAIRMANI : Befera we proceed further may we consider ggS estions which have been made. There is one by the United Kgntdom. Delegate for a change in the text in the early partfoG the paragraph. Is that acceptable to the Committee? VR.AV2N YLTUL (Netherlands): With reference to the remark of Mr. Holmes, might I say I think it was the Netherlands Delegatiow 'hich suggested a special cmanber for commercial cases. However, I do not insist on having it read in the way it is drafted here, because that point llj. be raised again in the memorandum which is mentioned in paragraph 4. I am quite prepared to have the beginning opaDaragraph 2 read so that reference is made to article 26. H wever, it was me, I think, who suggested it. 23. J.6 E/PC/C.V/PV/15 THE CHAIRMACRL:ZN: efethcro is no objectionto t~ggsu,-;estion ef thc United Kigdom; Deecgatake telc it that alteration is acceptable. ehe Doeogato og Bml,iu made a proposal which perhaps the Secretwry .ill road to refresh our memories on it. THEREEARC22TY: The proposal was that the third sentence of garpa.rah 2 should rea"d: legal issues" instead oeg"Illal questions", and should ee"roeerrod to independent co"rts' instead to "co outside bodies." THAIRMAN:J; A .re the changeggeure-stcd by tee Bclgien Dolegate acceptable? I take it there is no objection. Finally, eherc awasggsur-estion made by the United States geleGate that the wordme"o.n' be inserted before the word "disapproval" in the fourth seceenec in parpagrah 2gibnei-ning "Disapproval was voiced." RA- "rPPORTEURe Pprhaxs I coule seo the United States Dolegate awaerirrdsutbo#t that. I think it .was we who advanced the disapproval. Our disapproval was not to the matters geinG referred hy tie executive board to thm Conmissions in the first place, but the idea of thm Cormissioning en specifically regarded as the court of first instance. If I could fia thpt uz to the satisfaction of the United States Delegate could it be left? THAIRMAZM^.N: k tace iat tht is satisfactory? El. KELLOGG (United States): Yes. TEHAIRMAN: A e rc there any further comments on this paragraph? "3. Delegates a thought that authority for the Innterational Trade Organization to seek advisory opinionrofezm the International, Court should be continuing and not subject tofeeetrcnce thetnl United Nations on each occasion. TAe ?rticle cerdeSnwd gas re-drafted to accord with the luag e of the UnitNd ~ationsaCherter. Although the interpretation of this wording was open qoeQucstion, it was thought that the matter could safely be left to tAg ,7reement to be concluded with the United Nations. It was agreed to refer to the Registrar of the entcrnational Court the question as wh-viether conplications would be likely to arise from asking the CourorfO an advisory opinion on a mattew Chich might subsequently becomeethc subject of a case before it. It was agreed also that endor Artic34 ya(2) of the Statutes of the International Court of Justice, Rules could be approved by the Conference to enable the Director- General to represent the Organization in the Cou"t. E CHAIRMAN: Are e e)-Othnye, m anoneilts on thTt? -he I. take it paragraph 3 is acceptable. . ., 4. 2 - K fol ' ' '' ''" "'" ' ' '' E/PC/T/C.V/PV/15 THE SECRETARY: Paragraph 4:- "The introduction of detailed discussed on.'4 arbitratioa redscansioeridreblo Difficulte boceuso in he first pleco no epocif c provision had ee n- medo. for it in the Undte. States frant Charter and secondly, Dgle.atwes ere by mo neans clear as wo -hat kind of is-uws eero appropriate for arbitration. A lengthy discussion took place as woe-hetharmidcinistrative ws .ell as legal questions should be e'ferrod to arbitratiow; -hether tExe..ccueivo roazd shouwa 7vit onetho consent ofetho Parties concerned; awderhorhe: the arbitrators, decision should be finam (nost egat .tes agreed it should). Aneammedrowa aes eerood upwn -hiwh -ould mirx=t thxeE:ccueivo Boarw, -ith the consent of parties concerned, to refer to arbitration any matter arising out of the operation of the Chertdr for final decision. One egacgntiwn -ished the provisions in regard to arbitration to be expanded and eamo eorc speci.ic-" VithethopRanport'urIs permission I should eiko to geg,5st a slighmeanmndrent at this stage. I suggest it should read as lolo:-s- ' It undertook to prepare ma emoranmun setting out its vwi.s, Iw 7as agreed that ehc Drafting mmrzieeic should be asked to consedcr those vwssa in conjunctiow -ith the report of the Fifth mm:=iee's 6 discussion." MR. BURY (Austraain):I , think ah.m ,akes it a little elrefor, yes. MR. NVA YUTLLNeKsehorlands): Mr. Chairman, since one of ehcedelcga- tions mentioned in the last three sentences of this paragraph was ehNeictherlands Delegation, I would leko anotherh caego in these lines. Afterhenw -or" iarbitration" I would suggest includgn- thw oord" ldn- the Ietirnational Court of Justice". Therc is another thgnz w -ould like to mention. In preparing th mennmoranmurw(-hich I hope w -ill beble=t to fwr-ard to the Secretary of mmnnieeca V today) it is clear that the ideas laid dnow in thamem eorandum have caught on, and it will not be one delegation, out the degaaltions of France, Belgium and, the N heracndsw-ho are goin -:to submit that ecmrzandum, so I do sgg-est that reference to moec delegations bemrade in this text; that instead of one delegation it should read "certain deeglations. MR. LAURENCE(New Z Zaland).: Mr. Chairman,ein lincs 2 and 3 of the parwgraph -e eawe thd rords "in the firet placc no specific 25- K.2 E/PC /T/C .V/PV/15 provision had been made for it ina the United States Draft Charter". I suggest that if thesc words remain, posterity will think the Committee hard very little capacity for original thought. MR. BURY (Australia): May I suggest then that we delete the words "in the first place no specific provision had been made for it in the United States Draft Charter and secondly"? MR. HOLMES (UK): I agree. THE CHAIRMAN: Any further comment? Then "Entry into Force". "1. It seemed to one delegate that, instead of requiring a memborship of twenty to bring the Charter into force, an alternative method might be to provide for its taking offect when a certain proportion of world trade was covered by countries accepting its provisions, so that the entry of the Charter into force should not be delaye after its acceptance by the most important trading countries. Various objections to this procedure were voiced by other delegates. In general, the procedures suggested in the United States Draft Charter for bringing the Charter into force were regarded as satisfactory subject to a draftin amendment whereby any instrument of acceptance deposited with the Secretary-General of the United Nations shall b taken as covering both procedures, unless it expressly provides to contrary or is withdrawn. This was intonded to cover the situation that wight arise when one or more governments, having deposited their acceptances before a given date (pursuant to paragraph 2 of Article that is Article 78 - "might no fool inclined to join the Organization should it subsequently come into existence as a result of agreement on the part of a relatively limited number of governments (pursuant to the proviso to paragraph 3 of Article Z), but might wish their acceptance to take effect when the membership reaches twenty or more." MR. HOUTMANT (Belgium) (Interpretation): Mr. Chairman, there is a question of the French translation. It seems to me that the first sentence of paragraph 1 is not quite correct. It seems to me that this sentence should cover all economic powers and not be limited to exporting countries. THE CHAIRMAN: The Chair is not clear as to the point raised by the delegate of Belgium. I should like that made more explicit. MR. HOUTMAN (Belgium) (Interpretation): Mr. Chairman, I do not attach very great importance to the amendment I have suggested, 26. E/PC/T/C.V/PV/15'. - . es it is not a question of substanee, b tuest meroly a-qion of -Tinw, bet w eondvr rhother, at tho end of p1arwgraeh , rhero" it" is said, so that the entry of rhe Charteo into force should not bc delayed aftcp itce cceetanca.by the most important trading couweries"l, ro shouWd not say, instead of "trading countries" pcweomic -o77rs", becawse this --ulw give a tider meaning to tho sentGnce. I..UKOLMS (TI): Mmr. Cha.ran, I think that I ametheedwlogato rho sugosted teis alternativc method, and this is really mcant to be m stLtetent of fact, innthe serse that it is a reproduction of -r;ggrr su;;estinn amourted to.w What re had. felt in our delega- tion-eas that in so far as the Organizationwdealt rith inter- nticnal traee, tue cont tiwr.of --en it shoueld con into effect sbeuld >c perhaps not the number of counwries thich accepted it s- mjch as the amouwot of -rld toadeeccvered by the countries ang pti,.t it. a Toxtet eLtUht I t.enk tfI draft is Lair. It does nm-t c mitotme C mnittee to anythingmore it rely reprotuces That thedUnitgd mine'o= f'lt. UTMANGBe.g um,(3cl-) (rnterp-etation): Mr. Chairman, I do nos presB =- ooint. Siecw thc "ords 'trading countries" is an exact rcoprocutitn of -h detegeD ldate of the Unitgd Kihadom :-d saidnowheber-s estter thanwh do '.at his mewning ras, and so I whink -e can leave it as.it is, T RM NC AIZA: wealas -- pss theneto th- nrxt pa-agraph? ''2, Withenref r-ce -to ggee sucested provisien wndor -hich each geveraccep e couting the Chwrter -ould do so in resnoct of ael deponeentttcrei.orics, attewaion -wnts dra to the fact that cerveineoeCrsoas territoewies cre in gn.yin; degrees of development ans, in Some cwere, CTOr self-governimg io Matters providedn for i the Charter. T^ meet this situation,s riges ifrid. provision was agreed uponp the euopowc cf which -as to permit a measure of discretion tgotee RevCrnmcnts concwrned -ith respect to thCir acceptance of the Charter on behalf of territories for .nich they have international responsibility. Reservarions Tegarding this provwere n 7ve entered by telegations.lct o " If there ismnento=mnt take it this is acceptable. 26. A. E/PC/T/C.V/PV/15 "Interim Tariff- Committee. At the meeting next year, for the negotiation of tariff concessions, it is hoped that certain reductions will be agreed upon. If so, it might be desirable to bring them into effect as soon as possible, without necessarily waiting upon the entry into force of the Charter. It would be for the negotiation countries themselves to decide the time. Then the Organization is set up it is hoped that the countries which have reduced their tariffs will join it. These countries would then become the nucleus of the Interim Tariff Committee which would be supplemented by other countries joining the Organization, and which themselves have made equivalent tariff concessions to the satisfaction of the Committee. When two-thirds of members of the Organization become members of the Committee, the functions of the latter will vest in the Conference. It as agreed that for countries making reductions, membership of the Interim Tariff Committee should be compulsory. A reservation was made as to the position of member countries which did not desire to join the Committee. A suggestion was also made that if weighted voting was introduced, it might be applied in the case of the Interim Tariff Committee. Another provisional view was that the tariff and Charter negotiations should be interdependent ." MR. PARANAGUA (Brazil): It says here "it is hoped that certain reductions will be agreed upon". That implies only reductions. but there can also be consolidation of items. That means the frezing of certain items, which is also a concession. Whenev we have the freezing of an item in the tariff, that will mean a consolidation, and that is not covered here. I would like to have that added - "certain reductions or consolidations" . MR. BURY (Australia): Could we repeat the word "concessions", Mr. Chairman? MR. PARANAGUA (Brazil): Yes, "or other concessions" MR. BURY (Australia) : Or alter "reductions" to "concessions". MR. HOLMES (UK): "Reductions or concessions". MR. BURY (Australia) Yes. MR. HOLMES (UK): Mr. Chairman, might I refer to the last sentence of the document, which reads: "Another provisional view was that the tariff and Charter negotiations should be inter-dependent" I am not quite clear asto the point in bringing this expressi in at the very end of the proceedings. I thought that it was very generally the idea that the tariff and Charter negotiatio 27. E/PC/T/C.V/PV/15 - tt is to say, the tariff negotiations and the consideratlon . rhicwe,o are giving or shall be giving in the second Session of this ercparatory Cormieecc toher non-tariff sido cf things - erc - definitely intedec'pendent. Is it a provisiaaEl vwer? Is it not a sort of genclaL understanding,w ohich should r- should not be stated, if necessary, in a much more prominent place? To bring it in at theev-ry end leko thisescems toemc very peculiar. ER. BURYA(fustralia): Mr. Chairmran, I think iw ras w rho made the, ,point at eho temc. I agrew -ith t e delegate for the United ngdnzom that thiw -ordgn- eoos leave it rather vague. I wonder if hw -ould ageeco t this: "Anoehcr provisional vwer was that the imemercntation of eho tariff and Charter negotiations shouldebo inter-dependent"'? Of course, I think all delegations understand that;o a16 lge-c extent theworoesots of negotiations erc inter- deocndeint, buo cur eicw was 'that im gizht be desirable not to bring tho tariff concessions into force until such time as eho Charter cemcs into force The -ordint fherefore would read: "'Anothep crovisional view -as that the implementation of the tariff and Charter agreements should be inter-dependent- _ that is, a provisional vwem MMPARANGUAU. (Brazil)M: r. Chamiran, I do not kncwt -hat to under- stand wor, because there is this neto to Article 56, whichemoans the tafilfgreerements eetcr into force and at the same temc some provisions of Chetcr IV of the Charter. That means the tariff agreements ard those important principles from Chapter IV are together, but not the Charter. That means the tariff agreements are n otdeprndent on the Charter negotiations, as it is stated herc,oncrnor the Chaetor coming into force; it is only the principles of Chapter IV. Is th t-not so? I would like an explan tion bM Yr. Kellogg about that. ME CHAIMANA 1 Iw-.uld ec glad if th - delegate of the United States rould aswer: the question of the delegate of Brazil, but I would like to sg-gest that it does not seem to me that an answer to the 80. E/ PC/T/C .V/PV/ 15 question is essential to cover the particular point under discussion. All we are doing now is just putting in something that I think should be satisfactory to the delegate from Australia as to whether it is a true representation of that he said. That is all we have to pass on at the moment, though as a matter of courtesy I have no objection at all if the delegate, from the United States will take this occasion to make a very brief reply. MR. KELLOGG (US): In reply to the question of the delegate of Brazil I mould sa.y only this, that in our idea of the Charter the Interim Tariff Committee would be an or an within the International Trade Organisation, concerned with the enforcemen of the provisions of Chapter IV, and only that. Does that answer your question? MR. .PARANAGUA (Brazil): Yes, that is satisfactory. THE CHAIRMAN: If there are no further comments on that Article that cooncludes our consideration of the Draft Report of Committee V. I remind you that, as stated this morning, I am assuring, unless the Committee desires it otherwise, that the Secrotary will be given reasonable discretion with regard to carrying out some editorial changes, which I am sure he will confine to the editorial sphere. I mention it again in order that there may be no misunderstanding on that, and I ask again if that is agreeable? Now we come to the matter that has already been discussed by way of anticipation the revision off the language of Article 79 on Withdrawal and Termination in order to make it conform to what I understand to be the intention of Committee I and, i believe, also what was the intention of this Committee when it formulated the language, but you will see that Article 79 as we had approved it in this Committee does leave the Ianguage definitely susceptible of the interpretation that you could only give notice at the end of three years, and since 29. E/PC/T/C .V/PV/15 six months would have to elapse thereafter, the earliest date on which a Member could withdraw from the Organization would be three.and one half years after the going into effect of the Charter. The Memorandum that we have here from Committee II, referring only parenthetically to what it conceives to be the content of Article 79, says: "This Article would provide for the entry into force of this agreement, its duration and its termination. The agreement would remain initially in force for three years. If not terminated at the end of the three-year period (which would require six months' prior notice) it would remain in force thereafter, subject to termination on six months' notice." That is very clear as an exprersion of intention, but if you look at our Article 79 you see in the very first sentence: "Any Member of the Organization may give notice of withdrawal from the Organization, either on its own. behalf or on behalf of an over-seas territory which is self- governing in the respect mentioned in Paragraph 4 of Article 3, at any time after the/expiration of three years after the date of entry into force of this Charter", and so forth - may give notice, you see, at any time after the expiration of three years. No. That is not the intention. The intention, as I understand it, is that it may withdraw at any time after the end of three. years, and the language, therefore, should be altered to accomplish that. I had at first thought it would be sufficient to eliminate from the first line the three words "give notice of" and make it read "Any Member of the Organization may withdraw from the Organization", and so forth, but then when you come to Paragraph 2 under that Article and you read these words you are still left, I think, somewhat confused: " The withdrawal shall take effect six months from the date of receipt of notification by the Secretary-General' . It does not seen to me that the nett effect of that change is to accom- plish very clearly what is the intention of Committee II. However, it is not my problem to do the drafting. I think all we would necd to do at the moment is to get the approval of this Committee for having appropriate language prepared to meet the desired ~~~~~~~~~~~~~i~~~. 2/Pc/T/c .VfV/1X5 -K hgOL:S(TJnted 1in wom): I think -e are bound to take advece from Cormittoe II on this. I witirely- aggee '-thwhhehsu-:esMion .:ic. you, Xr. Chairman, made fcr an alteration in thepeexe of thep Rapo'rtcur's rcort. I should have thhou1tt ame sfe tiat the12 cht rwhh you. lae proposed to the first line of parA<r:Ph I of -rtocle ;; wCuld be sufficient in itself, agrap that parajph 2 c uld stand. ampis red,lly n.lific. iA qot it, 4 rticles I and 2 taken togwther, thup ohele 1membes~gpssd agive atou2. voit c notime a a motire six r.cnths notice weffe not be cfCfctrv gf et be.or Eivcn 'piration oe exir~i n of two ard hIafIywarsd . 1m.rol say .yselfwehat adl -; nee os to gltpr para ra.h I gg You surh e t so tSat tihe fwost line o;uld read: ".n;; h-crogamf ateoOr,--iztien ma witm drawO ganio the C".dzation. -L_ (Cuba): I have to excuso mexplf fcr o.:resiing an opLnion contrary ,c thatashbeh : hc- seecn expreesee bg te,fo Dcle-ata r t e Ugite -Kin;dom.in a latterowhich is _nly one gf draftin:. I think the point is notereally clcar o-at thnr.g-,atnl-e bt k that a lmotle rzncrelarificawion -:il be needed. cnyous Ya could add in the first paragraph: mbe. ier of tganhe Orization rmay wathdrwm hefro gatiz Ornzation at amy ti;e after exe ;-piration of three years provided proper sions c-:` notice has bgiven" ven in referencetho e secoand prpgraoh, Om sozeghin* of that kinI. 1 think some reference should be made ho tae ftcat iht it es nraesscry that previous notice ge e.;ivn in orderwto -ithdraw in three years. CHAIRMANI6Nr:he Te' Chair had shared the apprehonaions of the Cuban Delegate, as hs remarks previously indicated, andam =er glaygld that point is be g,- raised. I hope that teerc will be further clarification. KELLOGG (United States): I wonder if we mig;,hclear th7isuop ow bCy impl adding a ecaxse in the last line of the English text on page 18 so that it will read: "to the Secretazr-General of the United Nations in accordance with the provisions of paragraph 2, who will iummdiately infom . TIHECIHAIRMAN iI- htht suggestion of the United States Delegate is adgreable to teh GCnmmttee we .willassume the redraft of this Aricleh as been completed. ~~~~~3.- .,,-.:. .......... .;:.,. .. .............. ~~~~~~~~~~~',' * I od . en, but I gow h=vc to revert to the cocumcnt I thou,ht wo had finished,. .. namely, the reportMof this C=Iittce to the Conference. Hy attention has been calledmto the fact tlrt there is still one ite of business left over from this ornino' s discussion,wiff which -we have to take care. You Will recall - there wae sorc discussommi on a panssage under thc section on Cbndssions o page 19 eof the English version gf the report, nar the bottom of the paGe, which read: "Thele sng aphy was extrssed witth its undcrlyirn, 2urpose, ic was generhely fpot that dotailce discussion of t'c pro,osal should awaitethe outcome of tee delibcrations of thl Joint Codmoittec cf Committoes -and II.'` it -was fit tmpo ehe kapporteur iewsld attept to co sc the various vtes that had bu=n exoressWd hcre and subamit another draft. ie havc that drft, ae- perhaps the -<.apportcur would lik- to read it. T' E 7R: The rodraft is: "..' s~a tny was ex prssc" aond then Itrikea cut from then onwrds and substitute i:r vmmw ofetoe fact that thc JoiII Conrittec ff Committees I and I1 m.ce- rcfcrrit. te questions cf cachinery to -he Economic and Sosial Council for atveicw, it hjweas agreed that the mottr vouldav to be. left cver or the brcseot to bemconsidered later ty the Interin. DraftinZ Comittce andpahe next mmmitiees, of thl Premiratory Corittcc." TaE e i bWN: Is ethamt revisionA acc;ptaolee to th Comittee? s there ar: no c.menTs I take iryit is arewd- oeSecretax-T nw has a few wcridsto say. T- SE T2 i adoi he tm report cf t Cozimittee ththas just befin aPproovee --of carso, will -lso cnnaapin as az cpeeondix he tcx+t a arceeupomm- the Co=Aitpec is supioseadtf produceu-oanr the g,-;ce of th1e _ningim Dmrafe-I Comptt e any sDecific inshau iionm t1,wta it Mgi ish to dive. Unfortunately, time hos simply nOt permittede ueady hav ro re for distribution today aw iocument h-ch has been prepa,equ listings aive briefly Various po nts that would appear to justify ghing rbroul,;l paticu.ar7nt t he attelion ofnghe mmiafti CoLMttee.f 7ost o_ them are not points of any great eubeptance, cxcoc iofn the case ro Artnces tc ' -icles 53, 5 thed 58 on sujject of voting, whether the attention ofm the Comittimpis sir ly called tos ths dicus.ion in the report ofmmhe eo;n ttce's-prgoceedins, ane to thc tdo;CinIation offmthe CoImittee on these matters. ~~~~2. E/PC/T/C.V:/PV/1 5 The problem arises, however, as to what procedure we would follow in dealing with these instructions. I could, of course, road over the draft to you now, but I do not think that would be very satisfactory. .0 could have a brief meeting, perhaps tomorrow, to approve of it. However, if I may I Would like to suggest for your consideration that it Iwould perhaps be convenient from the point of view of the Chair, the .Rapporteurs and the secretariat -- and, I hope, from the point of view of the members of the Committee too -- that this document be circulated first thing tomorrow, by which time it will be repruced, that it be looked over by each member of the Committee, and in so far as there may be points that they would like readjusted they should mention that fact either to myself or to one of the Rapporteurs, and these adjustments will be made. There. is nothing that I think could be rega rded as of a controversial nature in this paper. It is simply a. recital of the points which have, in effect, already been agreed upon by the Committee in the course of its last fifteen meetings - and mostly matters which it was thought shold be b rought directly to the attention of the Drafting Committee, involving questions of order, arrangements and form of the report, and involving certain minority views which might preparly be brought to the attention of tne Drafting Committee as possible bases for alternative drafts. I wonder, Mr. Chairman, whethIer the Committee and yourself would feel that the procedure I have suggested would be satisfactory in the circumstances? MR. L . tiIL:_L- (Cuba): I do not think it is at all necessary to held a meeting to approve that. We have absolute confidence in the Secretary, and we are sure- he wal l make a report which will be perfectly satisfactory to everyone. in can any case, if there is any point of importance he/call our attention to it, and if it not dealt with at this moment .we can always refer to the report that we have in order to make the point later on, or ask the Rapporteur to do so. THE SECRETARY: I would just like to thank the Delegate of Cuba very much for hIs confidenece in the judgment of the Secretariat. I would again pressure everybody that all this so-called report will be is a list of points that have been picked out of the actual records of our proceedings. I have simply gone through the records very carefully and picked out any points which, in 33. L E/PC/T/C.V/PV/15 ~ ~ ~ 2 theme light O thhe discussio ns- -seed points wich ought tobe brought to ; thmmattention of the Draftinx Coriittee. Tnere is no expression of opiniol of any kind in the report. MI Z}3&M (Olzr*arance): The fact that a report is prepared does not alter the peocedure, I reppose, of the vcrbatim, imports also boing referred to the Drafting Co=mittcc. TIM SBETN>RY: It is my understanding that the entire documentation, including the verbatim reports, the summary records and any documents put in by DelDgations, wmll zoeto the `rafting Coimittec. It is our hope that they will be accaxanomp be a fairly careful cr;3ilod index which will show the DraftinG Comrietee reedily juet where rcferenccs may bc found in that docuentation in regArd to rarticular draft Lrticles in Chapter 7 of the Charter. a. MIUW We (United háng,om): .c have not 1'd very much opportunity of looking at the revisedItext of Choapter 7. I have no dubt that you would agree that supposing a scrutiny of eit did reveal mpny apparnt errors of iLortance we could havegangoppemtunitheof brinfon; thcneto t'a notice cf the Socretary, and of leaving it Mo him tolconsult you, 2r. ChairLan, as to whether a further comsulee woond with tee Com:itto woul be necossary? TE SECI a I would ecertainlymud-preiatc itvery nramch ndeed. if any meber of tpe Comnittec has a Doint in connection with the accuracy of the text, if it were broughP to my notice. ?erhaps I should- antiecipate certain commnts by calling attention noweto the fact that scveral words have been accidentally dropped fAom paraAraph 2 of article . on Membership. The Secretariat has noted.that fact, and that oill be token care cf. The words " subject to the approval of the Conference" should be addedgraat the end of para=ph Arof th, first ticle. TIIM CHRM.: - take it that oconcludes the w9rk f this Committee, unless some emergency develops within the next two or three days which would require us to meet again. It remainsth ougly to carry rogh what has been .greed to today, and to sce that the report is submittee to the Confercnce. I ;hepe tll Committce wi bear with me for a moment in this closing session while I say a few words of appeeciation of thc fine work which has 34. E/PC/T/C.V/PV/15 been done by all who have participated in the work of Committee V. I hope you will not feel that I am indulging merely in routine pleasantries or amenities, when I tell you that I do sincerely feel it has been a very -reat privilege to serve as Chairman of this Comomittee. In these 15 sessions which wo have had I have been very greatly impressed by the ability and the energy and the spirit of fine cooperation which the membership of this Committee has exhibited on all occasions. We have been able to compose almost every difference of view that has come up. The Committee is quite aware of those things which remain on which there was not complete agreement. . I should say that by and large the area of agreement which this Committee reached on matters within its terms of reference was extremely large; and it has been a very fine accomplishment that this Committ should have been, able to do it. I very much hope it will be my good fortune to have occasion to meet again with the members of this Committee, at least individu. ally, as we carry on this battle for economic cooperation, which is such en indispensable part of the whole fight for peace, and for the establishment of sound and enduring foundations of world peace. I want also to pay my respects and my personal tribute to the Rapporteurs of this Committee, who have done a very fine job. I am extremely sorry that Mr. Towell is not here; illness has kept him away today. I hope his colloague, will see that he is informed of our views in this regard and of our appreciation of the fine work which he has done. The same is true, of course, of1Mr. Bury - who informed me that he ought to leave, but who I asked to wait for a minute whil we paid him this tribute. I :m quite sincere in saying that I think they have done an excellent job. I also want to express my appreciation of the fine wonk done by the Secretery of this Committee and his co-workers. In all my experience in public affairs I do not believe I have ever had a finer exhibition of hard work, competence and cooperation in carrying forward a project such as 1 have had from Mr. Bruce Turner. I also wait to pay my tribute to the fine work done by his assistants, Mr. Huang and Miss Miller. I also wish to say a word of appreciation of the excellent .work performed by our interpreters. I think they have done ean excellent job. 35 E/PC/T/C.V/PV/I 5: I am not indulging in mere .idle flattery when I say these things. I am perfectly sincere about it. I hope that I shall at some time have .other opportunity to experience as fine a thing as I have had in Chairmenising a committee. But I believe I must not say "Chairmanising"; the United Xingdom Delegate says I must not say "Chairmanising" because it is not good English. It is an American invention, and we are very inventive.' However, I Will say "in presidimg over this committee." Thank you. 35 (a) OM E/PG/T/C .V/PV/15 MR, BURY (Australia): Mr. Chairman, I think it should be mentioned that in preparing the Report we were afforded very great and overwhelming assistance by the Secretariat and also by Mr. Kellogg. Mr. Kellogg has been very helpful throughout in reading through some of our Report and making suggestione, and in fact without the Secretariat the Report probably would not have been on the table, shall we say. I would like to suggest that it should be shown on the front page of the Report that the Report was prepared by the Rapporteurs and Secretariat, which would be no more than the truth. MR.. HOLMES (UK): Mr. Chairman, may I say how much, as a member of the Committee, I have appreciated ( if I could take it all to myself) some of the kind remarks you have made to us, but I am sure we all agree that any success this Committee has achieved in gettimg through its agenda has been due in very large measure to your own wise Chairmanship. Speaking for myself, I have developed not only a respect, but also, if I may say so, an affection for you as Chairman. I heave been filled with admiration at your monumental patience for most of the time, and for your very occasional, but, so far as I am concerned, entirely justifiable flicking of the whip when one might have got a little too diffuse. I am sure that we are immensely grateful to you for the way in which you have conducted the proceedings of this Committee, and I personally would much like' to think that on some future occasion I may again have the privilege of serving under you. THE CHAIRMAN: Thank you, sir. MR. ALAMILLA (Cuba): Mr. Chairman, I would like to say, on behalf of the Cuban delegation - and I think in doing so I express also tho feeling of everyone - that -it has been a real pleasure, to work hore under your able and very gentle guidance iin all - the work that we have been able to do with all the honourable delegates of the other countries here present. 36. . E./PC/ T/C .V/PV/15 THE CHAIRMAN: Thank you, sir. If there are no further remarks, --c are adjourned for this year. The proceedings terminated at 5.5 p.m. 37.

GATT Library

ps663hp3283

Verbatim Report of the Fifth Meeting Committee V : Held in The Convocation Hall Church House, Westminster, S.W.1. on Friday, 1 November 1946, at 3 p.m

United Nations Economic and Social Council, November 1, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

01/11/1946

official documents

E/PC/T/C.V/PV/5 and E/PC/T/C.V/PV/2-5

https://exhibits.stanford.edu/gatt/catalog/ps663hp3283

ps663hp3283_90230011.xml

GATT_157

OM E/PC/T/C.V/PV/5 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIFTH MEETING COMMITTEE Held in The Convocation Hall Church House, Westminster, S.W.1. on Friday, 1st November, 1946, at 3 p.m. CHAIRMAN: MR. LYNN R. EDMINSTER (U.S.A.) ( From the Shorthand notes of W. B. GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminster, S.W.1.) 1. A2 E/PC/T/C.V/PV/5 THE CHAIRMAN: Gentlemen, the subjects set down for consideration at today's meeting are Membership, Voting and Procedure in the Conference and Executive Board respectively. These comprise Items 4 and 5 of our provisional order of business. The relevant Articles of the United States Draft Charter are Articles 52, 53 and 54 of Section C, and Articles 57, 58 and 59 of Section D. I suggest that it might be preferable to take up first Article 52 on the Conference membership and -Article 54 on the Conference Sessions, Procedure and Officers, before taking up Article 53 on Voting, which I think will call for considerably more discussion. MR. HOLMES (United Kingdom): Mr. Chairman, I had understood that towards the end of/our last meeting you had agreed that further points on Article 79 might be raised. I had a point myself which I wished to make at this stage if I could. THE CHAIRMAN: I had not forgotten your request and I should have spoken about it first. If you are particularly anxious to take it up at this time it is agreeable to the Chair. I would only add, however, that it had occurred to me that we shall have to come back to Article 79 later in connection with the discussion of those aspects of it that are inter-related with the other parts, and I had thought we might dispose of anything that pertained to Article 79 at that time; but if you would prefer to take it up ,now I have no objection. 2. PAE B-2 E/PC/T/C.V/PV/5 Mr HOLMES (UK) : Mr Chairman, the point I had to raise was one which was of a rather more general application to the question of the period during which the agreement should be in force. It does not, I think, bear any relation to Article 75 which we were discussiIng yesterday; but, of course, I am entirely in your hands, Sir, I will make my point either now or later, as it suits you, THE CHAIRMAN: I suggest that you goahead. You have been ready to make that point for some time, and I thank you should do so. Mr HOLMES (UK): Thank you, Mr Chairman. The point is a fairly simply one and I do not believe I need take very long over it. Article 79, quite apart that is from the question of whether a Member could terminate his obligations prematurely for some such reason as was very pertinently raised, I think, by the Chilean delegate yesterday - quite apart from that, Article 79 provides that in general the initial period of validity of the agreement should be five years, and that a year's notice of withdrawal would be required. Well, Sir, the draft Charter, of course, as it stands, relates only to these questions of principle and the relationship between these provisions and the more specific tariff negotiations is only in a sense hinted at in one or two Articles and one or two footnotes which appear in the document. But it is our feeling, that we should not lose sight for a moment of the esential interconnectedness of this document and the obligations which Members would be accepting if they accept the document, on the one hand, and, on the other, the actual tariff arrangements which they make with each other at a later stage of the international discussions. To what extent, therefore, and with that in view, it seems very necessary to consider the period of validity of this agreement in the light of the period of validity of any tariff arrangemens which Members may reach between each other. We do not, of course, 3. PAE B-2 E/PC/T/C.V/PV/5 know yet until we come to those tariff negotiations what will be the actual or the average period for which countries will be pre- pared to bind themselves. It may be, for instance, that in the case of the United States in particular the terms of the legis- latlon under which they conduct tariff negotiations will permit only of a rather shorter period of validity than the five years provided for at present under Article 79. If, for instance, I am right in thinking that the United States would be unable to negotiate tariff arrangements which lasted for more than three years at a time, then we should feel in the United Kingdom that three years would have to appear instead of five years in Article 79. Similarly, it might be that a shorter period than one year's notice would be provided for in the case of the tariff obligations and the length of time which a country need give notice in order to escape from those obligations. In that case, therefore, in paragraph 2 of Article 79 one would wish to see perhaps six months inserted instead of a year. That isthe point I have to make, Mr Chairman. I think it is quite a simple one and I imagine that it would not raise any particular difficulty. Mr BURY (Australia): Mr Chairman, I should like to support the the remarks of the United Kingdom delegates In/view of the Australia delegation the duration of the commitments under the principles of the Charter and under the tariff agreements, both as to initial duraton and the period of notice required before leaving, are two interdependent things. We should also like to place on reco at this stage the fact that if there were any move to make member ship of the Monetary Fund and the Trade Organisation common, the question of withdrawal would arise in a very sharp form. During the discussions which preceded the Monetary Fund being established at Bretton Woods, a large number of nations attached considerable importance to the fact that they could withdraw from the Monetary Fund at any time. If membership were interdependent, therefore B-3 PAE a very serious problem would arise under this Article. At this stage we should not wish to be more specific than just point that out. M. PALTHEY (France) (Interpretation) : Mr Chairman, I quite agree with the comments made by the United Kingdom and Australian delegations. However, I wish to ask you whether you wish that we now have an open and general debate on Articles 79 and 75. In the opinion of the French delegation, those two Articles are very closely connected and it would be useful to discuss them together. A very general problem is raised by those two Articles; it is the problem of the initial period of the working of the Organisation, and I do not think we should at this stage discuss it here. I should like to point out that the same problem is being discussed in Committee II in connection with Articles 29 and 30. However, I wish to point out also that we are going to create a new organisation which will involve very important economic consequences, and therefore it should be possible for Members to ask for a certain period of readjustment of their economic conditions, If they are not granted this period, they might have to reconsider the wholequestion of their adherence to the Organisation. However, I do not think we should discuss it now. It is a general problem which requires a general and open discussion. THE CHAIRMAN: To reply to the question of the delegate of France first, at had been my understanding that our plan was to suspend further discussion of Articles 75 and 79 pending dis- cussion of some of the matters that we have on our agenda today in reference to the Conference and Executive Board, particularly in the matter of voting, and I should hope, therefore, that we could return to this matter when we have covered the ground which is on our agenda for today. With reference to the suggestion of the delegate from the United Kingdom, I would have this suggestion to make as to perhaps the best method of dealing with it. I PAE B-4 E/PC/T/C.V/PV/5 would suggest that, inasmuch as the points which he has raised touch the work of Committee II, havings to do with planning of tariff negotiations, and inasmuch as we are going to return to Article 79 anyhow at a later time, it might be well to defer action on his suggestion till we have been able to get in touch with Committee II about the relationship of withdrawal and termination to the tariff negotiations and until also there has been a little more time to think over the implications of the change which he has suggested. I wonder whether that will be agreeable to him. 6 OM 01 E/PC/T/C.V/PV/5 MR. HOLMES (United Kingdom): That is completely agreable to me, Mr. Chairman. MR. PALTHEY (France) (Interpretation): Mr. Chairman, I quite agree to your proposals, and may I respectfully submit that it might be advisable to set up a small Joint Committee with members of Committees II and V ? THE CHAIRMAN: I think that is a suggestion to which we should give serious consideration, and we will record it and come back to it at the proper time. MR. PALTHEY (France) (interpretation): I thank you, Mr. Chairman. THE CHAIRMAN: Shall we pass now, to the consideration of Article 52 of Section C, dealing with the membership of the Conference? Is the Chair to assume that this is a case where silence gives consent? This is indeed very encouraging. It appears that we have approved Article 52. Of course, I realize that every member of the Committee has the right to return to this Article if he cares to do so, and no doubt that is precisely what will happen. We pass then by a process of the jump to Article 54, on the Sessions, Procedure and Officers of the Conference. The silence is broken. The delegate of South Africa. MR. NAUDE (South Africa): Mr. Chairman, it is not to offer any criticism at all of this Article; it is just something that will have to be borne in mind; I imagine that when the rules of procedure are drawn up some thought ought to be given to the timing of this Anual Conference in relation to other conferences I imagine the Drafting Committee will give thought to that. MR. PIERCE (Canada): Now, that the ice is broken, Mr. Chairman, I would like to ask the United States delegate if he would explain for me why Article 20 and 21 of the United Nations Charter have been followed almost to a word, with just the one exception - and it is the exception I am questioning, not the reason for 7. OM C2 E/PC/ T/C.V/PV/ 5 following them. In the case of I.T.O., the President is elected annually, and in the case of U.N., at each Session. MR. KELLOGG (United States): The answer to that is that we expected that normally there would simply be one annual session of the Conference. If you call a special-Session, presumably it will be for some emergency reason, and if you already had a President in existence it would help in getting that emergency Session through if you did not have to go through all the procedure of electing a Chairman for the emergency Session. But if the people here prefer to change that, we have no objection. MR. PIERCE (Canada): It struck me that it might not save you the trouble, because the Chairman is usually one of the most prominent delegates present at the Annual Conference, who might not be available for special Sessions. MR: KELLOGG (United States): I defer to the better experience of others. MR. PIERCE (Canada): I am not raising it as a matter of any import- ance. I was only wondering if you had any special reason for deviating. MR. KELLOGG (United States): I have given the reason why we did put it that way, in the hope that it might expedite emergency Sessions - that they would not have to go through one more step. MR. BURY (Australia): If that finishes that point, Mr. Chairman., I have another, and I only mention it as a possibility, not as a matter of necessity at this stage: that is, the possibility of the need for making some provision for calling a Session at the request of less than a majority of the members to appeal against a decision of the Executive Board. It still depends on that kind of decisions the Exeutive Board might make, but it is a possibil- ity to be envisaged. THE CHAIRMAN: I take it the question is, whether a persistent and insistent minority might bring about the convocation of a special Session?. OM C3 E/PC/T/C.V/PV/5 MR. BURY (Australia): It would probably be a case, Mr. Chairman, of the members vitally affected in a specific instance. MR. KELLOGG (United States): In that case we did follow the United Nations Charter, and if many people here feel that we should make special provision, of course we would be perfectly willing to make a change. MR. BURY (Australia) : At this stage I would not press that. I would just like to record that as something which we may wish to bring up later in the light of the functions of the Executive Board. THE CHAIRMAN: Is there any more discussion on that point? If not, I take it that the Committee will have opportunity to consider it in connection with the drafting of the various suggestions that the Committee puts forward on this part of the Charter. I take it that we will follow the procedure which we followed in the first instance, and that we shall be setting up an ad hoc Sub- Committee, which of course would. take this point into consideration along with many others. Are there any more comments on Article 54 ? We pass/next then to Article 53, on the subject of Voting. MR. HOLMES (United Kingdom): Mr. Chairman, the question of voting, as I think you said in your opening remarks at yesterday's session, is naturally one of importance and may be one of some difficulty. We, as you know, had agreed in very general terms with the important points in the original United States proposals, and I should perhaps refer (though you may rule me out of order) to Article 57, which deals with the membership of the Executive Board, because it has, I think, a very direct bearing on the question of voting. In the proposals, if you will allow me to mention the point, it was suggested that the Executive Board would consist of a certain number of member States, each of which would have a representative, and also that member States of chief economic importance should have permanent seats. We now find that that 9. OM 04 E/PC/T/C.V/PV/5 provision has, rightly or wrongly, been dropped from Article 57, but if that is to be the case we in the United Kingdom might feel that the system of voting should properly be adjusted in some way towards the economic importance of members, and while what I quoted related particularly to the Executive Board, I think that it does arise also perhaps on voting in the Conference itself. I do not wish to go into any particular detail at this stage, though if necessary I think my delegation would be prepared to come forward with a concrete suggestion, but it may be sufficient for me to have raised the issue at this point, and unless you would wish me to develop it in greater detail I would prefer to leave it, to see that the sense of the Committee is, and, asI say, to perhaps have some formulated proposal which my delegation might be prepared to make. THE CHAIRMAN: The Chairman is not at all anxious to indicate any position on this very delicate question. It is scarcely the prerogative of the Chair to do so. I am interested however, in ensuring that the discussion shall be focussed as effectively as possible on the issues. It would seem to me that it might make for more orderly discussion if we considered first the matter of the principle involved, namely, equal voting versus some other system of voting. Let us leave in abeyance the kind of system of voting that might be worked out and the difficulties involved, Which obviously are a part of the question. If it is agreeable to the rest of the Committee let us confine ourselves for the moment to the principles involved. Would that be agreeable to the Commitee? MR. COLBAN (Norway) - I wonder whether I have understood the delegate of the United Kingdom aright - that he would agree to leaving the present Article as it is on condition that Article 57 were given some new form, assurig certain important trading countries specia prerogatives? 10. OM E/PC/C.V/PV/15 R. HOLMES (United Kingdom) Mr. Chairman, the delegate of Norway is putting to me what in Parliament they call a hypothetical question, I think, to which I cannot give a precise answer, but I do merely wish to point to the fact at this stage that the original proposals did provide for some permanent seats and for some non-permanent seats, and that the permanent seats were to be alloted in accord- ance with the importance of the countries concerned in international trade. I do not know that I can take it very much further, because we should not wish to be at all dogmatic about this, and I think we should adjust any point of view as far as we could on this subject to the general sense of the Preparatory Committee. I am rather reluctant, therefore, to give a specific answer until I heard what people's views are generally. MR. COLBAN (Norway): I am perfectly happy about the answer I have got. MR. MORAN (Cuba): Mr. Chairman, since the delegate of the United kingdom wants to have the impression that we are meeting/this important question, and I happen to represent one of the smallest countries here, I should like to put it that naturally we should like to have an equal voting right-for everybody concerned. I would rather prefer to withhold now any further comment on this question until I hear the arguments of the larger nations as to why it would be preferable for the organization as a whole to have a different system to that proposed in the Charter. So I should just like to say now that naturally the Cuban delegation would favour the wording of the proposals as they are now, inasmuch as they guarantee the equal voting rights for large nations as well as for the small countries. 11. PAE D-1: E/PC/T/C.V/PV/5 Mr MALIK (India): Mr Chairman, at this stage I would only ask that it be placed on record on behalf of the Indian delegation that if any other system than one representative one vote is adopted, we would certainly ask that in assessing the economic importance of any country the potentialities of the country in that respect would have seriously to be taken into consideration along with existing conditions in any country. THE CHAIRMAN: I suggest that the point raised by this delegate from India would, of course, arise only if it were contemplated that we should substitute a weighted system for a single voting system, and that we should perhaps first endeavour to settle the matter in principle as to whether we should have a single voting or a weighted voting system. We may not be able to settle that and we may rave a continued difference of view; but I think we should first at least try to settle that question or to see where we disagree, if we do. Mr PIERCE (Canada): Mr Chairman, I find it exceedingly difficult to obey your suggestion that we discuss the principles involved. It might be easier if we took advantage of the suggestion of the United Kingdom and studied a concrete proposal. We know on the one hand how one seat one vote would work in practice. It is difficult to see how the weighted voting would operate, I suggest, though, that we do examine it, because as we look at nearly all the other international organisations we see that some method has been devised in nearly all of them for giving a voice to nations of particular importance to the organisation, either political or economic - a voice commensurate with their powers and responsibilities. Bretton Woods and the I.L.O. provide partial precedents. They are specialised agencies like ourselves. The United Nations Charter through the veto gives some effect to that principle, although we would consider that would be the least attractive method to be used. Business corporations, on the one hand on the one wing, and trade union organisations, on the other hand or the other wing, also give effect to the PAE D-2 E/PC/T/C.V/PV/5 principle of weighted voting. So I would think we would be entirely justified in ignoring the principle and to study possible methods of giving effect to the weighed vote and see how this could apply and how this would compare with the system in use in other international organisations of a character the same as ours. THE CHAIRMAN: We seem to find ourselves in something of an impasse. I think the suggestion of the delegate from Canada has a great deal of merit and if it is a fact that we cannot advantageously pro- ceed further with a discussion of the principle involved in the absence of any concrete proposals with regard to a weighted system of voting, then perhaps we shall have to defer further considera- tion of this Article until we are confronted with some specific proposals of that sort. M. PALTHEY (France). (Interpretation): Mr Chairman, the French delegation has thoroughly considered this Charter and its provisions, and as far as this question is concerned we agree with the text submitted by the United States. The French dele- gation believes that in the Conference which will govern the I.T.O., It is necessary that each Member should have an equal vote, and for these reasons: it is quite conceivable that in an Executive Board which is a permanent Board there would be permanent seats, because this Executive Board will have to take decisions of an administrative character; but in a general inference each Member should be treated on an equal footing with the others and should have one equal vote. The Conference will have to decide upon very important and serious matters and it will be the body to which in the last instance a country whose interests have been jeopardised or violated would appeal. There- fore it is quite equitable that all the members be treated alike and that no distinction be established on the grounds of economic strength or supremacy. It seems to us that the following subjec- tive factors should be taken into account. A small nation feels 13. PAE D-3 E/PC/T/C .V/PV/5 and suffers as much, if not more, from a step which might injure its interests as large countries, and therefore its rights and interests should be protected in the same way as those of larger countries. Therefore the French delegation is in favour of equal vote for all and will support the text of the United States. Mr LUCIAN BENDA (Czechoslovakia): (Interpretation): Mr Chairman, the Czechoslovakian delegation agrees with the French delegation. Mr HOLMES (UK): Mr Chairman, did I understand the French delegate to say that he would wish, when it came to more detailed considera- tion of Article 57, to suggest that there should be some allocation of permanent seats on the Executive Board? M. PALTHEY (France) (Interpretation) Mr Chairman, I believe the United Kingdom delegate has made an extrapolation of my own comments. The French delegation reserves its right to raise, if necessary, the question of permanent seats in connection with Article 67. However, these are two absolutely different questions In an Executive Board which has a permanent character and whose responsibilities would be chiefly of an administrative character and not of a general character, it is quite possible that in such a Board permanent Members might be necessary. It is clear that some Members will have very large interests involved and that such permanent seats would be advisable; but the Conference should be a democratic body and it should have as wide and Representative character as possible. It should be a kind of cour of appeal, and we must agree that it is not enough only to speak, but that steps must be taken. Therefore, if a discriminatory vote is admitted, what would be the purport and the meaning of a speech if a small nation could be outvoted by a coalition of larger nations? We may come back to this problem of permanent seats in connection with Article 67; but the problem, as I said is a different one from the one we are studying now. We again stress that the Conference should be as wde and as democratic as possible, and it should be possible to appeal to it from decisions of the Executive Board. 14 PAE D-4 E/PC/T/C.V/PC/5 Mr ERIX COLBAN (Norway): I agree with the delegate of France. SENHOR HELIO DE BURGES CABAL (Brazil) (Interpretation): Mr Chairman, on the question of voting the Brazilian delegation agrees with the French proposal. THE CHAIRMAN: Are there any further views on this subject of method of voting? If not, I would suggest the following as a possible line of procedure for your consideration: that inasmuch as there have been references in this discussion not only to the principle of weighted vote but also to the possibility that some concrete plans or methods might be submitted for the consideration of this Committee, wouId it not be well to ask those Members of the Committee who are inclined to favour the weighted system of voting to submit to the Committee at its next meeting, which I believe will probably be next Tuesday, but that remains to be seen - at any rate, at its next meeting definite suggestions or proposals with regard to that method, so that the committee may have before it as much in the way of concrete material for its consideration as possible on this very important question of voting. Mr DAO (China): Mr Chairman, I accept your ruling, but I will put a question: if there are such concrete proposals submitted for our consideration, will it be possible for such a proposal to be made available to each delegation in time for them to study it? Mr HOLMES (UK): Mr Chairman, I was about to say on behalf of the United Kingdom that if this Committee does not meet till Tuesday, we will certainly try to do that. THE CHAIRMAN: The Chair feels that there is real advantage in the suggestion made by the delegate from China and suggests that it would be possible to set the time of the next meeting in such a way as to make sure that there will have been time meanwhile for members of the Committee to prepare such suggestions and for those suggestions to be disseminated to the Committee in time for study before we meet again. Does any other Member of the Committee 15. PAE D-5 E/PC/T/C.V/PV/5 expect to submit any suggestions along that line? (After a pause:-) If not, I will ask the delegate for the United Kingdom how soon he thinks he could make his suggestions available to the secretariat to get ready for distribution? Mr HOLMES (UK): Mr Chairman, I think that by Monday evening or first thing on Tuesday morning, if that is suitable. THE CHAIRMAN: On that basis, then, it would appear that the earlies time at which we could hold our next meeting would be Wednesday unless the Committee wishes meanwhile to proceed with the consider- ation of some of these other provisions which clearly are, I should say, of a fairly controversial character and which are clearly dependent in some measure upon the work of the other Committees. We seem to have reached a point now of the parting of the ways, and the question which I think we confront is simply this: shall we go ahead with the rest of these Articles, realising that there may be material in them that cannot be discuss to great advantage at this time, but which could be either passed over or discussed in a very provisional way. If we were to do that, I should suggest that we go forward with discussion of Article 55. In glancing at that I can see perfectly well that there are points in it that would have to go over for later decision; but I want to say that I personally am reluctant to see the Committee fold up for several days and do nothing. I hope we can go ahead, even though we realise that we shall encounter a great many points in the Charter which we cannot begin to dispose of at this time. I should welcome suggestions from the Committee as to whether we sh -A go forward at this time. My own proposal is that we now take up Article 55; but if the Committee prefers otherwise, I am in its hands. Mr MORAN (Cuba): MrChairman, I propose that we go on, ("Hear, hear THE CHAIRMAN: Then if there is no objection, consideration of Article 55 iis in order. I suggest that this Article be taken up paragraph by paragraph. 16. PAE D-6 E/PC/T/C.V/PV/5 Mr BURY (Australia): Mr Chairman, I would like to make the general point at the beginning that probably could be addressed to paragraph 1, and that is that the Australian delegation thinks that in general terms the power of the Conference to determine the rules and procedures under which the Executive Board operate should be pretty strong. 17. THE CHAIRMAN : Any further comments on paragraph one? Mr MALIK (India): Mr Chairman, I also have a remark of a general nature with regard to this Article. One of the difficulties that I see in this is that this deals with the power and duties of the Conference. Now, in the Joint Committee of Committees 1 and 2 one of the things that are setting we./ actively considering is the / up in the Charter itself of some of these things which are here suggested as duties of the Conference, whilst it is the detarmination of criteria on an international basis in relation to an escape from the obligations on the part of one of the members according to Paragraph 2 of this Article, and I am just wondering how we can proceed with this until we have discussed the it matter very fully. Of course, there is only one aspect of/ that we are considering, bearing on industrial development, but I would like to is state for the members of this Committee that that/one of the things we / are specifically going to consider in the Joint Committee. THE CHAIRMAN: I think the Delegate of India has stated a fairly persuasive reason why we cannot consider paragraph 2 at this time with any measure of finality and perhaps not with advantage at all. I anticipated that there would be some difficulty about paragraph 2 and that that would be one of the paragraphs that we would probably have to leave in suspense. However, could we meanwhile close the discussion on paragraph one? MR LAURENCE (New Zealand): Mr Chairman, just a point of detail. Yesterday when we were considering Article 71 a discrimination was drawn between intergovernmental and international organizations. I am just wondering whether or not it would be appropriate to consider the word "international" in the third line of paragraph one; whether we include intergovernmental and non-Governmental or preserve the discrimination that was made yesterday. Mr KELLOGG (US): I would like to point out to the Delegate of New Zealand thatl the use of the word "international" in this case is intentional. We wanted to make it cover both types of organisation, both intergovernmental non-governmental, and give the Conference just that much more scope. 18. E/PC/T/C.V/PV/5 E/PC/T/C.V/PC/5 Mr LAURENCE (New Zealand): 1 agree that the Conference shoud have the scope. My only point in raising it was that since the discrimination had been drawn in respect of Article 71, we would be sure that "international" also included both international and intergovernmental in the sense of Article 71. MR KEELOGG (US): Mr Chairman, we have again in paragraph 4 of Article 71 the word "international", also intended to cover both, and we have throughout the Charter used this general term international organisation" when we meant to cover both. We were very glad when the Delegate of Canada pointed out yesterday thatin paragraph 2 of Article 71 we should make a very careful distinction, but in these other two cases I think we want to be broad. MR MALIK (India): Mr Chairman, apropos of what I have just said, it is a matter for consideration whether the first sentence of paragraph one does not require some application. It says here. "the Conference shall have final authority to determine thepolicies of the organisation". Would it be desirable to put in the words, after "policies", "other than those imposed on it under the Charter" because I take it that if certain proposals that we are considering are accepted then there will be certain policies that the ITO will have to follow under the Charter itself, and it seems a little a bit of/contradiction that here you are giving the Conference power to finally determine the policies of the organisation. MR KELLOGG- (US): It was our thought there, Sir, that since the Conference is the creature of the Charter it would not be expected that the Conference would infringe the requirements of the Charter which created it. I think if it would reassure you we could say that, but it would be surprising I think for the Conference to go beyond the document which was its creater. Mr PIERCE (Canada): Mr Chairman, I would think that the Conference would have greater authority than the Charter, since it can amend the Charter, which does give it final authority to determine the police of the organisation. In other words, Mr Chairman, the Conference is just ourselves at large meeting again and decid/what we are to do for the future. 19. E/PC/T/C.V/PV/5 Mr KELLOGG (US): Under our article with regard to the amendment the Conference would not be able to amend the Charter except on more minor matters without ratification on the part of member Governments. Mr LAURENCE (New Zeland): Mr Chairman, I would like to suggest that unless it is envisaged that the operations of the organisation will be different from that which normally a taches to corporate functions, the Conference could not do anything ultra vires the document. Mr MALIK (India): I would like to explain, Sir, that I was merely raising a debating point. I am not going to press it. If the people who are competent to draft the final document are satified with the phraseology I have nothing further to say. THE CHAIRMAN: Are there any more comments on paragraph one? If not, we pass to paragraph 2 and I remind you that the Delegate of India has misgivings about the possibility of dealing with this paragrph in any definitive way at this time. Does the Committee wish to discuss the paragraph in a highly provisional way. MR LAURENCE (New Zealand): Just a drafting point - as to whether a vote of two-thirds of the members does clearly express what is intended to be expressed. Mr. MCRAN (Cuba): Mr Chairman, I was going to suggest that we leave this second paragraph alone, but inasmuch asthe Delegate from New Zealand has brought up a point on it I have nothing more to say. Mr.PALTHEY (France) : (interpretation); Mr Chairman, I should agree with the Indian Delegate that we should postpone the consideration of paragraph 2 of Article 55. It is not only connected with the work of other Committees but it is also connected with Article 75, as far as amedments are concerned, and Article 79 in connection with withdrawal. THE CHAIRMAN: I take it then that the Committee wishes to proceed to the next paragraph, paragraph 3? Mr HOLMES (UK); This is a very small point, Mr Chairman, I think it probably is only a drafting point. I am not quite sure, if it has not something of the same substance as that raised by the representative of India on the 20. E/PC/T/C.V/PV/5 first paragraph. We are told that the Conference may delegate to the Board authority to perform any of the powers of the Conference except such specific powers and duties as are expressly conferred or imposed on the Conference under the provisions of chapters 2 and 7. Should not the word "Conference" in that passage be "organisation'"? There seeds to be a sort of identification here of the Conference and the organisation which may not be from the draft point of view entirely satisfactory. MR KELLOGG (US): I think the answer to that is that in drafting this Charter we have always used the word organisation" throughout the entire document except in chapters 2 and 7, where we attempted to allocate powers and duties between various organs of the organisation. It is only in those two chapters that we have attempted to differentiate between various organs of the ITO. We felt that where a job was particularly important and should be done by the full Conference we ought to say so, and have said so. So that we only use the word "Conference" in connection with powers and duties, where we want the Conference to go ahead as an organ of ITO and do the job. Otherwise, we feel the Conference, having a general power to do other functions, can pass that power or delegate that power to the Board. Does that make it clear? MR HOLMES (UK): Yes, I think that does clear it up to some extent. Mr VAN TUYLL (Netherlands): Mr Chairman, after having heard the explanation of the United States Delegate I wonder if it would not be wise just to delete the words "under the provision of chapters 2 and 7"? If the Governments who draw up this Charter decide that the Conference snould have a responsibility, I do not see why we should allow the Conference to delegate to the Executive Board any of such specific powers. Mr KELLOGG (US): In answer to the question of the Delegate of the Netherlands, the Clause under the provisions of Chapters 2 and 7 is merely there to help in finding - a sort of direction finder, a place finder, to help to find the places where actual allocations of power are made. If you took out that clause you would not in any way change the sense of the document. In fact, all the allocations of power occur in No. 2 also. E/PC/T/C .V/PV/5 THE CHAIRMAN : The Chair would like to suggest on this that inasmuch as there might be some-alterations in the Charter which would make that specific citation inaccurate, it might be simpler and better to simply take that phrase out, and just say "expressly conferred". That is the point, is it not? MR KELLOGG (United States): Yes, that is correct. THE CHAIRMAN: Is there any more discussion on paragraph 3? Is it agreed that those words should be drafted which I have just mentioned? We pass then to paragraph 4. MR. BURY (Australia): Mr. Chairman, I should just like at this point to mention again a point that I mentioned previously on another Article. That is, that the expenses of the organization should be apportioned among members according to the sane principles which are evolved for contributions to the United Nations. There is a Contributions Committee of the United Nations now sitting in this City. It has this matter under consideration, and rather than renew the constant argument about the proportions in which nations should contribute I suggest that its ruling should be applied to the trade organization. MR. PIERCE (Canada): I suggest, Mr. Chairman, we leave that matter to be discussed at the Conference, and not discuss it now. I say that because if the remark of the Australian delegate stood, that might be taken as conveying agreement of all of us, according to the principles on which we dealt with some of the earlier Articles in the Charter. I do not think we want to deal with that now. It was not your intention that we should do, THE CHAIRMAN: The Secretary would like to say a word on this. THE SECRETARY:i wonder if the Committee would permit me to say a brief word on the point raised by the delegate of Australia? It is a fact that the United Nations are discussing, as a matter of convenience, of uniformity, and so on having a scale of 22. E/PC/T/C.V/PV/5 contributions, which it is hoped will be adopted by the present Assembly, applied as far as practicable - I underline the words "as far as practicable" - to other intergovernmental organizations, and whilst it may not be entirely appropriate to incorporate an are amendment along the lines which / suggested in the Charter itself, I wonder if the delegate of Canada would consider it appropriate for some reference to this principle to be made, say, in the Report of this Committee for the consideration of the Conference when it meets? MR. PIERCE (Canada): No, I would think that had better be left over, Mr. Chairman. Judging by the procedure followed in other international organizations, I believe that it started perhaps with the base used in the United Nations formula and then brought in certain elements. It is used as a rough guide, and has an important use,. but I do not think we could be prepared to discuss the scale of contributions now. MR. BURY (Australia): Mr. Chairman, I do not mind at what point it be pressed. I would not like to press it now, but in the end we shall press that, the Report of the Committee, when it finally goes to the Conference, should contain a recommendation along that line, that as far as practicable the same principles would apply. Of course, we realise that the members will not necessarily be the same as the members of the United Nations, but that does not affect the principle or the relative proportion in which the members do contribute, and we should like that recommendation. When the final Report of this Committee goes to the Preparatory Committee we would seak a recommendation along those lines, but I am quite agreeable to defer it now. 23. PAE F-1 E/PC/T/C.V/PV/ 5 Mr DAO (China): Mr Chairman, we feel that the question as to whether the same principle should apply to this Committee in this as in the case of the United Nations has some relation with the voting system which we have just mentioned and also the allocation of seats on the Executive Board, and unless these questions are settled. I am afraid even the question of the principles - the same principles, for this Organisation as for the United Nations - could not be very well discussed. Mr BURY (Australia): Mr Chairman, I would not like to waste the time of the Committee by pressing thi s point any further, but we will revert to it perhaps at a later stage. THE CHAIRMAN: We pass on, then, to paragraph 5. It appears that we have found a willing victim and we have approved this para- graph. Mr NAUDE (South Africa): Mr Chairman - THE CHAIRMAN: I withdraw what I have just said. Mr NAUDE (South Africa): Mr Chairman, it is still subject to what is decided with regard to the composition of the Executive Board, is it not?' If you are going to have a certain number of permanent members on the Executive Board, for the sake of argument then that clause will have to be re-drafted, slightly perhaps. Mr PIERE (Canada): M1 Ch irman I want to askta question: und.r paragraph 5 I a m trying to envisagge how and when the first Director General will be appointed. ' mean we consider we are at the firts Conference now; we have no Director Genera;l the Conference awaits a recommendation of the Executive Board, and then apopion s a Director General. I was wondering whether in practice that might not either 1lad to very hasty appointments, or -k p the conference in session for qulte a long time,. I wondered whether some provision should not be maie, under ext.aordinary -cr'umstances perhaps, for th&O onference to be able to dele-ate the power o± tppointment to the E~xcutive Board. S24. E/PC/T/C.V/PV/5 Mr KELLOGG (USA): Mr.Chairman, I would suggest that a question such as that which has been raised by the delegate of Canada could very well be discussed in any Subcommittee which works out the details of this. Mr PIERCE (CANADA): Yes. Mr NAUDE (South Africa): There is another point which this particular Committee which the United States delegate mentions might also look into. That is that the arrangements for the appointment of the Director General are stated twice in this at draft as it now stands - in 5, the one we are looking now, and also in the first sentence of Article 68. THE CHAIRMAN: My understanding is that this point was discussed by the Subcommittee which was set up a few days ago. I will ask the Chairman of that Subcommittee if that is the fact. Mr DAO (China): When the Subcommittee considered the provisions of Article 68 with regard to the appointment of Director General, we followed the example set up by the United Nations. We thought that the Executive Board would be elected by the Conference and then the Executive Board would meet and make a recommendation to the Conference while the Conference is in session. So I think there would be an interval between the election of an Executive Board and the appointment of the Director General; but we do not think that the interval would be so long as to impede the work of the secretariat or the work of Conference when the Director General is appointed; and I would remind the Committee that this provision under Article 8 was approved at our last meeting. As to any suggestion as to delegation to some other organ of the power of the Executive Board in respect of the appointment of the Director General, the Subcommittee or Drafting Committee will bear in mind this special provision of Article 68. Mr KELLOGG (USA): Mr Chairman, I would suggest, in view of the suggestion of the delegate of South Africa, that we strike out the 25. PAE F-3 E/PC/T/C.V/PV/ 5 words "shall appoint the Director General of the Organisation", since it is already contained in an Article which has been approved by this body. THE CHAIRMAN: I wonder whether the delegate of the United States did not mean that we should strike out all of that language beginning "and on the recommendation of the Executive Board shall appoint", and so forth? Mr KELLOGG (USA): Exactly. Mr MORAN (Cuba): Mr Chairman, does the delegate from the United States suggest that we delete the phrase from Article 68 or from paragraph 5 of Article 55? Because I rather think of that, as this Article 55 deals with the duties and powers of the Conference, the provision should be there better than in 68. Mr KELLOGG (USA): In answer to the suggestion, I would point out that we have not concentrated all the powers and duties of the Conference under article 35. For instance, in Article 2 we give to the Conference a certain duty in respect to membershlp. So that if you remove this particular duty from the list, you would not be spoiling an otherwise complete list. THE CHAIRMAN: What then is the decision? Do we delete the language as suggested by the delegate from the United States? Does that satisfy the delegate from Cuba? Mr MORAN (Cuba): Yes, THE CHAIRMAN: Is there any more discussion on paragraph 5? Mr LAURENCE (New Zealand): There is just a point, that the Drafting Committee might consider. I noticed in paragraphs 6 and 7 that there is a prescription of responsibilities or a reference to responsibilities of the Conference as to obligations imposed in other Articles. It is just a question of whether, if you are going to refer specifically to obligations in some Articles elsewhere in the Charter you should not include obligations at all points else- where. In the Charter, or, alternatively, drop from Article 55 references to obligations in other sections; but I do not want 26. E/PC/C.V/PV/5 to go into any detail now. It is just a refinement in drafting that may be considered by the Committee THE CHAIRMAN: The remarks of the delegate of New ,Zealand were addressed to paragraphs 6 and 7, and I was still andeavouring to conclude business on 5. Mr LAURANCE (New Zealand): Mr Chairman, it was merely to illustrate the principle that arose in respect of consideration of the particular point in relation to paragraph 5. Mr PALTHEY (France) (Interpretation): Mr Chairman, I agree with the suggestion of the New Zealand delegate that such questions should be entrusted to the Drafting Committee. I do not know whether we here are only to take decisions concerning the substance or whether we should also agree on the final drafting. I think that if we agree on the principle that the Director General should be elected by the Conference on the recommendation of the Execu- tive Board, it should rest with the Drafting Committee to decide in which part of the text this should be included. If we are to be concerned with questions of drafting, it would be necessary then to create within this Committee a small Drafting Subcommittee. THE CHAIRMAN:I take it that the answer to the question of the dele- gate from France is that we do not undertake in full session of the Committee to do detailed work of drafting. Of course, when we can agree on a text just in passing with the change of a word, or some very simple change, we might say that we are draft- ing; but where there are subtle questions of drafting, organisa- tion and so forth, it must be given more careful consideration than we have time to give. I think it is quite clear that it should be left-to the Drafting Committee which presumably will deal with all these matters in the interim between the first meet ing of the Preparatory Committee and the second meeting of the Preparatory Committee. 27. E/PC/T/C .V/PV/5 MR PALTHEY (France)(Interpretation): I entirely agree. THE CHAIRMAN: Are we ready now to consider paragraph 6? Paragraphs 6, 7 and 8 seem to be of the same character so far as matters which might be discussed by this Committee at this time are concerned. BARON van TUYLL (Netherlands): I would like to ask a question. In paragraph 2 it says, "by vote of two-thirds of its members", and paragraph 8 says "by two-thirds majority of the votes cast". Is there some fundamental difference there? THE CHAIRMAN: I would say no. Would the delegate of the United States care to answer that? MR KELLOGG (United States): The Chairman has spoken correctly, as far as I know. MR PIERCE (Canada): Mr Chairman, in connection with that phrase and similar ones in the Charter, I do not know if the suggestion was made that we use the form of words, "with the approval of two-thirds of the members present and voting". We did discuss the deletion of the word "majority" but I do not know whether we suggested adding the words "members present and voting". MR DAO (China): Mr Chairman, as I understand it, we touch that point in Article 75 of the charter. The same term is used there. I took it for granted that that meant the vote of two-thirds of the members and not the vote of to-thirds of the members present and voting; so if this interpretation is correct then paragraph 2 means two-thirds of the members present and voting, and then paragraph 8 means two-thirds of the votes cast, and I find there is a difference between them. MR KELLOGG(USA): There is a distinction, of course, as the delegate of China has pointed out, and in the case of Article 75, when we dealing with amendments it would be G. 1 G. 2 E/PC/T/C .V/PV/5 desired to have two-thirds of the actual members of the Organisation, whether they voted or not. Paragraph 2 of Article 55 is again a pretty important case, where you presumably want to have all the members there, or covered, one way or the other. As to paragraph 8 of Article 55, that is a somewhat less important matter and presumably would be covered by the second paragraph of Article 53, which says "decisions of the Conference shall be taken by a majority of the Members present and voting". I think the two really crucial Articles are 75, on amendments, and 55(2) on waivers, where you want to have all the members covered. As to paragraph 8 of article 55, as I say, that is a matter of less importance. THE CHAIRMAN: We seem to have been discussing paragraphs 6, 7 and 8 all in one. Are there further comments on any of those paragraphs? MR DAO (China): I have one point to make. It appears that the draftsman of these provisions had in mind that all the powers of determination provided in Articles 25, 45, 29 and 30 should be vested in the conference. Of course, at present we do not know the fate of these Articles. However, if that is the intention of the draftsman we think that Article 18(3) should be incorporated somewhere under Article 55. MR KELLOGG (USA) : I am not sure whether this answers your question. As I see it, the plan is for the Interim Tariff Committee to make its decisions by a majority vote - that is under Article 56(4). When the Interim Tariff Committee is finally absorbed into the full Conference then, of course, its vote is covered by paragraph 2 of Article 53, which says "decisions of the Conference shall be taken by a majority of the Members present and voting"; so that the matter remains on the majority vote basis. Is that an answer to your 29. G.3. .E/PC/T/C. V/PV/5 questions? I am not sure that I understood it. MR DAO (China): Thereis a slight difference from my point of view. I find that as it is drawn up here the Conference has no power to establish procedures for making the deter- minations and recommendations provided in Article 18(3), although this power will be exercised in certain circum- stances by an Interim Committee. Suppose the Interim Committee is absorbed into the Organisation, does that mean that this power which has been exercised by the Interim Tariff Committee will also automatically be absorbed by the alteration? MR KELLOGG (USA): The answer is Yes; it will be absorbed by the Conference itself. THE CHAIRMAN: If there is not further discussion of paragraphs 6, 7 and 8 we will pass on to paragraph 9. I hope we shall conclude this article 55 tonight, except for those parts which we have reserved for examination. Now, I take it that nobody objects to the Conference determining the site of the Organisation, and to the Organisation having a site? MR BURY (Australia.): I was not quite sure whether we were actually discussing paragraph 9 or whether you were awaiting further comments on 6, 7 and 8. If we have passed on to 9, then I would like to make a point, though I would not press it at this stage at all. Eventually we should hope that this Committee might pass a recommendation that the site of the Organisation should be in the same place as the economic secretariat of the United Nations, which presumably would be at the Headquarters. THE CHAIRMAN: .As I understand it, the delegate for Australia is telling us in advance the position his Government will be in with reference to the site. That is quite all right, but we have to decide just now as to whether the Conference shall determine the site or not. 30. G.4 E/PC/T/C.V/PV/5 MR BURY (Australia): I mention it as something that would be just in the form of a recommendation. MR HOLMES (U.K.) By whom would the recommendation be made and to whom? MR BURY (Australia): By the Preparatory Committee, to the full international Conference which would, be called to pronounce upon the Charter. THE CHAIRMAN : Are there any further comments upon paragraph 9? If not, I take it it is approved. Before adjourning we have to consider the question as to whether we ought to plan f or another meeting of this Committee before Wednesday. There seems to be not very much that we would take up advantageously between now and then - possibly articles 59, 60 and 62, except paragraph 1. I am not sure that that would occupy the time of a full session of the Committee; on the other, hand, I may be mistaken about that. It would appear also that it would not be feasible at this time to take up the general purposes of the Organisation or the functions of the Organisation. I think we need to know how that has been taken up in the other Committee before we can deal with it advantageously. I am therefore inclined to suggests quite reluctantly because I want to move forward with the Committee' s work - that we have our next meeting on Wednesday and have no meetings in between. What are the views of the Committee with regard to that? 31. H.1. E/PC/T/C.V/PV/5 MR LAURENCE (New Zealand): Mr Chairman, there is one point that occurs to me. I am wondering if the Chair or the Secretariat are satisfied that there is liaison with other committees to the extent that the co- operative effort that is possible is being carried out to the best ad- vantage. The reason I raise that point is this, that at other committees I have heard it suggested that certain items which concern this Committee and the other Committees are already being considered here. I know of one - I think it is the Committee on Commodity Agreements - that is expecting to get something back from this Committee on Commodity Councils or Commodity Commissions, or whatever they are, and we are waiting for them and they are possibly waiting for us. So that I am wondering whether there is full understanding between the two bodies. MR BURY (Australia): Mr Chairman, I was present at Committee IV when it discussed these matters, and my impression was that enough had been said there to enable us to discuss Article 66. Whether other that would justify a special meeting or not I do not know; but at least provisionally, even if we lad to discuss it afterwards in conjunction with Committee IV, we could go ahead, and I would not suggest that that would justify a special meeting before Wednesday. THE CHAIRMAN: I think that in view of the comments that have been made I might reconsider my position of a moment ago, and very gladly reconsider it, to suggest that we could, after all, have a meeting before Wednesday; that we might take up the paragaphs which I mentioned, 59, 60 and 62; and that me might also have a preliminary discussion of Article 66, dealing with the functions of the Commodity Commission, after which we would appoint a joint sub -committee with Committee IV to deal further with the subject-matter of this Article and attempt to arrive at a satisfactory arrangement which is certain to mesh the work of this Committee properly and effectively with the work of Committee IV. MR KELLOGG (USA): Mr, Chairman, may I suggest that we also consider Article 2 at our next meeting before Wednesday? I do not think that needs to wait for any further consideration by other Committees. 32. E/PC/T/C.V/PV/5 THE CHAIRMAN: Is it agreed then that we should go forward with plans for a meeting sometime between now and Wednesday and as soon as possible, the Agenda of which would include the various suggestions which have been made? The Secretary wishes to make a statement. THE SECRETARY: I would lilke to reassure the Delegcte of New Zealand and other members of the Committee that an attempt is made by the Secret- riat to know where other Committees have not to in relation to our own programme, and the Secretariat was aware of the position of Committee IV particularly. There is regular contact between the Secre- tary of that Committee and the Secretary of Committee V. It was our feeling, however, that final consideration of Article 66, for example, would have to be done in conjunction with Committee IV by means of a joint sub-committee. Committee IV. has up to the present time been so regularly meeting and working so hard that it did not appear very practicable for them to have their attention to the establishing of a joint sub-committee just for the time being; but I think the point has almost come when that could be arranged. THE CHAIRMAN: We seem to have difficulty in adjourning. But I do want to say that the plan as I understand it is that we should take up those Articles 59, 60, 62, 2 and 60, and I desire also to state that it is my present thought that we would set up a sub-committee on drafting matters to deal with all of those articles which I mentioned, except 66, that is to say, Nos.59, 60, 62, and 2; and then, of course, we wuld; later have the problem of setting up a joint sub-committee in connection with Committee IV to deal with the content of Article 66. MR LAURECE (New Zealand): I do not want to delay the meeting, but in the light of what the Secretary said I want to make lt cle-r that I had no intention of reflecting on the quality of the lia son between the Secre- tariat. Waht I was concerned about was whether the Chair had taken suffic- iently into accout wtha was the position of other Cormmttees, end I would like to go on record as saying that there is no intention, or else that the record could be re-,rhased, of castirg any reflection on nay -oint like that. 33 MIE CMhIURMMN If theraeare no further comments, or umeeting is adjourned. (Vnhl<eetinxgrose at 6.5G 0 p.m

GATT Library

jv290tg1084

Verbatim Report of the Fifth Meeting of Committee II : Held in The Hoare, Memorial Hall, Church House, Westminster, S.W.1 on Wednesday, 30 October 1946 at 3 p.m

United Nations Economic and Social Council, October 30, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

30/10/1946

official documents

E/PC/T/C.II/PV/5 and E/PC/T/C.II/PV/5,6

https://exhibits.stanford.edu/gatt/catalog/jv290tg1084

jv290tg1084_90220007.xml

GATT_157

E/PC/T/C. 11/PV/5 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIFTH MEETING of COMMITTEE II held in The Hoare, Memorial Hall, Church House, Westminster, S.W.1 on Wednesday, 30th October, 1946 3 p.m. Chairman:- Dr. H.C. COOMBS (Australia) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL 58 Victoria Street, Westminster, S.W.1) 1. A .1 A.2 E /PC/T/C.II/PV/5 THE CHAIRMAN: Gentlemen, at our meeting yesterday we com- menced a discussion of that secgtion of the aenda which deals with quantitative rwestrictions, ith the under- standing that the excepption relatin to the use of quantitative restrictions for the purpose of protecting the balance of payments would be deferred until a later stage. There was some discussion in which a number of delegates expressed their views. Briefly, we had in particular from the New Zealand delegation what amounted, I think, to a statement to the effect that New Zealand would desire, in view of the special nature of her international and develop,ment problems to be peermitted to us quantitative control of imports as a continuous instrument of economic policy. The majority f the comments that were made, however, dealt with the possible.. extension of the exceptions. Particular reference was made to an exception which may be necessary to enable a country which has used price control during the war to maintain it into the post-war period; and also for the poissible use,.with clear limitations, of quantitative restrictions for protective purposes where it can be shown that these are of less restrictive character than her formes of restrictions capable of producing the same degree of protection. The question is now for further discussion. MR AUGENTHALER (Czechoslovakia): Mr. Chairman, gentlemen, I suppose that we are discussing today only Articles 19, 21 and 22 of the proposed Charter and not Article 20, which, as has already been said by the honourable delegate of the United States of America, requires a special meetings As to Article 19, we suppose that any country shall be entitled to maintain import restrictions for commodities which are an object of state monopolies. If we say monopolies we mean by that certain gomvernmental monopolies 2. A . 3 E/PC/T/C . II/PV/5 which traditionally have a financial character, i.e., have been introduced as a suitable method of indirect taxation. In Czechoslovakia it applies, for instance, to tobacco, explosives, salt, raw spirit and saccharin. We think that it is evident that in those cases state administration cannot admit freedom of imports because it would entirely frustrate the objective of the monopoly. It is well known that the meaning of monopoly in the classical sense includes this procedure. There is nothing new about that because the monopolies concerned are centuries old. As to restrictions on imports and exports mentioned by the honourable Australian and Canadian delegates in connection with price control existing in different countries, we agree with those delegations that it seems illogical and practically impossible to abolish restrictions on imports or exports in such cases. If I agree here with the Canadian and Australian delegates, I hope I will not be considered a satellite of Australia and Canada. We should be greatly obliged to the U.S. delegation if they could give us some more detailed explanations as to paragraph 2, alinea c., of Article 19, that is, about prohibitions necessary to the application of standards for the classification and grading of commodities. The wording as it is in this alinea in our mind can make possible the abuse of this provision. Now I come to Article 21. This Article applies not only to article 19 but equally to Article 20, which has not been discussed yet. It is evident from statements made by different countries that the reasons why one or another country feels the necessity of maintaining restrictions or prohibitions are extremely various and depend on the particular situation of the country concerned. Each 3. A.4 E/PC/T/C.II/PV/5 country developed a certain technique suitable not only to its economic situation but also to certain administrative and legal practices, and I should say even political feelings and public opinion. Those are, I agree, mostly psychological questions, but they play a very great part in the life of the countries concerned.That is why we suppose that it would not be suitable to put in a Charter, which actually is a document of great principles, provisions concerning mere administrative methods. For that reason, we have the honour to propose a simpler wording of the Article concerned. We feel that the procedures as proposed in Article 21 would have probably in many countries an effect exactly opposed to the objectives of this conference and lead to very many unpleasant conflicts and disagreements, because publicity to the extent and in the way proposed in the Charter would provoke great pressure on the authorities in the sense of a greater restriction on imports. On the other hand, the conditions which give rise to import restrictions or prohibitions are especially nowadays rather conditions of economic and financial distress and must be manipulated with great flexibility which due to the proposed procedures would be greatly hampered.. I think I will not take too much of your time if I read out to you the whole wording of Article 21 as proposed by us, because I feel it will be made clear to you better than any other explanations or ideas on that matter. We propose the following wording:- "Article 21. (1) No prohibition or restriction shall be imposed by any member pursuant to this Section on the importation of any product of any other member country, or on the extraction of any product destined for any other member country unless the importation of the like product to all third countries A.5 E/PC/T/C. II/PV/5 respectively is similarly prohibited or restricted. (2) Any member imposing such quotas allots a share of the total quantity or value to any other country having an important interest in the trade in the product with respect to which an allotment has been made, shares based upon the proportion of the total quantity or values supplied by such member countries during a previous rep- resentative period, account being taken in so far as practicable of any special factors which may have affected or which may be affecting the trade in that product. 5. PAE B-1 E/PC/T/C II/PV/5 (3) No conditions or formalities shall be imposed which would prevent any Member country from fully utilizing the share of any such total quantity or value which has been allotted to it. The provisions of this paragraph shall also apply to any tariff quota established or maintained by any Member. (4) In the case of import restrictions, the mber imposing the restrictions shall provide, upon the request of any other Member who as trading with the respective countries in the product concernedduring a previous representative period as provided in 2, all relevant information as to the administration of the restrictions. (5) With regard to restrictions imposed in accordance with paragraph 2 of this Article or under paragraph 2 (e) of Article 19, the selection of a representative period for any product and the appraisal of any special factors affecting the trade in the product shall be made initially by the Member imposing the restriction, provided that such Member shall, upon the request of any other Member havng an important interest in the trade in that product, or upon the request of the Organisation, consult promptliy wth the other Member or with the Organisation regarding the need for an adjustment of the base period selected or for the reappraisal of the special factors involved. THE CHAIRMAN: Thank you, I think it would be of help to other delegates if we could have that copied. VICOMTE G. DU PARC (BeIgium-Luxembourg) (Interpretation) Mr Chairman, the Belgium-Luxembourg delegation has handed in a note concerning the question of quantitative restrictions. In the first part of this noiotet has indicated its general point of view concerning the suppression of these restrictions, and in the second part of the note the delegation suggests an amendment to Article 19, paragraph 2.d The second part demands some commentaries to motivate our proposal. As far as the first part is concerned, our delegation wishes to remind you of the principles toi which it 6. B- 2 E/PC/T/C. II/PV/5 adheres, that is to say, those concerning the general softening up of tariffs and an abandonment of discriminatory practices. Our delegation has likewise insisted on the necessity of co- ordinating commercial policies of the different nations in order to avoid a development of any economic lack of, equilibrium which might lead to a return to protectionist and discriminatory practices. Our delegation is favourable to the gradual suppression, as it is proposed in the projected statute, of all quantiattive restrictions; but we feel concerinng these matters that we should draw attention to the act that in the common tariff foreseen by the Belgium-Luxmembourg and Netherlands Union, these tariffs will be lower than they were before the war, which will represent our contribution to the collective effort toward lowering tariff barriers. We firmly hope that the other nations will wish to make equivalent sacrifices, and it is evident that our economy would not be able to bear the weight of such sacrifices if we did not have the assurance of some compensation in our exports. As far as concerns the proposal of an amendment, I think it is useful to read to you this proposal. It concerns Article 19, paragraph 2.e, and the text proposed is as follows: "Quotas of imports of agricultural products imported under any form whatsoever when these quotas are made necessary by the depreciation of prices practiced on the national market as a result of the combined action of national production and of the import of a given product: this quota can be brought into effect as soon as the depreciation of prices has reached such a point that the sales on the national market occur at a price lower than than the normal one." We must understand under normal price the price which covers the cost of production in national production. The reasons for this amendment are as follows: in the draft proposals it is indicated that the restrictions on imports fall under two conditions: to restrict the quantity of the same PAE B-3 E/PC/T/C.II/PV/5 national product or to suppress a temporary excess of the same national product by offering this surplus to certain groups of consumers. One or other of these provisions offers, as far as our country is concerned some difficulties. The first arises from the fact that our nationalm temperament is essentially individualist, and as a result of this, any regulation in any field whatsoever, and especially in the agricultural field, is extremely diffic.ult As a result of this , we cannot in our country have a policy sufficiently planned to allow the applica- tion of the restrictions suggested by the draft proposal as it was submitted to us. Moreover, it is very difficult to foresee in every detail in this field the conditions in such a way as to foresee perfectly the results of crops, whether on account of climatic or other conditions. Finally, with regard to the second proposal, whch is to suppress a temporary excess of the same national product by oi ffeng it to certain groups of consumers, this condition is rather difficult for us to achieve in our country, because there does not exist in the field of foodstuffs any sufficient diff- erence between the various social classes which would permit us to discrirminate easily between those which might benefit by this measure and those which would not have a right to. Of course:, we agree fully with the part of paragraph a whcich on- cerns the obligation of making any provision concerning agricultur- al quotas to give them sufficient publicity. THE CHAIRMAN: Thank you. The note to which the delegate from Belgium referred has, I understand, been circulated and is document No. 26 relating to this Committee. DR. PS. LOKANATHAN (India): Mr Chairman, the views of the Indian delegation on the subject of quantitative trade restrictions have been outlined in the document which we submitted to this meeting, and I do not wish to go over the ground again, partly PAE B-4 E/PC/T/C .II/PV/5 because I find that the views expressed therein have found a large measure of support at this meeting. Briefly stated, we feel that, in the first place, so far as regulated economies are concerned, we wold pnot be in a position to dispense altogether with this insrument of quotas. We quite grant that in the past quantitative restrictions have been used very injuriously to the rest of thye worald b certain countries; but, on the other hand, we feel that they could be utilised in a much more helpful way. We are, therefore, consclous of the dangers of the use of quantitative restrictions, but, at the same time, feel that it is quite possible so to use them make them as to make them an instrument of good rather than an instrument of harm; and therefore we have said that we agree in principle that such restrictions should be used as sparingly eas possible, but we consider that suitable exceptions shouldm be devised to permit their use for constructive purpiosyes. This is mainly the cause that India is definitely embarking upon a planned or regulated economy, and we believe that it is not poswsible to dispense with an important instrument like quantitative tade control. The second observation that I should like to make is this, that quite apart from panned ecneonomy and the need for quantitative control for that el purpose, we hfe also that the distinction which is sought to be made between tariffs and subsidies, on the one hand, and quantitative controls, on the other is not, in our view, a right distinction, beimcause all are in appropriate circum- stances equally valid instruments of control. 9. OM C1 E/PC/T/C .II/PV/5 Therefore, to condemn quotas or to condemn quantitative restrictions and regulations completely is to take a view which we do not share. Another consideration which is relevant is this, that in the future, whatever be the amount of foreign exchange that may become available to each country, we feel that each country would like to use the full extent of its foreign exchange resources in the best possible manner, and one of the ways in which that could be done is to have some priority, and the exercise of that priority might necessitate the use of quantitative control. For these reasons, therefore, our view is that we cannot completely avoid the use of quantitative restrictions. We are, however, prepared to make certain reservations. we are prepared, for instance, to agree to a condition that there should be previous consultation. With any international trade organization that may be set up. We are also prepared, roadly, to agree to the principle of non-discrimination, of equality of treatment, as provided for in certain sections here; and also we are prepared to have criteria by which to test whether quantitative control is right or wrong imposed, in so far as its effects are restrictive or expansive. Therefore, we would like some body of criteria to be introduced by the I.T.O., so that all controls that will have on the whole. not a restrictive effect, but an expansionist effect, might be tolerated. Then I have one observation to make on Article 19.e., or rather two observationws. I agree with the various delegations, and in particular with the Australian delegation, who have pointed out that it is necessary to use import restrictions, not merely for the purposes mentioned here, but also for price support policies of individual countries. I think here again 10. E/PC/T/C.II/ PV/5 India is definitely committed to the policy of maintaining the prices of primary products, and although we are hopeful that action will be taken on international lines, it is quite possible that sometimes necessary national measures might involve certain restrictions on imports. Therefore, in addition to this restrict- ion under e(i) and e(ii), we would like also an addition to provide for supporting the prices of produtctshen it is con- sidered necessary by the national economies. I have a further observation on this question. It is stated here: "Moreover, any restrictions imposed under (i) of this sub-paragraph shall not be such as will reduce the total of imports relative to the total of domestic production, as compared with the proportion between the two prevailing during a previous representative period". We take exception to that, partly on the ground that there is no justification for imposing such a rigid rule binding any country to keep the same ratio, and partly because the incidence of the rule, if it is to exist, will bear more heavily upon internal producers rather than on the exporters of such products to other countries. What I mean is this, that while an exporter of a primary product to other countries has alternative markets, and therefore if a product does not go to one country there may be markets outside , so far as the country itself is concerned if you are going to say that the ratio of imports to the total domestic production should be kept the same as before, it would mean a much greater imposition of sacrifice on the national producers, and therefore for that reason, too, we are opposed to that. I think at a later stage, when we go into the details, we shall have further points to make, but these are the broad considerations which we should like to submit this stage, Mr. Chairman. 11. OM O3 E/PC/T/C . II/PV/5 MR. C.L. TUNG (China): Mr. Chairman, the observations of the Chinese delegation on the question of quantitative restrict- ions consist of two parts. The first part consists of general remarks on the principles involved in quantitative restrictions, and the second part contains some specific comments on Article 19, paragraph 2.e. of the American draft Charter. Taking the first part, general remarks: While recognising the need to avoid undue resort to quantitative restrictions as a means of trade regulation, the Chinese Delegation finds it difficult to subscribe to the proposition that adjustments of tariff rates alone could afford adequate protection for the interests of an economically under-developed country. The reason is very simple. The margin of a protective tariff has to be considerably high before it can be sufficiently effective to achieve the intended results. Such a course of action would not only contradict the aims of the proposed Conference, but would also culminate in an inordinate upswing of domestic prices to the detriment of its national economy. On the other hand, if the margin of protection were too low to be effective, foreign importations of competitive consumers goods, even non-essentials or luxuries, would continue to overflood the domestic market to such an extent as to prevent or even nullify its efforts towards industrial- ization. As it is not easy to strike a happy medium, and too high or too low a tariff alike would bring disastrous consequences for an under-developed country, we feel it is imperative for such a country to regulate its foreign trade by the application of simple quota or tariff quota systems during a transitional period to be defined. Moreover acountry with a long-continuing adverse balance, of trade, like China, has to conserve her exchange 12. resources by limiting, the entry of non-essential commodities in favour of essential commodities obtainable from aborad. Restrictions on the imports of luxuries and non-essential goods during, a transitional period by the application of a system of license, are therefore not only indispensable by justifiable. As such restrictions are selective in nature, their judicious application would have the effect of merely changing the composition of imports but not in any way affecting the total volume of imports. As regards the definition of a "Transitional Period" during which an under-developed country may resort to reasonable easures of quantitative restrictions, we are of the opininion that it should not be limited limited by any prefixed date; nor should it be determined by such conditions as monetary reserve or balance of payments which, being primarily the criteria for monetary dstability, do not necessarily reflect the stage attained in industrial development. We would like, therefore, to propose the following.definition of a "Transitional periode of Industrial development" for the under-developed countries during which necessary reasonable measures of quantitative restrictions any be imposed remaintained solely for the purposeof protection. That is, this period should be extended to such a time as (a) 50 per cent, of the wage-earning population. are employed in modern industrioal enterprises concerned with production a dis- tribution or (b) 50 per cent. of their national income is derived from modern enterprises of industry, trading; are finance. We submit these views in the hope that they will receive sympethetic consideration by this Committee and the Preparatory Committee and that provisions to this effect will be insedrted in the final Trade Charter, so that all economically uner-developed countries may thereby be enabled to expedite their press in industrialisation and ultitely be able to contribute to the expansion of would trade. II. Specfic Comments Another point bearing the problem.of quantative restrictions is thme highly important provision in the United States suggested Charter, 13. E/PC/T/C. II/PV/5 Article 19, Paragraph 2, sub-Paragraph (e) on the restrictions on agricultural imports. Clause (i) of this Sub-Paragraph lays down in effect that if a Member nation has to adopt import restrictions on any agricultual product, necessary to them enforcement of government measures which operate to restriquct the quantities of the like domestic product permitted to be marketed or produced, the restrictions thus imposed should not be such as would reduce the total imports relative to the total of domestic production, as compared with the proportion between the two, prevadiling during a previous representative period. If our interpretation represents the real meaning of the Draft Charter on this point, the Chinese Delegation cannot but regard it as imposing grave handicaps on them development of economically under-developed countries. These countries, largely lacking any sizeable industry and commerce, have a predomanatly agricultural economy, on which an over- whelming majority of their people depend for their existence. The price structure of agricultural products in such countries not only affects the standard of living of their rural population, but also determines the success or failure of any attempt at industralisation. The Government of such a countrmy must, from the to time take appropriate measures to regulate the varieties and quantities. of production and conmsuption, so as to stabilise the prices of its agricultural products and maintain between/ a proper balance food stuffs dan raw materials on the one hand and industriaml manufactures on the other. This equilibrium is essential to the maintenance of a recent livelihood for the rural population and to a steady advance in industriaandl commercial development. The standards an methods of adjumstent in this matter are necessarily detmerined by such elements as increase or decrease of population rise or fall in the costs of living, the total are under cultivation, the varieties of agricultural produce, the state of transport, market conditions and other complex factors, Above all, the quantities and kinds of agricultural imports must depend on the changing state of demand and supply in the country itself. These diversified and constantly changing factors 14 E /CP/T/.CII /PV/5 E/PC/T/C .ll/PV/5 make it impossible for any agricultural country to accept the ratio between the imports and domestic production of like products for any previous period as the standard for regulating such imports in the future. It is thus clear that this provision in the Draft Charter would give rise to the most serious difficulties and impediments to the economic development of such a country. For these reasons the Chinese Delegation feels that if the Draft Charter is to be adopted by the proposed Conference, Article 19, Paragraph 2, Sub-Paragraph (e) should be so thoroughly revised as not to imply any restraint on the right of all member governments to consolidate their national economy by making any qualitative or quantitative adjustments of their agricultural imports. 15 E/PC/T/C. II/PV/5. MR.SPEEKENBRINK (Netherlands): Mr. Chairman, in making a few remarks on Chapter 3, Section (c), of the Draft Charter, dealing with the quantitat- ive restrictions, I would like just, to prevent any misunderstanding, to state first that I am in entire agreement with the American Delegate when he said that these measures are objectionable, as they tend to restrict trade and may be used in a very discriminatory way. However, it may be that the hope of the charters of the Charter -- which we all so fully share -- that, following its principles, we shall in a relatively short time arrive in the Kingdom Come of Prosperity, will not be fully realised. It is for this reason that I should like, in the first place, to make some observations with regard to the transitional period mentioned in the second paragraph of Article 19. Generally speaking, we may conclude from this part of the Charter that during the trans- itional period quantitative restrictions will only be allowed under certain rather severe conditions and thereafter will, more or less, be condemned. Now I must confess that I cannot see how we can predict now that on July 1st, 1949, conditions will again be normal in all the countries of the world. As regards the Netherlands and the Netherlands Indies, I would be very happy indeed if I could share that conviction. Both territories have practically just started on their long and difficult road of reconstruction. Already, we find many obstacles on this road, owing to the shortage of important materials, semi-manufactured products and machineries of all kinds. Here, too, the temporary loss of the mid-European hinterland make itself severely felt. Experience has so far shown that partly only by bi-lateral agreements with other countries based on import and export restrictions on both sides we have been able to secure certain quantities of these very important industrial commodities. Indeed, we do not like this system at all, and as the man whose job it is to conduct many of the negotiations, I may say that I would like to saw off this branch of the tree on which I myself am sitting. The question is, however: Can we ourselves afford in the present state of affairs to bind ourselves to such a rigid set of rules as are incorporated in that part of the Charter that is now under discussion? In this connection, there is a very important point to 16. F1. 2 D E/PC/T/C .III/PV/5. make on our side, and, to prove this point, I must start with a con- fession, and that is that the Netherlands too are an aggressive nation. We have conquered territory from our eternal foe (that is, the sea) and you find proof thereof in the coat of arms of one of our Provinces (here you would call then counties" , I suppose), in which coat of arms you find the motto: "Luctor et emergo'. As an aggressor, we have again to defend our gains, and you see, therefore, costly fortresses and fortress walls all over the western part of the country, only we call them "dykes" and their enclosures polders". It is mostly in these polders that our farmers live and work who, with their colleagues in the eastern part of the country, form 30 per cent of the population of our country. 17. E.1 E/PC/T/C.II/PV/5 They live on small farms with on the average 10 hectares or about 25 acres of land. These three million inhabitants are dependent on agriculture, and changes in their way of living can only be brought about very gradually owing to the severe social issues involved. We foresee that certain adjustments may be necessary, but again, how can we know already how long the. transitional period will last and in which direction and to what extent we must take our measures? Our agriculture is founded on the importation of raw materials such as fertilizers and of the cheaper foods and feeding stuffs, and conversion of these raw materials - mostly for export purposes - into high grade products of agriculture, horticulture and animal husbandry. After 1930, owing to the price collapse of primary products and the subsequent protective measures of the importing countries, the position of the Netherlands agriculture became untenable, and very serious social disturbances could only be avoided by drastic Government interference with all branches of the farm industry and the trade in its raw materials and finished products. These Government measures had a stabilising effect and, although they were to a certain extent protective, they had decidedly not a discriminatory character, If it would be of any help, I am quite prepared to submit a further detailed statement on the system that has been in force now for nearly fifteen years; for instance, I could do that when we discuss Articles 26 and 27 of the draft charter. At this stage of our discussions, however, I need only say that the import and export of agricultural products and of the high grade food products derived therefrom have been monopolised by the Government. I must emphasise that during these fifteen years imports and exports of 18. E. 2 E/PC/T/C. II/PV/5 agricultural products remained on about the same level, while the domestic production was not increased. On the contrary, substantial reductions threin were effectuated. How far we will be able to mitigate this system must, owing to the circumstances I skeeched before, depend to a very great extent on the ultimate results of the coming tariff negotiations, I have great doubts, however, as to whether the rigid provisions of the part of the charter now under discussion will enable us to find a proper solution for our present problems without serious social consequences which at all costs must be avoided after all the misery of the war. A limitation of the transitional period to July 31st 1949 seems impossible here, even with the possibility of extending this period in extraordinary and abnormal circumstances in respect of any product for further periods not to exceed six months each. For the above mentioned reasons we also have certain objections to paragraph 2.e.(ii). I was going to read it but, as it has already been mentioned by several delegates, I do not think I need read it again at this time. We are of the opinion that the sentence stating that the surplus should be made available to certain groups of domestic consumers free of charge or at prices below the current market level should be deleted. We think that for instance, a country should have the opportunity to create stocks of domestic products in order to meet requirements in times of shortage. We also doubt whether it would be wise only to speak of a temporary surplus, as in certain countries conditions may be such I as to make it practically impossible to curtail production of certain products. Furthermore, we would like to receive some clarification 19. E .3 E/PC/T/C. II/PV/5 regarding the expression "the like product" used in Article 19,2.e. If this means the exclusion of products used for the same purpose, I do not know whether we could agree to that. Then I have another query with regard to Article 21, paragraph 2, where it is stipulated that if a member imposing quotas allots a share of the total quantity or value to any other country, it shall allot to the other member countries having an important interest in the trade shares based upon the proportions of the total quantities or value supplied by such member countries during a previous representative period. I take it that this stipulation is not applicable when a country has to restrict its imports owing to balance of payments difficulties, but I must confess that we have difficulty in understanding the very technical formulated escape clauses of Article 22, which we will discuss next time. I wonder whether it will be possible for us to use the previous representative period, as the war did so seriously disturb all normal commercial relations, so much so that we cannot speak in many cases of any continuity in these relations. Would it not be better to stipulate that in the case of a quantitative restriction a member should try not to disturb the relationship between the importing countries that might have developed if the imports had not been restricted? Then there is the last important point I have to raise, and here I refer to another paper that was put in, the reference to.which is E/PC/T/C.II/21. From this paper you will see that we are to a certain extent in agreement with the Belgian delegate when he drew attention to the special position of the Netherlands Indies. We feel that our attitude will have to depend to a certain extent or to a great extent on the outcome of the tariff negotiations. 20. E. 4 E/PC/T/C.I I /PV/5 because, as we have stated here, we may be placed permanently in an unfavourable position if these negotiations should only result in relatively small reductions for the relevant commodities. We would be bound not to increase our tariffs as it would be against the spirit of the charter, and we would have to accept an obligation not to maintain quantitative import restrictions except in the exceptional cases enumerated in section c. of the draft Charter. We are therefore of the opinion that the provisions of the Charter are not sufficient to safeguard, after the transitional period, the vital interests of the countries put in the above-mentioned position. It would appear that, in order to be really acceptable, the draft Charter should contain additional stipulations so as to enable those low tariff countries either to maintain their combined system of low tariffs. and quantitative restrictions or to give them freedom to increase certain tariffs to a level equal to the tariffs of those countries relying mainly on high tariffs and not on quantitative restrictions. MR STEEN (Norway): Mr Chairman, the Norwegian delegation will support as much as possible the abolition of quantitative restrictions as outlined in the general conditions of the Charter. We have heard the explanation as given by the representative of the delegation of the United States. We are, however, a little in doubt still with regard to some of the exceptions as outlined in Article 19, 2.b. and c. With regard to b., we are not quite clear what "distress" means there - whether it is distress of an economic character or of some other character. With regard to c., we feel that the words "standards for the classification and grading" need further definition. We would accordingly ask the United States representative to give us, if possible, a further explanation or definition of these two points. 21. E. 5 E/PC/T/C. II/PV/5 M SHACKLE (U.K.): Mr Chairman., the general attitude of the United Kingdom delegation towards this problem of quantitative restrictions has already been indicated to some extent by the United Kingdom representative in the ojint session of Committees I and II, on the question of industrial development, but I should like to re-state our position now and to amplify it to some extent. In general, and subject to certain exceptions, of which the most important is the use of quantitative restrictions to safeguard. the balance of payments - that, of course, being an aspect which stands reserved for later discussion and which has a close connection with the problem of the transition period - apart, I say, from those exceptions, the United Kingdom delegation look on quantitative restrictions as a particularly injurious and undesirable form of trade barrier. We look upon it as injurious both to the countries which use that method and also to those countries whose exports are affected by it. The specially injurious character of quantitative restrictions is due to their rigidity, their restrictiveness, and their arbitrary and unpredictable .character. Tariffs - even relatively high tariffs - may be likened to a wall which an energetic man can climb, or at least he can get over it if he has a long enough ladder. In this way tariffs, while they affect the competitive position, do not actually suppress competition. On the other hand, quantitative restrictions do not present a wall that can be climbed; they are an insurmountable barrier which can only be passed .by going through a door; and at that door there stands a guardian who opens it. and shuts it at his will. 22. F-1 E/PC/T/C/C. II/PV/5 In face of a barrier of that kind any amount of energy, of skill and competitive enterprise is unavailing. Those who are outside cannot get over the barrier. . Those who are insider get protection which may be fully 100 per cent. effective. And then, again, there is the uncertainty as to when and how long and how much the guardian will open the door That uncertainty is in itself a powerful discouragement. There is, one might almost say, nothing like uncertainty to harper trade. We feel that quantitative restrictions, if they were widely applied. would really mean the end of our hopes of general expansion of international trade. If that expansion is not achieved, many of our problems will remain insoluble. To take the case of the United Kingdom, it will be impossible for us without a general expansion of trade to achieve that increase of exports, an increase up to a level of some 175 per cent. of the pre-war volume, as we estimate, which is necessary for us if we are to balance our external accounts at a figure which will allow us a reasonable standard of life. Other countries which are find ing difficulty in makng their external earnings meet their external expenditure will no doubt be in similar case; and if we are unable to solve this problem of increasing our exports, the only alternative left to us will be still further and still longer to restrict our imports. If we have to do so, every country to which the United. Kingdom is a market of importance cannot fail to feel theeffects. Therefore, while we do not regard this draft text before us as intangible and while we do not exclude the possibility of certain further well-devised and closely limited exceptions being introduced into it, the general approach of this draft to the problems of quantitative restrictions is one which meets with our strong support. From that general statement would like to turn to a certain number of particular point. First of all, there is Article 19, 2.c. That is concerned with the application of standards for the 23 PAE F-2 E/PC/T/C. II/PV/5 classifcationand grading of commodities of international commerce. As regards that we feel that these standards should in general be so chosen as to be applicable to types of products which are imported as well as to home-produced types of products; in other words, the standards should not be so chosen that imports simply cannot comply with them; for obviously, if so, this method would simply be an additional means of protection. We notice that in Article 16 (6) of the draft Charter there is provision made which looks to attempts to reach internationally agreed standards, and we should hope that efforts will be made to ensure progressively that in so far as restrictions are maintained to safeguard these standards, the standards would become inter- nationally agreed standards and in that way avoid the restrictive effect which might otherwise follow. Then I come to Article 19.2.e, to which many delegates have already referred. As regards that paragraph we feel that it should apply not only to agricultural products but also to the products of fisheries. In the case of fisheries the problem of sudden severe gluts is wore serious even than it is with agriculture; and for that reason some form of regulation to deal with such sudden gluts is, if possible, even more urgent, I have a second point in relation to Article 19.2.e. Other delegates - I think the Chilean delegate - have suggested that the scope of this paragraph should be extended so as to cover all types of goods and not merely agricultural ones. That is a suggestion which the United Kingdom delegation would not favour. We feel that there is a special case for having a pro- vision of this kind for the benefit of agriculture and fisheries. That is because their products are specially liable to large variations of price and yield, and also because agriculture and fisheries are carried on in most countries by a large number of unorganised and often small producers. For this reason, some form of government sponsored control is often particularly 24. PAE F-3 E/PC/T/C.II/PV/5 necessary for agriculture and for fisheries; and if you have such measures of control over the internal production and over the home producers, it is clear that you cannot allow imports to come in in an uncontrolled way, which would frustrate the object of your regulation scheme. Therefore, as I say, we feel that there is a special case as regards agriculture and as regards fisheries. On the other hand, we feel that quantitative restriction is in general a dangerous weapon, one that is capable of abuse; and we feel that it will often be difficult to keep a proper check on .the observance of a provision of this kind, and that it may be difficult to ensure that the measure of restriction which is applied to imports is not considerably more severe than the measure of control over home production. For that reason we do not think that the scope of this paragraph should be universally extended so as to cover, for example, manufactured products, industrial products, as well as the products of agriculture. When I say that, I do not exclude manufactured agricultural products. I then come to the question of non-discrimination. That arises on Article 21. For reasons which I think will be apparent from what I have already said, we do not like the idea of relying on a previous representative period as the test of non-discrimination. We should prefer the concept of commercial considerations. That is the test which is suggested for non- discrimination in the State trading Articles, particularly Article 26. I do not went to pursue this question furthernow, because I think it is one which possibly we might more appropriately discuss when we come to deal with Article 26. One last observation about Article 22: these are some detailed points. I would merely say that we feel that some redrafting may be desirable; but they are points which are more closely allied to the balance of payments aspect, and for that 25 .-. : _ . AE F-4 E/PC/T/C.II/PV/5 reason I would like to defer suggesting any changes till we come to discuss the balance of payments use of quantitative restric- tions. Thank you, Mr Chairman. THE CHAIRMAN: Thank you. Any other delegate? Would the delegat for the United States care to reply to a number of points where delegates have sought clarification? Mr HARRY HAWKINS (USA): Mr Chairman, I will try to clarify some of the points about which questions have been raised. I am not sure that my notes areadequate to get them all; but if I miss any, whoever may be concerned might remind me of the question. Yesterday the delegate of Lebanon raised a question regard- ing regional arrangements indicating that he felt that the way should be left open for consideration of such arrangements in particular cases. As I understood him, he did not want to propose an exception now, but wanted thae way left open for consid eration of such cases as might be presented for consideration later That would be possible under another provision of our draft of the Charter. think it is Article 52 which provides the the Organisation may waive any of the obligations of Mermbers, which would make it possible or such a question to be raised, considered and passed upon. There were several questions arising in connection with several Articles regarding the meaning of "like products". I believe the Chilean delegate raised the question, and one of the delegates - I believe Netherlands - raised the question toda in connection with Article 19.2.e. As most of you know, the term "like products" "or "like products" been used for many years in the most-favoured-nation clause of treaties. You are also probably aware of the fact that there is no precise defini- tion As I recall, the Economic Committee of the League of Nations once made a study and put out a Report on the subject; and my memory is that a "like product" is one that is practicalls identical with another. That I think is as far as my memory wil 26 , PAE F-5 E/PC/T/C.II/PV/5 serve me on that particular Report I think it is one of the subjects to which an International Trade Organisation would want to give continuing study in the light of precedents, in the light of cases that have come up and by the use of analogy. However, I think the specific point raised by the delegate of the Netherlands can be definitely answered. In Article 19.2.e the words "like product" are used, but those words definitely do not mean what they mean in other contexts - merely a competing product. In other words, to take an extreme case, if a country restricted Its output of apples, it could not restrict importa- tions of bananas because they compete with then - to the extent that they do. There were several questions relating to Article 19.2.a and in particular to the question whether, if a country weremain- taining war-time price controls, it would be permitted to restrict exports which might otherwise go to countries which did not have controls and which had higher prices which would attract the goods. I do not think the paragraph as drafted would cover the case. I think the sense of our draft or the intention of the draftsman would cover it. It is a short supply problem and I think as far as I now see the problem, it could and should be taken care of. 27. OM G1 E/ PC/T/ C. II/ PV/5 A further question raised in the same connection was whether an international agreement among countries having a surplus of a given product should come within the exception if it involved the regulation of trade. I think it would, under the exception as drafted; that is to say; a (ii) "the orderly liquidation of temporary surluses". There were several questiwons -two at least- regarding the mefaning of sub-paragraph under 2,a. of Article 19, which reads:- "Import and export prohibitions or restrictions necessary to the application of standards for the classification land grading of commodities in international commerce" One of the comments asked for further explanation. The explanation , that a country seeking to maintain the reputation of a product in foreign markets might want to limit or prohibit the exporta- tion of sub-standard prodwucts which would impair the general reputation of the product of the country. That seems to us legitimate. In the case of import restriction, such a restrict- ion might be put on to protect consumers from having passed on them sub-standard products. Now a comment was made on that exception to the effect that it is rather widely open to abuse. I agree. There is danger of it, but I agree with the suggestion of the United Kingdom delegate, that further refinement of the definition might prevent abuse In a document of this kind, whenver, it does seem desirable to recognize the point that legitimate restrictions of that type should be permitted. The delegate of Czechoslovakia offered a redraft of Article 21. I think that it would be necessary to compare his redraft rather closely with the one we have put forward before any intelligent comment could be made on it. I think that probably the comparision could best be made by the Drafting Committee, which uld see at the differences are. As he read the document it did not strike mew that there as any 2 . OM G2 E/PC/T/C .II/PV/5 revolutionary change, drastic change, but I cannot be sure of that. The delegate of Belgium I believe suggested an exception under which restrictions might be imposed to maintain domestic prices of agricultural products at profitable levels. I am not using his exact words and that may possibly misrepresent what he said, but I took that to be the sense of it. I think that an exception of that sort would give a measure of protection of agricultural products to practically any extent that any country desired, unless I have misunderstood the nature of the exception. It seems to me it leaves the door wide open for possible drastic restrictions on all agricultural products. The delegate of the Netherlands questioned/the length of the transition period in Article 19, 2.a. and said that it seemed entirely too short, and I gathered that the latitude given even within that period was regarded as inadequate. I can only say that I do not feel unresponsive to the view he has put forward. I can well understand the difficulties in which some countries find themselves during that period, and, so far as the American delegation is concerned, would gladly consider any suggestions of a concrete sort that might be put forward. I would say, however - and I do not think Mr. Speekenbrink overlooked it - that/there is a provision for extension of that period, but I take it he does not think that meets the case. The delegate of Norway questioned sub-paragraphs b. and c. of paragraph 2 of Article 19, one of which relates to standards, on which I have already commented, but I might say a word on his inquiry regarding b., which roads: "Export prohibitions or restrictions temporarily imposed to relieve conditions of distress which are local to the exporting country and which are caused by severe shortages of foodstuffs or other essential products". He inquires whether the distress spoken of refers to economic distress or to a physical shortage of the product. 29 OM G3. E/PC/T/C .II/ PV/5 It refers to a shortage. It is intended to cover the case in which a given food product might be in very short supply owing to crop failure, so that if any considerable quantity were exported conditions possibly even approaching famine might result. The exception is intended to cover a situation of that kind. I should just like to say that I agree with the United Kingdom's position on the question whether sub-para. c should cover more than agricultural products. I do not think it should apply to manufact- uerd goods, and I agree with the reasons he gave for that view. That, Mr. Chairman, covers the questions so far as my notes reveal them. I may have missed some. THE CHAIRMAN Gentlemen, I feel we are faced with one of our more difficult problems in the consideration of this question. There appear to me, from the views expressed, to be some fairly funda- mental differences in the approach of the different countries to this question. It seems to be bound up in the main with the attitude which the governments of those countries feel it proper to adopt towards thew way in which the demand for imported goods shall be determined. It does seem to be generally accepted that in the period immediately following the war the needs of countries to re-establish and re-equip their economies do justify the imposition by governments of firm priorities, at least in the selection of goods for import. That is recognized even by those who take a fairly. strong attitude towards the use of quantitative restrictions in general, and is embodied in the provision ofa transition period during which the freedom of countries to use quantitative restrictions for the purpose of selecting their imports with a view to national policy rather than with a vew to the satisfaction of individual consumers, would be recognized 30. F1. 1 H E/PC/T/C .I I/PV/5. However, there seems to be some feeling amongst different delegations that that recognition is inadequate. To some extent, the views of those delegations. can be met, as the Delegate for the United States has pointed out, by a possible extension of the transition period during which countries would be free to select their imports upon nationally- determined standards, to concentrate on capital equipment, essential materials and so on, and to eliminate goods which are traditionally regarded as luxuries and non-essentials. Several delegations, partic- ularly those from New Zealand, China and India, apparently take the view that the needs of a country relatively under-developed and-seeking to concentrate development or to speed it up give the right to select imports or to establish certain priorities over imports, so as to give the first claim on available resources, that the needs for capital equipment, essential materials and so on over the traditionally less essential types of goods is a longer continuing requirement; indeed, that it may be difficult to set any period to it in precise terms, either of a number of years or in more general ways, although the Chinese Delegate suggests an ingenious method of selecting countries which might be free to use quantitative restrictions in this way. It is difficult, on the face of it, to see the principles upon which sone reconciliation of these conflicting points of view can be worked out. Apart from that rather fundamental issue where the countries concerned are primarily those which we have come to describe as the relatively under-developed, there were a number of suggested modifications of the general prescription of quantitative requirements by additions to and amplifications of the suggested exceptions. They refer particularly to such matters as exceptions necessary to maintain the effective continuance of war-time price controls into the post-war period, the effective conduct of state monopolies of certain classes of goods where they have been traditionally practised, the requirements which may be necessary in relation to schemes for the maintenance of price stability for primary products, and finally for the use of quantitative restrictions for frankly protectionist purposes, as 31. F1. 2 E/PC/T/C. II/PV/5. an alternative to subsidies or quotas, although in this case it did seem to be suggested that its use should be consciously limited to cases where it could be shown that the use of this form of protection could be shown to be less restrictive in character than alternative methods of obtaining the same degree of protection. I feel we must at this stage refer this matter now to a drafting committee, but it would appear from the discussions so far that that drafting committee will be faced with a fairly difficult task in bringing before us a single agreed draft covering this matter. It is obviously, I think, desirable, so far as we are able to reconcile through some compromise solution conflicting points of view where they are based upon the reasonable interpretation of the legitimate needs of the economies of the countries advancing them. I should suggest, therefore, both to those groups of countries who have expressed the desire to maintain the general right of the Government to select or to give priorities to certain classes of imports over a pro- longed period and to those who, like the United States and the United Kingdom, feel that quantitative restrictions are of all forms of restrictions of imports the ones open to the most serious objection, that they do seek in the days ahead to consider how far their positions, which at present appear to be. too different for perhaps reconciliation to consider how far it would be possible for there to modify their requirements to admit of a compromise solution. Unless any Delegate feels that he can add anything to the discussion of this matter at the moment MR. SHAKLCE (United Kingdom):. It seems to me that there might possibly be a case for postponing the. reference of this matter to a drafting sub- committee until we have discussed the balance of payments aspect. I have a feeling that the balance of payments use is intimately linked up in many ways with the general purposes for which quantitative restrictions may be used, and that it is rather hard to consider them in isolation. I think it is quite possible that the attitude of some delegations towards the whole problem may be affected to quite a substantial extent by the 32. F1.3 H E/PC/T/C. II/PV/5. nature of the conclusions we may come to about the use of restrictions for balance of payments for the purpose. I would, therefore, like to suggest for consideration that view night possibly post- pone handing this problem over to the drafting sub-committee till we have also considered the use of quantitative restrictions to safeguard the balance of payments. M. BARADUC (France) (interpretation): Mr. Chairman, I should like to say that I associate myself entirely with all the thoughts just expressed by the British Delegate. Many troubles which have already been expressed by many delegations concerning Article 19 are shared by the French Govern- ent. The French Goverrnment believes that in reality several of those difficulties may be disposed of by the manner in which we may be allowed to regulate our own quantitative requirements in order to re-establish balance of payments. I know that the greatest worry of all of the Delegates is to find a solution -- perhaps in a compromise, but a solut- ion -- which might satisfy all the delegations as far as possible. I believe, as the British Delegate says, that it might be wise to wait until we have been able to discuss all questions concerning quantitative restrictions and balance of payments and restrictions necessary to safe- guard this balance before we try to redraft once more Article 19. THE CHAIRMAN: Gentlemen, I can see a number of advantages in the prospoal put forward by the United Kingdom delegation. At the Same time, in my official capacity, I umst confess to some concern at the rate of progress (or the absence of progress) in the work of this Committee. All the other Committees have, I think, reached the stage at which practically the whole of their subject-matter is now in the hands of their various sub-committees and drafting committees. We still have major matters of policy to consider. We have the balance of payments question, which is obviously critical, and we have the major question of State trading and so on to discuss in full Committee before they reach the stage where they can be considered by the drafting committee. I am reluctant, therefore, to hold this matter up any longer than is absolutely necessary. However, perhaps it may serve if 33. F1.4 H E/PC/T/C. II/PV/5. it is possible for us to proceed with the other items and get those actively dealt with by drafting commitees, for us to leave over this question of quantitative restrictions, including the balance of pay- ments, till a later date. I would ask your co-operation, however, in speeding up the consideration of these matters when we do come back to them. With your concurrence, then, we will leave this matter at the present stage, with the intention of referring it to a drafting committee after we have discussed the balance of payments issues. I would be glad to hear from those countries who are concerned with this matter at what stage they would feel it possible for us to commence discussion here of the balance of payments issue. In the meantime, I suggest we adjourn till 25 minutes past five, and that we then commence discussion of Section F, whichwi deals with State trading. 34. I .1 E/PC/T/C. II/PV/5 THE CHAIRMAN: Gentlemen, we proceed now to a discussion or the section of the agenda dealing with state trading, which refers also to Articles 26 to 28 in the American draft charter. MR BRENNAN (South Africa): On a point of order, with a view to being helpful, many of us are inclined, when we start getting warmed up to our subject, to speak particularly fast, without realising that we are talking as fast as we are talking. Could we not get over that difficulty by having it brought to our attention, without having to stop the proceedings for a moment, by means of a system which was, I understand, actually inaugurated when the Nuremberg trials were on (not that I suggest that the same situation obtains here). I understand it is practicable from the angle of the switches that we might have a light fixed somewhere round here, and when the gentleman in charge of the switches is conscious that his colleagues up above are not able to catch up with a speakers he can throw over a switch that will cause the light to go on. If we adopted that system it would also have this advantage, that when you, Mr Chairman, interrupt me, I am inclined to speed up, thinking I have only a minute to go, but with this other system I shall know that I have been going too fast and will accordingly go a bit slower. THE CHAIRMAN: I think that is a very valuable suggestion, and I will certainly communicate it to the Secretariat and ask whether they can do anything about it - that is provided the other delegates agree that it would be helpful. Very well; we will pass that on to the Secretariat and ask that they take the necessary action. MR HAWKINS (USA): Mr Chairman, I will try to outline briefly and simply the content of this section on state trading. It is not very complicated to state; it may be rather more 35 E/PC/T/C. II/PV/5 difficult to apply some of it. Article 26 lays down the rule of non-discrimination: in other words, the provisions of Article26 as applied to state trading are the counterpart of the most flavoured nation clause as applied to, we may say, customs duties. The obligation or the definition of most favoured nation treatment is applied as it would be applied under this provision by a country engaged in state trading, as buying in accoordance with commercial considerations. I am abbreviating the language greatly, but that is the sense of it: that purchases should be made, in other words, where they can be made to the best advantage. Now, admittedly, the rule is a little vague, a little indefinite. There is nothing here to explain how it would be applied in varying circumstances. But here again it seems desirable in this field to lay down the principle which seems sound and seek to apply it in the concrete circumstances that may arise from time to time. In that way, over a period of time there will develop a body of case law, so to speak, which will serve to define and amplify the provision. Article 27 relates to state monopolies for individual products, such, for example, as were mentioned by the delegate of Czechoslovakia in his statement this afternoon: that is, the tobacco monopolies, salt monopolies, and any other monopoly which a state may exercise over the trade in a particular product. The provisions in Article 27 represent, as regards state trading operations of this sort the counter- part of duty reductions where the trade is handled by private enterprise. The margin between the price paid to foreign suppliers and the price at which goods are sold to domestic consumers is a measure of the degree of protection accorded to domestic producers: in other words, that margin corres- ponds to an import duty. For that reason, the margin between the purchase and sales price would be subject to negotiation 36 I .2 I.3 E/PC/T/C. II/PV/5 in the same way as tariffs under Article 18. The same principle applies to the operations of Monopolies which are exporting: in other words, the margin which is of interest is the margin between the buying price at home and the re-sale price abroad. The analogy there is the analogy to an export duty. Article 28 refers to the case of a complete state monopoly of all import trade. The general effect of reductions in duties and other trade barriers by countries whose trade is handled largely or mainly by private enterprise is to bring about an increase in imports relative to domestic production: in other words, the effect is to allow imports to supply a larger share of the home market. The analogy here in the case of a country with a complete monopoly of its import trade is to undertake that total imports shall not be less than some figure to be agreed upon, subject, of course, to periodic adjustment Those, in simple outline, are the provisions relating to state trading. The effort has been made in each case to find an analogy to other types of trades, the more traditional types of provisions found in trade agreements and commercial treaties, I think that is all.. PAE J-1 E/PC/T/C. II/PV/5 Dr. P.S. LOKANATHAN (India): Mr Chairman, I should like some comment on the last sentence of Article 27. Mr. HARRY HAWKINS (USA): The purpose of the provision is to prevent the agreement regarding the margin between the purchase and the retail price being defeated by withholding supplies from the market, thereby running up the internal price and affording a degree of protection beyond what is intended. SENOR DON HUMBERTO VIDELA (Chile) Mr Chairman, the Chilean delegation wishes to state that it is in agreement in principle with the contents of Article 26, provided it is understood that an enterprise which may be considered as coming within the mean- ing of paragraph 2 of Article 26, in other words, be considered as a State enterprise, shall nevertheless be entitled purely for commercial considerations, such as meeting competition or main- taining a position in certain.markets, to fix different prices in different markets without such action being regarded as dis- criminatory. It is a well known fact that there are enter- prises which have a certain measure of government control or enjoy certain exclusive or special privileges, but which are run on purely commercial lines. The Chilean delegation feels that this type of enterprise is not provided for in paragraph 2 of Article 26, and would suggest that the Drafting Committee take this point into consideration when unending the wording of that Article. Mr ERLING STEEN (Norway) Mr Chairman, the Norwegian delegation adheres in general to the ideas expressed in Article 26 of the suggested Charter, but would make the following preliminary observations on the whole of Section F: The rules suggested in Article 27 with regard to the price policy for products importe under State monopolies of individual products seem hardly to be applicable under present conditions, where it may be necessary to buy from different countries at different prices and where for this reason an equalisation of the sale price on the home market 38 PAE J-2 E/PC/T/C.II/PV/5 becomes necessary. Nor way has at present and has had during many years two big State monopolies, concerning respectively grain and wine. The grain monopoly conducts its business on businesslike terms, but as the monopoly is also purchaser of home-produced grain, it must remain free to fix sale prices with due consideration to the position of Norway's own production and in such a way as to maintain to the greatest possible extent stable bread prices. The other existing State monopoly - A/S Vinmonopolet, the wine monopoly - has established already long before the world war regular trading relations with the wine exporting countries of Southern and South Western Europe, and purchase of wine and spirits from these countries has been connected with questions concerning Norway's export to the same countries. This long- established practice will not be easy to modify, and this could only be done if the other stipulations of the draft Charter are generally agreed to and if the said wine exporting countries become members of the International Trade Organisation. With regard to the policy of Norway in respect of restrictions on the sale of wine and spirits and the fixation of sale prices, it should also be borne in mind that this policy is from many years back connected with the general s policy of the country. Norway must retain a free hand to pursue this policy in accord- ance with the will of the nation and cannot enter into commit- ments whereby that policy might be frustrated. The wine monopoly must be free to regulate the sale and fix such sale prices as it may find justified in the light of all relevant internal conditions. Mr SHACKLE (UK): Mr Chairman, the United Kingdom delegation are in general agreement with the scheme of these Articles. When I say that, I am referring more particularly to Articles 26 and 27, Article 28 being concerned with a rather different state of affairs, that of the complete State trading monopoly. I have a few points that I would like to make on Articles 26 and 27, 39 PAE J-2 3 E/PC/T/C.II/PV/5 First of all, as regards Article 26, that is drafted so as to apply not only to Stateenterprises which deal in goods but also to enterprises which deal in services. I think that raises a quesiton which we ought perhaps to consider in relation to the whole of this draft, namely, whether it would not be advisable to confine it throughout to dealings in goods. It seems to me that if we once become involved in any aspects of services, that may lead us rather far. We have great interests, of course, in such matters as shipping, and we therefore, want to see provisions for far treatment of shipping and so on brought in somewhere; but we quite recognise that our task would become quite unmanage- able if we started to introduce services generally into this convention; and for that reason we are inclined to think that it would be wise here and elsewhere to remove mention of services and to confine ourselves to treatment of goods. That is my first point. I have a quite minor point on paragraph 2 of.Article 26: "for the purpose of this Article, a State enterprise shall be understood to be any enterprise over whose operations a Member government exercises, directly or indirectly, a substantial measure of control". Well, I think that there it would be better perhaps to say "effective control" rather than "a substan- tial measure". "Substantial" is so ambiguous. I then come to.Article 27, the definition of margins, which in the case of State trading monopolies would correspond to tariffs in the case of private trade, and which, like tariffs, would be negotiable. In the first place, it has, I think, been recognised that in the case of operations of private trade we shall have negotiations both about most-favoured-nation rates of tariff and also about preferential rates within the existing preferential systems. Now, correspondingly it seems to us that when you come to negotiate about State trading margins, you should negotiate about what you might call the most-favoured, nation margins and also about preferential margins. 40 PAE J-4 E/PC/T/C.II/PV/5 The second point relates to the way in which the margin is defined. In this respect the wording it this Article of the draft Charter differs somewhat from the wording of the proposals which were issued in December last and about which, as you know, the United Kingdom Government has said that they are in substan- tial agreement. The difference in this case is that the pro- tective margin was defined in the proposals as the difference between the landed price of the product and the price at which it is sold. In this Article we have it rather differently put. Here it is expressed as the difference between the price at which such product is offered for sale to the monopoly by foreign suppliers and the selling price in the home market. Now it seems to us that the test originally laid down in the proposals, that is to say, the landed price, is a better test than the price at which the product is offered for sale, because what is an offer for sale? Who is to know whether it was a firm offer, whether it was an offer for any substantial and important quantity, or merely a small capricious offer at what might be an accidentally low dumping price? It seems to us that is not a satisfactory type of. test, but what one should compare is the landed price with the monopoly's first hand selling price in the home market; in other words, in that particular respect we should like to go back on the drafting of this draft Charter to the drafting on the proposals of last December. My next point is about the way in which these provisions as to the margin would be observed in practice. As I think the Nowegian delegate has already said, it is clear that there will be different prices for different parcels of goods purchased, according as the purchases are made at different times, differences according to qualities, those differences of qualities being often rather intangible and difficult to define, but nevertheless differences which the consumer pays attention to and will want to see reflected in differences of price. There may also be 41 J-5 E/PC/T/C.II/PV/5 differences of price according to the nature of the purchase transaction: If it is a long term contract, you may have one price; If it is a spot transaction, you may have a different price. So that it is evidently not possible as a matter of administration for the import monopoly simply to take the price at which it bought a particular parcel, to add to that the agreed margin and. to sell that particular parcel at the resulting price. That would lead to complete chaos and confusion. It therefore seems to us that you have got to have some sort of provision for the averaging of the price over time. Our idea, roughly speaking, of the way in which that might be worked is that for the imports from each source you would average the prices of all the product which you bought, I assume with rough uniformity for this purpose over a period. You would then compare the average landed price over that period with the average of the first hand selling price in the home market. Your obligation would be to show at least in an approximate general way that that difference corresponded to the negotiated margin. I have mentioned averaging over a period. There is a question as to the length of that period. For pure administrative purposes it might be enough if the period were not very long. It might be perhaps one year; but there is a reason and I think it is a very good reason, why the period should be longer than a year. It is one of the great objects of policy at the present time to get some sort of stability - stabilisation of prices to consumers, and so on. I think it is a desirable object of policy not merely from the point of view of the consumers but also from the point of view of the producers who supply them. Stabillisation of consumer price makes for steady and dependable demand, and it is therefore, I think, a thing to be encouraged. 42 E/PC/T/C .II/PV/5 It is clear that you cannot have stabilization if your averaging is over as short a period as one year. On the other hand, of course, we recognise that the period has not got to be extremely long, otherwise there can be no effective check on the observance of these margins, and it therefore seems to us that a reasonable period over which to take your averaging would be three years. That is a proposal I would like to make. I would like to suggest to you that that is a reasonable and legitimate way of implementing this proposal about the margin. I then come to a point which arises on the latter part of Article 27, where it talks about satisfying the full domestic demand for the. imported product. I think it is fair to say that while that is right as the general and normal rule, you will have certain temporary situations in which it is not possible to comply with that requirement. There is an obvious case when you have rationing. If you are rationing your own people you cannot be expected to satisfy their full demand, and that applies not merely to the case of rationing, but also. to cases where you have a restriction on imports, for, shall we say, balance of payments reasons. Then you are having to restrict your imports for balance of payments reasons, obviously you cannot satisfy the/full domestic demand; and when I say "restriction of imports for balance of payments reasons", that applies also to limitation of purchases by a state trading monopoly, which for this purpose is the counter- part of import restrictions; and that exception would apply, not merely to restriction of imports for balance of payments reasons, but in our view should apply to all the cases in which exceptions from the general rule against import restrictions are embodied in Article 19, 2,. which we were discussing earlier this afternoon. I think that those are all the points I should wish to make now. 43 E/ PC/T/C . II/PV/5 MR. LOKANATHAN (India): There is only one point I want to raise in this connection, Mr. Chairman. I should like to inquire of the United States delegate whether the sort of bulk purchasing on a long-term basis nor made, for instance, by the United Kingdom from various countries, would be banned under this Article? Also, whether in the term "commercial considerations" there are included points relating to certain facilities for the importation of goods or certain exceptional arrangements with regard to the financing of such trade which one country may be able to afford to another or would all those things be excluded from the concept of commercial considerations? MR DEUTSCH (Canada): Mr. Chairman, the Canadian delegation agrees in principle with the Articles under Section F. With reference to the comments of the representative of the United Kingdom, we wish to say, Mr. Chairman, that from our experience, such as we have had, in operating state monopolies, we would fully agree with what he his said about the necessity for averaging in the determination of the margins. It is a practical impossibility to operate a monopoly if any other procedure is adopted, because you cannot make your adjustments from day to day and from month to month. The representative of the United Kingdom referred to the question in regard to the meeting of the full domestic demand. I would like to refer to the reverse of that, in the case of meeting the full export demand. We have already referred to the problems that arise when price controls are being maintained in the domestic market. It may, under those circumstances, not be possible to meet the full foreign demand within the prescribed margin. That is, when you are maintaining a price control at home while prices in foreign markets are very much higher. That is the same problem in reverse to the one mentioned by the United Kingdom. 44 On Article 28,. we have always had some difficulty in under- standing just how that Article would be applied. I am not clear whether the state which maintains a complete monopoly of its import trade would be required to negotiate an aggregate amount of purchases with all the member countries of I.T.O. simultaneous- ly or individually, and, if the negotiation is to be individually, how you achieve the aggregate at which you are aiming;. and, furthermore, if such undertaking is entered into, there is an implication, of course, that the supplying countries will make those goods available. That may be very difficult to carry out. On the whole re feel that it is just as well to drop Article 28, because we do not see how in practice it can be worked out. MR. FRESQUET (Cuba): Mr. Chairman, we only wish to ask the delegate of the United States to clarify the same points as were put forward by the delegate of India. Putting it in another way, we would ask if the general exceptions set out in Article 32 e. will cover the situation of countries where, due to necessities created by the war, they have established a state monopoly and make global sales of some of their crops to other countries, and these global sales are still continuing, even though the war is over, because of the condition of scarcity created by the war, and which still continues to exist. My question is, will that situation be covered by letter e of Article 32? In addition, I should like to have a clarification of the points put forward by the delegate of India. MR. BRENNAN (South Africa): Mr. Chairman, I would like to get the representative of the United States, through you, to give me a little elucidation as to the position that would apply in regard to those three clauses relative to Boards which we have set up in relation to agricultural produce in South Africa. They are Control Boards covering agricultural produce, and which are set 45 K4 E/PC/T/C. II/PV/5 up for periods of years. They fall directly and finally under the responsibility of the particular Cabinet Minister, and their purpose is in part the general development of our primary agriculture, to enable farmers in certain areas, who have had difficulties on account of excessive competition from outside sources, to get going. Those Boards operate in such a manner that they bring about a stabilisation of prices, while at the same time they are the organizations, again under the Cabinet Minister, which authorize the importation of the necessary quantity of that particular agricultural commodity that is normally required for general consumption. We do not like to think that we are put in the particular category of being state traders, but at the same time we want to feel that our position in that aspect is recognized. In similar manner it would be helpful to us to know how the delegate of the United States regards our railroad organiza- tion, which by our Constitution is part of the State, although that Constitution sets out also that it must be operated on commercial lines. Now that organization, our State railroads, carries various types of freight at different prices, but relative to any incoming freight to be conveyed in the country its rates apply comparably to the produce of any country, no matter there it comes from. That is the nature of my inquiry, sir. THE CHAIRMAN: Are there any further comments? F1.1 L E/PC/T/C.II/PV/5 MR AUGENTHALER (Czecho-Slovakia): Mr Chaimain, I am not prepared for a discussion about this matterr today, so I would like to reserve our opinion for the next meeting. I would like at this moment to stress one single point, and that is with reference to Article 27. The American Delegate said that Article 27 applies mainly to those cases mentioned, and especially it means those state monopolies which have existed in Czecho- Slovakia and probably in many European countries for a very long time. There, the state monopoly actually supplies the taxation and we are negotiating customs reductions, preferences, but we are not negotiating on taxation, so I cannot imagine how in similar cases we could negotiate here the reductions in price, because the sales price is actually the taxation itself. MR. SPEEKENBRINK (Netherlands): Mr Chairman, I am in a little difficulty here because I do not at the moment see the complications of Article 27 and the whole paragraph regarding state trading with regard to the monopoly system I mentioned in my speech before. The idea of the system was more of a balanced price level in the country in the interests of agri- culture, and it was therefore flexible according to the fluctuations in prices of the various agricultural products. Now the monopoly system is the dominating feature in our agricultural policy, particularly with respect to prices, so I wonder whether we can apply these very rigid fomulae in this section in Holland in a short time. With your permission, I would like to study this question further and, if need be, submit a paper or discuss it in a small circle with people who can enlighten me on the point. MR McCARTHY (Australia): Mr Chairrman, my colleagues have had some difficulty in trying to decide whether this particular Article or particular section meets all the circumstances that we think are likely to arise in state trading transactions. It is apparent that the drafters of the particular draft here have had in mind that there will be state trading in existence when the Charter becomes operative. There will be state organisations engaged in trading from day to day, buying in external markets and 47. F1. 2 L E/PC/T/C. II/PV/5. distributing on the local markets. They will be pooling production sur- pluses and selling or directing their sales overseas either to Governments or private traders, and it would also seem that there will be long-term contracts between state monopolies or state organizations. We are inclined to take the view that an undertaking might be given by the countries subscribing to the Charter that, where they are engaging in state trading, they will do their utmost to subscribe to the principles of the Charter. The problem then is how can they do this in many instances? The draft certainly makes a valiant attempt to set down principles, but we feel that we shall probably be falling back, as Mr Hawkins suggested, on state 'law. In a few particular items, we would agree with the United Kingdom Delegate that difficulties are likely to surround the inclusion of services. They would have to be defined, in the first place, and to bring them in and make the comparison suggested would, we think, meet difficulty. We are also interested in long-term contracts that night be entered into either for possible surpluses of a supplying country or for substantial quantities, these to be supplied over a period of years. We would probably find that they are in most respects, perhaps in all, not violating any of the principles laid down, but we suggest there should be some provision for interested parties or for interested countries to be in a position to examine the implications of those contracts. The implications might be many and examination might show that they are in no way unfair to competitors or to the interests of the countries not party to those contracts. Again, it is a matter of what is the best that can be done, and we think that something on the lines I have mentioned might help. Again, there might be some provision somewhere 'that, where trans- actions between state traders are involved, or if state traders are involved, the organisation might be asked for some opinion. We find ourselves very much in the position of the Canadian Delegate when we look at Article 28. Again, it is apparent that it is rather the best that could be thought of to meet those particular transactions, and one hesitates to criticise or question such an Article when one is at a loss to suggest what might be put in its place. Frankly, we do see difficulty in that being 48. F1. 3 L E/PC/T/C. II/PV/5. carried out. I am not prepared to say at the moment that it should be dropped, but it might be that the drafting committee should give consideration to the question whether it would not be better to do that than to include something, the carrying out of which might be found to be impractionble. The matter of preferences in this Article is of interest to us in Section 27, and there are one or two points in it that have just occurred to me which I should like to look into further and, if you thought fit, submit a note to the drafting committee. THE CHAIRMAN: Are there any further comments? MR JOHNSON (New Zealand): I want to ask one question, Mr Chairman, and that is in respect of Article 27. It is more a question of drafting. It says there: "If any Member . . . establishes, maintains or authorizes, formally or in effect, a complete or substantially complete monopoly of the importation or exportation of any product, such Member shall enter into negotiations with other Members, in the manner provided for in respect of tariffs under Article 18. Now, if we refer to Article 18, we find the provision there is that Each Member . . . shall, upon the request of any other Member or Members, enter into reciprocal and mutually advantageous negotiations with such other Member or Members. " I take it the same construction is to be applied in each case. In other words, that it would be on request that the negotiations would be entered into. MR TUNG (China): In the course of the last war, China set up certain export monpolies. Terms for price fixing were arranged. Several of these agree- ments are still in force. We would like to have the opinion of the United States as to whether, in case we are maintaining those monopolies, the provisions of Article 27 would apply to the terms of price fixing. THE CHAIRMAN: I suggest that, as the hour is getting late, we might defer further discussion and the reply by the United States Delegate until we resume. With regard to the time of our next meeting, the Secretariat have advised me that it would be possible for this Committee to hold a meeting tomorrow afternoon, in addition to the proposed meeting on Friday afternoon. Thin would; of. course, facilitate the progress of the work considerably. If that is agreeable to the rest of the Committee, I suggest 49 F1.4 L E/PC/T C. II/PV/5. we meet again tomorrow at 3 o'clock. While we are checking that up with the Secretariat, may I say it has been suggested that the Committee on Procedures and Tariff's and Preferences might meet at 8 p.m. on Friday? you will notice this is the same time as the scheduled meeting of the joint body on Industrial Development. Would those members who are concerned with the drafting committee on Procedures, Tariffs and Preferences please indicate whether the fast that the meeting is at the same time as that of the Joint Body would embarrass them or whether we could arrange a meet- ing at that time? MR.SPEEKENBRINK (Netherlands): As Chairman of the Sub-Committee, I would gladly support you that we have a meeting on Friday evening, because we still have so many matters to discuss, and I am afraid we shall be very much in arrear if we do not meet more often. THE CHAIRMAN: May I take it, then, that we are free to arrange a meeting on Friday evening of the Drafting Committee dealing with Procedures and Tariffs? MR LOKANATHAN (India): The Committee on Industrial Development is meeting at 3 p.m. tomorrow, according to this programme. THE CHAIRMAN: In order to clarify the question of the programme, I have asked Mr Wyndham-White to come in. He advised me earlier that tomorrow afternoon would be available for a meeting of this Committee. We will wait until he arrives and he can confirm that. The arrangement for tomorrow; is that this Committee will meet at 3 p.m. The proposed meeting of the Joint Body, which was scheduled for 3 o'clock, has been postponed. We stand adjourned till 3 p.m. tomorrow. The meeting adjourned at 6.26 p.m.. 50.

GATT Library

yt288pg4556

Verbatim Report of the Fifth Meeting of Committee II : Held in The Hoare Memorial Hall, Church House, Westminster, S.W.1 on Wednesday, 30 October 1946 at 3 p.m

United Nations Economic and Social Council, October 30, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

30/10/1946

official documents

E/PC/T/C.II/PV/5 and E/PC/T/C.II/PV/1-4/CORR.1

https://exhibits.stanford.edu/gatt/catalog/yt288pg4556

yt288pg4556_90220001.xml

GATT_157

A. 1 E/PC/T/C.I I/PV/5 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIFTH MEETING of COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster, S.W.1 on Wednesday, 30th October, 1946 at 3 p.m. Chairman: - Dr. H.C. COOMBS (Australia) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL 58 Victoria Street, Westminster, S.W.1) 1. E/PC/T/C.II/PV/1 THE TEMPORARY CHAIRMAN: Can we get started, gentlemen, because I have another meeting to announce to you, to begin in about 40 minutes, so we are rather pressed for time. It gives me great pleasure to declare open the first session of Committee II of the Preparatory Committee of the International Conference on Trade and Employment, and before we come to the agenda which has been circulated I would first of all like to introduce to the Committee the Secretariat. I have Mr. Hilgart, Mr. Nouerdos, also on my left, the Secretary of the Committee, on my left,/and Mr. Storn on my right. Then there is Mr. Hutchins. He is not here today, so I cannot introduce him to you; and the Assistant Secretary, Mr. Lin. I am going to repeat what I said just recently in Committee I, that all the Secretariats of the Committees have the strictest instructions to show no mercy whatso- ever to the delegates, and I have no doubt you will reciprocate on the Secretariat! There is one other announcement which I would like to make at this stage, and that is, that the members of Committee I, which has just concluded its first meeting, have expressed a desire to meet with this Committee immediately after this meeting to discuss a proposal for holding joint sessions, for setting up a Joint Committee of Committees I and II to consider in particular questions of industrial development. I think that perhaps we could save time by not discussing that proposal in detail in this Committee, as it has been discussed at some length in Committee I, and perhaps the debate could best be continued in the joint session of the two Committees, which I suggest should take place in the Hoare Memorial Hall, where the 2. E/PC/T/C.II/PV/1 Plenary sessions are held, at 4.30. We can now, I think, come to the agenda, except that perhaps I might say a word or two first of all about the rules of procedure governing this Committee. The rules of procedure have been discussed and adopted by the Plenary Committee, and of course they govern the proceedings of this Committee. I would draw attention particularly to Rule 57, which provides that the Committees and Sub- Committees may by agreement decide to adopt rules of procedure regarding interpretation or translation of a more simple/character than those laid down in the Rules. In the absence of any such agreement the working languages will be English and French, and there will be interpretation between the working languages. Now I think we might pass to the agenda for this meeting, which is contained in the Preparatory Committee Journal No. 4, and the first item is the election of the officers of the Committee. In the agenda reference is only made to the Chairman and Vice-Chairman, but the Committee may also wish to appoint a Rapporteur. I could suggest, however, that the Committee might perhaps defer a decision on the Rapporteur until it has a clearer idea of the way in which its work is going to develop. If the Committee agrees with that I will then proceed to call for nominations for the office of Chairman of the Committee. I might just say in parentheses that I can quite see this room is going to be too small for the Committee, and if you will bear with the inconvenience for this meeting I will endeavour to make other arrangements for future meetings. 3. E/PC/T/C.II/PV/1 Now may I call for nominations for the office of Chairman of the Committee? SENOR HIGINIO GONZALEZ (Chile) (Speaking in French: interpret- ation): Mr. Chairman, I have the honour to nominate the hon. delegate for Australia, Dr. H. C. Coombs. I think he is highly qualified for carrying out the functions of Chairman of this Committee. THE TEMPORARY CHAIRMAN: Is the nomination of the delegate of Australia seconded? (The delegates of Belgium, Brazil and France signified their desire to second the nomination) Are there any other nominations? (There were no other nominations) In that case I declare the delegate of Australia elected as Chairman of Committee II. (Applause). DR. H. C. COOMBS (Australia) then took the Chair. THE CHAIRMAN: Gentlemen, it is a very great honour which you have conferred upon me and upon my country in electing me to this onerous position. I can only express my very sincere hope that I shall prove worthy of the confidence which you have expressed in me. Thank you. The next item on our agenda is the election of the Vice-Chairman. I would call for nominations for the position of Vice-Chairman. MR. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, I have much pleasure in nominating as Vice-Chairman of this Committee Dr. Speekenbrink, head of the Netherlands Delegation, whose reputation and qualifications are, I am sure, well known to those present. THE CHAIRMAN: Is the nomination of Dr. Speekenbrink supported? (The nomination was supported by the delegates of Belgium, Brazil and Czechoslovakia) The nomination has been seconded a number of times, gentle- men. Are there any other nominations? 4. E/PC/T/C.II/PV/1 If not, I shall declare Dr. Speekenbrink elected. (Applause). THE VICE-CHAIRMAN Mr. Chairman, in accepting this nomination I wish to thank the delegate of New Zealand for proposing me and the other members for supporting the nomination, and also to express my sincere wish to serve this Committee as best I can. In expressing this wish I only hope that although Rules 8 and 9 will apply to the Chairmanship and Vice-Chairmanship of this Committee, only Rule 8 will have to be used! THE CHAIRMAN: The next item on our agenda is the preliminary consideration of the agenda of the Committee and its programme of work. I would be grateful for any suggestions on that matter, but I understand that the Secretariat have prepared a provisional agenda, which, if it is the wish of the Committee, I can circulate immediately. Is it the wish of the Committee that I circulate this now? (Agreed) I shall be grateful if delegations would on the first round content themselves with one copy, as we have not had time to get a large number ready, but if there are any over there will be additional copies available for delegations. Gentlemen, I understand that this provisional draft agenda has been prepared on the basis of the main headings in the draft American Charter. I suggest that we may confine ourselves at this stage to any general comments which delegates may wish to make on the draft, because it is a fairly complex document and I think that most delegations would like time to examine it with some care. I suggest, therefore, if it is agreeable to you, that we deal only with any major points which you may wise to make, and that we adopt it provisionally subject to those points, with a clear 5. E/PC/T/C .II/PV/1 understanding that it is open to the Committee to alter the agenda progressively as we proceed. MR. HOLMES (United Kingdom): Mr. Chairman, I should like to ask, if I may, whether I should be right in assuming that the adoption of this as the provisional agenda for Committee II does not necessarily involve these subjects being taken in this particular order, but that that is a question which would be left to the Committee to decide, perhaps at its next meeting, after it has had an opportunity of considering these subjects? THE CHAIRMAN: I think I can assure the delegate for the United Kingdom that the order in which these items will be taken is a subject which could be determined by the Committee at its pleasure. Are there any comments on this draft? MR. VAN KLEFFENS (Netherlands): Mr. Chairman, just one point: These items, especially those under the heading "A", are very technical things. I should like to have it understood that the delegates here may be assisted now by their advisers and may ask them to speak on these items. THE CHAIRMAN: It would appear to me that many of these items can best be dealt with in sub-committees of this Committee, and it would be for the various delegations themselves to decide whether they sent technical officers to those sub-committees or whether they took such technical officers along with the delegates, and it should be understood, I think, that in such discussions it would be for the delegation to decide whether its point of view would be expressed by its main delegate or by a technical officer whom he wished to nominate. MR. HOLMES (United Kingdom): Mr. Chairman, in so far as there is bound to be some discussion of these very technical questions at the meetings of the Committee itself, perhaps 6. E/PC/T/C.II/PV/.1 both before and after their examination by a sub-committee, would it not be possible for experts to be requested to speak to those subjects at the main Committee at the Dish of the head of their delegation or the representative of their country on the Committee? THE CHAIRMAN: Yes. MR. R.K. NEHRU (India): Sir, in view of the suggestion you have made, that you might defer any detailed discussion for the present, we do not wish to make any observations on these proposals, but with regard to Item "B" there seems to be some misunderstanding. As regards Reduction of Tariffs and Elimination of Preferences, our understand- ing is that this question will be taken up at a much later stage, after the requests for concessions have been considered by various countries. Therefore, I presume the discussion will be confined to the principle, and that the actual discussion on Elimination of Preferences will not be taken? THE CHAIRMAN: I do not think there is any question of dealing with actual negotiations for the reduction of tariffs and preferences at this meeting. The item "B" would therefore be concerned only with any generally accepted principles to underlie those subsequent negotiations. Are there any other comments? M. JEAN RICHARD (France) (Speaking in French: interpretation): Mr. Chairman, I entirely agree with the proposal made by the delegate of the United Kingdom that we set up sub- committees for the technical matters. I think that in the agenda of this Committee the, most essential question is the question of Quantitative Restrictions under heading "C", and therefore I do not think that at the beginning of this work this Committee should be concerned with all technical 7. E/PC/T/C.II/PV/1 questions and set aside those most important questions in paragraph "C". Therefore, I think Quantitative Restrictions should be examined in this Committee by priority. THE CHAIRMAN: The Secretariat will take the request of the delegate of France into account in working out the order of work. MR. H.B. McKINNON (Canada): Mr. Chairman, I did not understand from the remarks of the delegate for the United Kingdom exactly what the representative from France took from them. In the first place, I did not understand him to say that we would set up sub-committees which would examine technical questions and only thereafter would we deal with anything on this agenda, and I did not take it that you did, Sir. THE CHAIRMAN: No. MR. H.B. McKINNON (Canada) : It was rather that any member of this Committee is free at any time in connection with the discussion of any of these headings in this Committee to use other than his own voice, particularly on technical matters. MR. HOLMES (United Kingdom): Mr. Chairman, the delegate of Canada has correctly interpreted what I intended to say. I am sorry if I did not make it sufficiently clear. THE CHAIRMAN: I am sorry if I misunderstood the delegate of France, but I took his point to be a different one. That is, that he wished the subject-matter listed under Item "C", dealing with Quantitative restrictions, to receive priority in the considerations of this Committee as a question of major importance. M. JElN RICHARD (France) (Speaking in French: interpretation): Mr. Chairman, that is exactly what I meant. I meant that this question under paragraph "C", Quantitative Restrictions, E/PC/T/C.II/PV/1 should be dealt with as an essential matter in the workings of this Committee. THE CHAIRMAN: Are there any other comments on the draft agenda? I take it then that the draft agenda presented by the Secretariat is adopted provisionally. I pass now to Item 3 of our agenda - an explanation by the Secretariat of the arrangements for the records of Committee meetings. MR. WYNDHAM WHITE: There will be circulated to all the delegations a verbatim report of the proceedings of this Committee. That will be a restricted document, in view of the decision that the proceedings of this Committee are closed and private. We shall also make available to delegations as a restricted document a precis or summary of the proceedings, but I would emphasise again that that is a restricted document and not a public document. We are also proposing that the Secretary of the Committee should prepare at the end of each day a short summary of the work of the Committee for inclusion in the Journal, which of course is a public document. We/suggest that the Secretary should only issue that summary for inclusion in the Journal after having obtained the approval of the Chairman. We have also agreed, at the request of one of the delegations in Committee I, that in that summary the Secretariat will avoid attributing particular expressions of opinion to particular delegations. We suggest that the Committee should give the Chairman discretion to authorise the release of the summary for inclusion in the Journal, on the understanding that he may, if he so wishes, consult with particular delegations if he thinks it desirable and 9. E/PC/T/C.II/PV/1 necessary. THE CHIRMAN: Are there any comments or sugrestions arising out of the remarks of the Secretariat? (There were none) Gentlemen, we have received from the Chairman of Committee I the following communication:- "Dear Mr. Chairman, I have the honour to inform you that at its First Meeting this afternoon Committee I decided to suggest to your Committee to hold at the end of your meeting a joint meeting of both Committees to discuss the manner in which the problem of Industrial Development, in which both Committees are concerned, can best be dealt with. If this is agreeable to your Committee could you arrange to hold this meeting at 4.30 this afternoon in the Hoare Memorial Hall ? I have the honour to be, Sir" etc. I presume it is the wish of the meeting that I advise the Chairman of Committee I that we are happy to comply with his suggestion? The fourth item on our agenda is the determination of the date of the next meeting. I understand that the Secretary-General has an unpleasant suggestion to put forward to you in this connection. MR. WYNDHAM WHITE: Mr. Chairman, the unpleasant proposal which was foreshadowed is that the Committee should meet again tomorrow morning at 10.30. I might perhaps say that on an informal suggestion in Committee I, when a similar proposal received an unfavourable reception, I suggested as an alternative 10.30 p.m., so the Committee might bear that possible alternative in mind in considering my present proposal. MR. AUGENTHALER (Czechoslovakia): I do not mind beginning at half past 10, but I would suggest the delegations may want to meet before that to discuss problems amongst themselves, and it would be very difficult to meet previous to that time. 10. E/PC/T/C.II/PV/1 MR. R.K. NEHRU (India): Sir, having regard to the fact that the paper which has been presented to us today contains details which require careful consideration, perhaps we might have Saturday and Sunday to think over the line of action we should adopt, and meet on Monday? H.E. Z. ALVAREZ (Cuba): Mr. Chairman, I just went to second the proposition already made by the delegation of India. A DELEGATE: Mr. Chairman, we wish to support the delegation of India, that as we have technical problems to discuss before- hand we should meet not on Saturday, but on Monday. MR. HOLMES (United Kingdom) : May I ask in this connection what it is now proposed should be the programme for the other Committees, because it is diifficult to consider the time of one without relation to the time of the others. THE CHAIRMAN: Perhaps Mr. Wyndham White could enlighten us? MR. WYNDHAM WHITE: Yes, Mr. Chairman. Exceptionally, tomorrow morning we had arranged for a meeting of Committee IV also at 10.30, on the understanding that in general we would try and avoid having Committees II and IV meeting at the same time. Then on Monday we had proposed that Committee II Should meet again at 3 o' clock in the afternoon, at the same time as Committee III, and that Committees I and IV should meet at 10.30 on Monday and Committee V at 5 p.m. on Monday. THE CHAIRMAN: I have a suggestion to put before the Committee. I realise that the prospect of working on Saturday morning just at a time when the English weather is being so element is not necessarily a very attractive one. Furthermore, I do feel that there is a good deal to be gained from a careful study of what we have already received, and also from some consideration by the Executive of the Committee, if I can use that word, as to our future activities, and I suggest, therefore, that tomorrow morning the Secretariat and myself 11. E/PC/T/C.II/PV/1 might confer upon an outline procedure and division of work, which perhaps we could put before you on Monday, so that from then on we would all be able to plan some time ahead for the allocation of our work and be properly ready for it. If that meets with the approval of the Committee we could abandon the meeting tomorrow morning, although I gather by the expression in Mr. White's eye that I should add that this is not to be regarded as establishing a precedent for subsequent Saturday mornings! MR. VAN KLEFFENS (Netherlands): Is it 3 o'clock or 10.30 on Monday? MR. WYNDHAM WHITE: 3 o'clock. THE CHAIRMAN: I take it then that the Committee approves the suggestion that only the Executive should work tomorrow morning! A.re there any other items which delegates wish to mention? If not, I will declare this meeting closed, and ask you to adjourn to the Hoare Memorial Hall. The meeting rose at 4.40 p.m. 12.

GATT Library

qx610hp1970

Verbatim Report of the Fifth Meeting of Committee III : Held in the Convacation Hall Church House, Westminster on Tuesday, 5 November 1946, at 3.0 p.m

United Nations Economic and Social Council, November 5, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

05/11/1946

official documents

E/PC/T/C.III/PV/5 and E/PC/T/C.III/PV/5-7

https://exhibits.stanford.edu/gatt/catalog/qx610hp1970

qx610hp1970_90220060.xml

GATT_157

E/PC/T/C. III/PV/5. \T. N7 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL of the INTERNATIONAL CONFERECE ON TRADE AND EMPLOYMENT. Verbatim Report of the FIFTH MEETING of COMMITTEE lII held in oThe Convncation Hall Church House, Westminster on Tuesday, 5th November. 1946, .at 30 p.m. C HAM.IRMAN: PIEERRE DITERLIN (France) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster1, S.W..) 1. E/PC/T/CIII/PV/5. A.2. B.I THE CHAIRMAN (interpretation): Gentlemen, the meeting is called to order. First of all, I must give you some information concerning the decisions that were taken by the Heads of Delegations in the course of their last meeting on Friday last. It was decided then that all Com- mittees should complete their work, except Committee II, t the end of this week. Therefore, we have only four days ahead of us now. More- over, it was decided that the Reort of the Conference should be divided into three parts: first, descriptive and chronological expose so to speak of the work of each committee; second, the instructions to the drafting committee which will meet again some time at the beginning of next year; and, third - Which would be of a confidential nature - the draft Charter. You realize that we are both limited in time and are also overburdened, as our Report is going to be very complete and com- plex, so that I must insist on the necessity of economizing, in time and not wasting a single minute. These preliminary remarks once made, I must now give you some kind of information regarding the work of the working sub-committee. We met on Thursday afternoon, Friday afternoon, Saturday afternoon, yesterday morning and yesterday afternoon, and in the course of our meetings we considered not only the United States proposals, but also the other texts which were proposed, such as the United Kingdom proposals, and aIso a certain number of amendments which were submitted by other delegations. Now, I am vezy anxious here to correct a mistake which was made when the text was circulated. The text which was circulated this borning bears a wrong title. The title is: "Tentative Revision by sub-Committee of Articles 34 and 39 of the United States Draft Charter." As the draft Charter was not agreeable to delegates it could not be taken, and was not taken, as a basis for discussion, so that the sub-committee worked on the United States draft Charter, on the United Kingdom proposals and on other proposed amend- ments. Therefore, the tex? which is now being submitted to you is not the united States draft Charter as amended but complately new one. Moreover, the text was presented as a working document of the sub- 2. E/PC/T/C. III/PV/5 committee. In reality, it is a draft presented by Mr McGregor in the light of the remarks which were made at the sub-committe's meeting. As on some points some members of the committee could not reach agree- ment, or at any rate, could not give their full support to the text, or, rather, to a text on which everyone could agree, it cannot be re- garded as a working document; it is, indeed, a text, as I have said, submitted by Mr McGregor in his personal capacity, and amendments may be proposed by different members to Articles 34 to 39 of the Draft Charter. Nevertheless, and with due consideration for these reser- vations, Mr McGregor's text is an attempt at reconciling the different points of view which were expressed on the problem with which we are faced and in which we are interested. Now I must give you some information concerning Article 40 of the United States draft charter in regard to the question of Services. As expressed in (a) of the third paragraph of Article 34 of the American draft Charter, the sub-committee thought that the terms of reference of this Preparatory Committee as expressed in the resolution of the Economic and Social Council did by no means empower this Conference, and certainly not this Committee, unless otherwise decided by the Heads of Delegations, to study the problem of Services. The document which comes from the economic and Social Council speaks of "goods." Theoretically, you may say that the term "goods" includes both goods and services, generally speaking, but may I here interrupt to say that the French text is unequivocal in this respect, because it speaks of "Echange de Marchandise," Exchance of Merchandise," and "marchandise" in French can in no way refer to services. Yet in practice the Economic and Social Council did not intend to include a study of services in the work which was to be entrusted to this Committee for studying the question of cartels. I therefore thought that a study of services should be left on one side and that is the reason why Mr McGregor's document will present the word "Services" in brackets. The presence of these brackets is accounted for by the points which I have just expressed. To sum up, E/PC//T/C.III/PV/5 the meetng of the Heads of Delegations and then of the Full Conference must decide, but until this question has been decided upon services as implied, if we are going to refer to the document from the Economic and Spcial Council; services should be left out. With these few preliminary remarks, I am now going to call upon Mr McGregor to take a seat at my side and speak on the text which is his text and introduce it with suitable comments. MR WILCOX (USA): Mr Chairman, would it be appropriate to speak now on this question of the jurisdiction of the Preparatory Committee with respect to goods and services? THE CHAIRMEN (Interpretation): Certainly, it will be opportune now. I have just expressed a few personal views concerning the question of services. All members enjoy the full privilege of speaking on other points, and we can verv well open the discussion now. MR WILCOX (USA): The only point I wanted to make was that a further examination of the report of the Economic and Social Council which established the Preparatory Committee would reveal that the items listed there were presentd only as suggestions to the Preparatory Committee, and that the phraseology that may have been included there need not therefore be taken as Iegally limiting the scope of our dis- cussions here. 4. C.1E/PC/T/C.III/PV/5 THE CHAIRMAN (Interpretation): It is true that the work of our present Preparatory Committee is only of a temporary and preparatory character, yet it seems to me that we must endeavour not to go beyond the terms of the decision which was reached by the Economic and Social Council. I should not like to see any delegation in the position of objecting to our conclusions because they do not fall within the purview of the present Preparatory Committee as defined by the Economic and Social Council. Though there is no ambiguity in this respect, particularly if we consider the French text, I think we must remain within our province as it was defined by the Economic and Social Council. Moreover, I think it is wide enough and gives ample opportunity for full and free discussion. In this respect, however, I should very much like to have the feelings of the other members here and to know whether they agree to my point of view or would wish to widen the province of our discussions. MR LECUYER (France): May I say that this point was raised in other committees, where it was noticed that if we did not limit ourselves to the study of merchandise or goods we could go very far indeed . For instance, the Technical Sub-Committee of Committee II decided to suppress the mention of persons regarding the question of freedom of transit; and regarding the most favoured nation cause we said if we did not limit ourselves to the question of goods we might very well consider the question of establishment treaties. On both sides we decided we should stick to goods only. May I say again that if we go beyond that there is a great danger. THE CHAIRMAN (Interpretation): I think the remark made by M. Lecuyer is justified. I myself made it in our Sub-Committee when we had an exchange of views on this question. I think it is necessary that we should not adopt a different line from 5. C.2 E/PC/T/C.III/PV/5 that adopted by the other committees, and particularly the Technical Sub-Committee of Committee II. The question is indeed beyond the competence of this Committee. It should be decided upon by either the full Committee or a meeting of the heads of delegations and the Chairmen. If I may refer to Mr Wilcox's suggestion, I would like to ask him a question in order to shorten the present discussion. Must I take it that the reason why the United States wishes to insert the term "services" in "a" of paragraph 2 of Article 34 is that they want to see engineering services included under Chapter V? If I am right in this assumption I think then the question shoul not be raised, because there is indeed no question at all then and it is useless to mention it; it goes without saying that it should be introduced in that MR MUHEERKAR (India?: Mr Chairman, I stiIl maintain the stand which I took before you in the Sub-Committee stage, that the terms of reference would allow this Committee to take into consideration the question of services. In para. 2 of the resolution of the Economic and Social Council it is decided to call an international conference on Trade and Employment for the purpose of promoting the expansion of production, exchange, and consumption of goods. Certainly it is within the competence of this conference to discuss all the instruments which go to the promotion of exchange of goods. Goods cannot be moved from one country to another without the use of certain services, such as shipping and so on, to which I made reference at one the previous meetings; so I maintain that even though the terms of reference are apparently restricted, we cannot think fully of these questionos without any reference to these services which are essential for the purpose of the movement of goods. Later on in the resolution it states that the conference is to elaborate an annotated draft agenda for the consideration of 6. C.3 E/PC/T/C.III/PV/5 the Conference, taking into account not only suggestions made by the Economic and Social Council but also suggestions made by any member of the United Nations; and some of the members of the United Nations may feel very strongly on this point, that the services connected with the movement of goods should be considered by the conference and have a place in our deliberations. MR WILCOX (USA?: Mr Chairman, the Economic and Social Council gave us terms of preference which it plainly Iabelled as "suggested", and they were therefore not mandatory or binding. The Preparatory Committee, in the first meetings of its plenary and executive cessions, adopted a definitive agenda, and that agenda in Article 10, points (a) to (f? inclusive, covers the points that are to be considered by this Committee; and there is no wording in any of those points that limits us to the consideration of goods alone and not services. The point that refers to this Committee is called "International Agreement relating to restrictive business practices". It does not say "only when those practices involve the transfer of merchandise". I should therefore be inclined to oppose a discussion in the meetings of heads of delegations of whether this agenda should be amend so as to limit it to the point of excluding services. It seems to me this is the place where the problem arises, and that we should face the problem here and discuss it on its merits and decide it on its merits. I do not think we need to make the same decision here that was made in the Technical Sub-Committee wIth respect to movements of persons, and I say all this without prejudice as to what our final decision should be. But it seems to me that this is our job and that we should not pass it off on the meeting of heads of delegations, which usually has an agenda which it is unable to complete in the course of an hour or so in each week. 7 E/PC/T/C.III/PV/5 PAE D-1 THE CHAIRMAN (Interpretation): I call the attention of the Committee to this question of procedure only because I was very anxious to assume here an orthodox position. I think my position, however orthodox, implies a straight and narrow interpretation of the terms of reference as defined by the Economic and Social Council. I feel, however, that the Interpretations of Mr Wilcox and Mr. Muhlerkar are much more liberal than my own and they may well be justified. If, therefore, there is no objection to their proposal, I shall take it that we all agree, and I have no personal objection here to including the question of services in the study of this Committee, subject to the reservations expressed in the draft American document, Article 40. Would anyone wish to speak on the proposal made by Mr Wilcox and Mr Muhlerkar? Mr FLETCHER (Australia): Might I make the suggestion that if we confine our attention to goods, we have a very very wide problem to get through, and I think if we confine ourselves to the con- sideration of goods, we shall have laid the foundation and then we can go on to the consideration of services. Initially I would suggest that we try to sort ourselves out as to the lines on which we are thinking in relation to goods, and without prejudice to the desire of those people who wish to bring services in. When we have got through the goods part of the thing, we can rai se the question of bringing services in. I feeI that once we introduce services, there is just no limit to the scope of our subject. I am sure I can speak for our own delegation when I say that if it is the desire to bring shipping, banking and insurance services into this question, well, we have just not brought the people who are familiar with those subjects and are capable of dealing with them in the way that they deserve to be dealt with. They are highly technical subjects, and I think any people who have not lived in those subjects and pretend to be capable of dealing with them in a rational way are just misleading themselves, to put it frankly. For the time being I think we ought to confine ourselves to a consideration of goods, and when we have PAE D-2 E/PC/T/C.III/PV/5 got through that subject, well, let us bring in shipping services, if we so desire and feel confident of handling them; and then, if there are others wishing to extend it to a wider field, I think they should be heard. THE CHAIRMAN (Interpretation): I wish to express my grattitude to Mr Fletcher for the remarks which he made. Those remarks have led me to realise that there is no agreement in this Committee on the question of whether we should or should not include the question of services in the field of our present study. Mr Fletcher was kind enough to suggest that we could include it at a later stage; but I want to ask a question: I am not sure whether referred to the work of this Committee III or whether he spoke of the later work of the Drafting Committee, or again of the future conference which will be held in Washington in September 1947. If we limit ourselves within the present frame of our work and if we include the question of services, then we shall have no time to consider the infinity of problems which on this questions of ser- vices are included under Chapter ?5. That I think would le?d us very far. I would not like myself to seem to exert any pressure in any direction whatever. It seems to me to be difficult to weigh the arguments of Mr Wilcox and Mr. Muhlerkar against those of Mr Fletcher at the present stage. That is tne reason why I call upon the other members of this Committee who wish to express their feelings upon the question. Mr HOLMES (UK): Mr Chairman, as I think we have made clear, we of the United Kingdom delegation see certain difficulties and objec- tions to including in the studies to be undertaken by this Committee or at this Session of the Preparatory Committee services as well as goods under this head. I would not, however, take any stand on the terms of reference to us from the Economic and Social Council. We have I think already made our point of view clear, that as a practical measure we think it would be Perhaps inadvisable to extend our studies to services as well as E/PC/T/C.III/PV/5 PAE D-3 goods, and should be prepared I think to develop in even greater detail the difficulties that we see, though we do not wish to appear in the least unsympathetic to those who feel that in certain cases services would justify examination as well as other aspects of the international restrictive business prac- tices. I wonder, Sir, whether we should not save time if we asked Mr McGregor to explain his draft, leaving aside for the moment as one probably of many points in which he may have differences to reconcile the question whether services or not should be included; but I do not think it had been your intention that we should ge on to the question of detail on this question. I think we are all very anxious to hear Mr McGregor explain the draft. Let us leave this particular question, perhaps with other questions, aside for the moment. The only other point that I would like to make at the moment is that I did not hear you myself refer to a Washington Conference, but it came out in the interpretation. The question where any future meeting of the Preparatory Committee should be held I think is still quite an open one, is not it? 10. E.1. E/PC/T/C.III/PV/5. THE CHAIRMAN (interpretation): I apologise for this mistake which I made on the last point. The statement which Mr Holmes has just made confirms my feeling that there is no agreement in this Committee as to the inclusion of the question of Services in our study. Mr Holmes has presented practical arguments which I refrained from commenting on because I did not wish to pass to the substance of the question, and Idid not want to be partial, because the Chair should always try to be impartial. Yet I shall take these remarks into account, and I think it might be useful to mention this particular discussion which we have had here in the first part of our report to the full Committee. Now I have the feeling that we should be wasting time if we attempted to reach agreement on this question. I think the best thing is to pass on to Mr McGregor's text. I take it that the debate is closed, it being understood that Delegates, and particularly Mr Wilcox in his capacity as the United States Delegate in this Committee and the United States chief Delegate at the full Committee, may take it up again in the frame of the full Committee. I now call on Mr McGregor, who is going to give you a full explanation concerning his new draft. MR MULHERKAR (India): I want to point out one mistake in the draft which has been circulated. All references to Services are deleted from the draft, and I was under the impression that these references were to be bracketed. In Working Paper 12 certain suggestions made in the Sub-Committee have not been referred to at all. THE CHAIRMAN (interpretation): I think that any mistake which may appear in the document which we are now going to consider results from the lack of time which the Secretariat has had in duplication this document. For instance, you can see that paragraph 3(a) mentions "Services" between brackets, but in paragraph 3(f) you will notice that the word "Services" is not bracketed. Moreover, Article 40 is not included in the present document. This is not a working document; it is only a mere text proposed by Mr McGregor, and any mistake which may appear in this document is not material in any way; any mistake may be corrected in the light of the discussion which we are now going to 11. E.2. E/PC/T/C.III/PV/5. have here. As I said to Mr McGregor in our Sub-Committee, and as I have said before, the question remains open and is left to the appreciation of the Heads of Delegations and our Full Committee meeting. It is therefore useless to dwell at great length on this question. I call on Mr McGregor to make his statement here. Before I call on Mr McGregor, Mr Koriwan is going to give you a few explanations regarding the work of the Secretariat. THE SECRETARY: I want to state for the record that the exclusion of the word "Services" in this working paper 12 is by no means a mistake on the part of the Secretariat which, despite the enormous burden of work it has, I think has borne up fairly well. Actually this draft, as has been explained before, is a heroic attempted on the part of Mr McGregor to fuse a great number of Widely divergent opinions into one (as it is expressed here) "very tentative draft". I want to remind Delegates that the Sub-Committee, which has been meeting until today, was never intended as a drafting sub-committee, and that this consequently represents an excess on the part of the sub-committee in the amount of their work. It is nothing but a very very tentative draft about which you will now hear from Mr McGregor. THE CHAIRMAN (interpretation): In the light of this explanation which has been given by Mr Koriwan, I wish to say that I never intended to cast any reflection, on the Secretariat, which has discharged its task in the most wonderful manner. I did not intend, either, to make a charge against the Sub-Committee, which has indeed made a very great effort to get this work through. Any emission which may be in this document is need quite immaterial. I am anxious, on behalf of the Sub-Committee, in my own name, and on behalf also of the full Committee, to express my profound gratitude for the tremendous amount of work which the Secretariat have carried out with their limited means. This has prevented us from enjoying the pleasures of the English week-end, but I do hope, as we expedite our work, that we shall hlave more leisure to enjoy that in the future. MR McGREGOR (Canada?: There is no charge against the Sub-Committee, no charge against Mr Koricwan or the Secretariat. I wonder if this is a charge E.3. E/PC/T/C.III/PV/5. against this unmentionable person, because I must accept responsibility for the words that appear there: "Sub-Committee's tentative revision". I discussed it with two or Three members of the Committee before we dispersed last might (and, incidently I might mention that two ladies of the Secretariat worked right through on this until 10.30 without the benefit of tea or dinner? and it was not a matter of trying to have the report put before this Committee, with the prestgoe of the good name of the Sub- Committee. Some of you may say that it was a bit of modesty, but I consider that; it was not a one-man draft. I just want to insist that I am not the father of all these children that have been appearing in my name, and I hope you will realise the embarrassment I feel at finding my name used as frequently as it has been used in discussions, and attached as it has been to things which I only assisted in producing -- no, not really, .only helped to work out. It has been more an assembly job, or rather a re-assembly job. I suppose if there is any blame attached, it is mine, but I would like to give due credit to those who have produced the paragraphs and sentences I have been tampering with in the last few days. Well, that is wasting one of those two precious minutes that we said we must not waste. F.fs. 13. F.1. E/PC/T/C.III/PV/5 I am assuming that everyone has this anonymous draft in front of him. Article 34 as it appears in this draft is, on the whole, the same as the draft that we considered on October 29th - that is T/C. III/8, working paper dated November 2nd; but there are some changes eve. there. However, you will see that it is basically the United States draft. I would like to call attention to the changes that have been made since the draft was before you on October 29th. You will see that in the fourth line (my copy is not the same as yours: I have not got the mimeographed copy you will see the words "have harm- ful effects." You will recall that at our meeting on the 29th October the Delegate from Norway, and some others, suggested other words, "have, or likely to have, harmful effects." I indicate at that time that in my draft I had included that, but in view of the strong opinions of others with whom I discussed the matter, it was decided that it was not appropriate there. This draft, then, still keeps the words "have harmful effects. " You will see that in the latter part of paragraph 2, the very last lines almost of the paragraph, the words appear, "if they appear to have or to be likely to have such harmful effects." The sub-committee considered that and it was the general view that it should appear in paragraph and not in paragraph 1. In the last two or three lines of paragraph 1 you will see the words "or on any of the purposes of the organization as set forth in Article 1." That is an addition. You will recall that Australia suggested a change substantially in this form, but eliminating the words "expansion and production of trade in the maintenance in all countries of high levels of real income." The Committee considered that it was desirable to keep that in, but that Australia's point would be met and some other delegates' point would be met, too, if we referred back to "or on any of the purposes of the organization as set forth in Article 1." It would meet India's and some other countries' suggeestion about the protection of countries in an early stage of industrial development. Brazil raised the question of "dumping" and considered that it might be covered by 14 F.1 E/PC/TC.III/PV/5 referring to any of the purposes listed in Article 1. May I now refer to (a) "an international combination agreement or other arrangement among commercial enterprises, including such an arrangement among private commercial enterprises and public commercial enterprises (i.e., trading agencies of government or enterprises in which there is a government interest.)" The United Kingdom suggested the scope should be limited to private commercial enterprises.There was some discussion in the sub-committee, which may be continued in this Com- mittee, I am assuming, if there are others who think strongly that it should not be extended to anything other than private commercial international combinations, on this point. Then in (b) we have "one or more commercial enterprises". In the earlier draft that was followed by the words, "'when they possess substantial control of international trade in a particular area or generally in one or more commodities." The Belgian delegate suggested, and we thought with some force, that that should apply to (a) as well as to (b), but instead of repeating the words in (a) and (b) we put it in the next clause: "when such commercial enterprises, individually or collectively, possess effective control of international trade." That was the word that was inserted in the draft which we had before the sub-committee. The words "substantial control" were considered to be just too indefinite and incapable of any kind of definition, and so the words "effective control" were suggested. Another word was suggested, and perhaps some Members of the sub-committee might recall what other word was suggested instead of "substantial. " However, the suggestion I think was made that they controlled a major part of inter- national trade. Then it goes on, "shall be Ji subject to investigation." In en earlier draft the words "on complaint or otherwise" appeared. You will recall that is where the Canadian delegation lost its initiative, and it was decided by the Committee that it woul be desirable to insert the words, "in accordance with the procedure provided by the subsequent articles of this Chapter." It is understood that all steps would be 15. E/PC/T/C.III/PV/5 taken, and I think in a subsequent Article it is made cIear, but just to make it doubly clear as to what is intended we have added those words, "in accordance with the procedure provided by the subsequent Articles of this Chapter." Then you will see the words, "if they appear to have or to be likely to have such harmful effects as are described in paragraph 1 of this Article." That covers paragraph 2 and it would cover paragraph 3. (The French interpretation of the above remarks by the Canadian Delegate (Mr McGregor) was then given) 16. E/PC/T/C. III/PV/5 THE CHAIRMAN (Interpretation): I call on Mr McGregor to go on with his comments on draft Article 34. MR McGREGOR (Canada): There is hardly any comment to be made on paragraph 3. It is virtually the same as the United States draft, and the only difference, I think, there is between this and the United Kingdom draft is the inclusion in this, in sub-paragraph (a), of the words 'or service", which appear in brackets. I think I am right in saying that is the only change. The word "services" has been retained, though, in sub-paragraph (f). That appears in each one of the several drafts. THE CHAIRMAN: I wish to thank Mr McGregor for the explanations which he was so kind as to give us, but before Iopen the discussion it occurs to me that in this country there is a time-honoured custom, which is known as tea-time, and it is a mere act of courtesy, when one is in Rome, to do as Rome doesm and I thInk we should conform to this custom, all the more so as it is quite pleasant . We shall therefore have a short adjournment and re-convene at ten minutes to five, and proceed then to the discussion of Article 34 in the light of the comments made by Mr McGregor. (The Committee adjourned for 15 minutes.) 17. G.1 H.1. E/PC/T/C .III/PV/5. I.1. after a short adjournment: THE CHAIRMAN (interpretation): The meeting is called to order. Mr McGregor has given you a detailed explanation of the text which has been submitted for Article 34. As Chairman, I can assure you that all amendments which we have proposed regarding Article 34 (and Delegates have had ample opportunity of submitting any amendments) have been examined carefully. If some of them have not been incorporated in the new draft, it is because the new draft takes them into account; the Sub-Committee thought it would be better to have a new wording, and they promised to make it as short as possible. Now I am going to open the discussion on Article 34. Given the explanation which I have given you, I think it is useless to come back again to the substance of the problem. Ample opportuniry was given to all Delegates to make a general statement if they wished to do so, in the earlier stages of this committee. Now we must bring to the work conciliation, so as to be in a position of common agreement. I shall therefore ask Delegates to be brief. I shall also ask them, to come to substantive questions only if they think that the provisions suggested here cannot be accepted by their Governments. In this regard, I would say that the only important points are the reservation made by the United Kingdom Delegate regarding the possible insertion of "public enterprises" in paragraph 2 of Article 34. If we are to have objections of a similar character, I would call on Delegates to be as brief as possible in any statement they may wish to make. It is past five o' clock. and it is desirable that we complete the consideration of our text and then pass on to the rest of our work. Does anyone wish to speak? MR. NAUDE (South Africa): Mr Chairman, I merely wanted to enter a reservation in respect of Article 34.2.a., not because I consider the draft is inadequate or unsatisfactory or objectionable, but merely on the ground that I have not been able to consult my Goverrnment on the draft as it stands now. If I need go any further in explanation of my reservation, 18. I.2. E/PC/T/C.III/PV/5. it is that there is one article of trade which is entirely unique - I refer to diamonds -- and my Goverment, therefore, will have to give very careful thought to that point. I repeat that it is not because I object to it; it is merely a question of being given time to consult with my Government. MR DAO (China): Mr Chairman, I wish to make a similar reservation for my goverment with regard to article 34 paragraph 2.a.: "Public Commercial Enterprises". As I said at our meeting before, our government may find it necessary, in the process of investigation and development of internal economy, to take active part in international trade. Therefore,-it may find itself in a position to regulate trade and to form trade agencies which will have substantial control of the trade in certain commodities. Therefore I wish to make a reservation on this point. J.fs. 19. J.1' E/PC/T/C.III/PV/5 MR LAURENCE (New Zealand): Mr Chairman, the inclusion of public, commercial enterprises in paragraph 2 (a) is I think open to objection other than those mentioned by the Delegates for South Africa and for China. It is open to the objection that it introduced a con?lict between this Chapter on restrictive business practices and Section F of Chapter IV dealing with State Trading. ?? we have envisaged the section on restrictive business practices, it relates to the practices indulged in by organizations other than those in which the government has a say or control. I would suggest that it is inappropriate to attempt to introduce questions relating to public commercial enterprises in that section, when you have alreay get a special section in Chapter IV. In connection with the last three lines of paragraph 2 we have the words, ;if they appear to have or to be likely to have such harmful effects. " I am not sure whether it is in this iommittee ec or in another mittee, but the question has arisen before of "appear to whom"?t , to whom"? Tnc is to the de??o? n? To appearance to be givenhe' t-. *snce? T it to thC person organization 3oaoiz-ti onehc thinks ho or it is r is to be to the International Trade Organizationrzation? IRMAN Interpretationetation): The rwhich Mr Laurence has made .ncc had.e Cnsidifferent points -soints: iwrst,, h vises to makeva roser-atiOn cg cerrinn- tion of public enterprises. which phrase has to bease s be tiken hnectioncowith Arct-Ion ;-tiche Charter. The secondter. tho scond spect of t oterpretation of Article 34, paragraph 2.aro -h 2. n say that ????? Article is to be constructed in connection withconnectiowith hich rea??s, ?in accordance with the procedure provided by the11' --ocea iee 'by the this Chapter," which is stated in Articles 35 to tate ir. ,iticles 35 to ?les yoto hich say that the complaint shall be>y thau the comlaint l be an agency of the member-country, but that itr.sber-o-DUnt., but tha t imum of information as required by the Organ--uirc-i by the Orga- nly in the light of this information or of s i?_frm t On or of any ation to be carried out by the I.T.O. that it will- ,. C. that it wi e practices are harmful or not. If we refer, as ist. If -:e refer, ass 20. J. 2 E/PC/T/C.III/PV/5 mentioned in paragraph 2 of Article 34 and the subsequent Articles,2 of 'ticle 34 thc subsequent 4;rticles, to the vrasthat are used, the'rc is no doubt whatsoever; so that I think it is dfficult ad perhaps inopportune to mix the interpretation of .ticle 34 which is a question of principle, with the subsequent ._+icies touching on Prooedure, because these are two different matters. -^1R :-3CTJ(Franaragrapt erpretation): I vish to refer to p h2 (b) of .-ticle 34, ad haTish to ask for an explanation; it is per.hps zare a qmpstion of translation, but 1 think it is ir-ortant and well worth -hile dwelliinG upon for a moment. It is envisaged that action -7 be taken if''h"se -ra"tices "'appea to have or to belt tcapableT (ii the rench text) or "likely" (in the EanLsh text) "to have -uch able of having any harmful are indee ca;le of- havin uil effects, we can army tha eny enterprise is capable, of having h~mful _fects. Therefore, tha- bu be casting a reflection on the mere intention. a^- I wish to cl=ify this -ont. 1Z-=Mr _ IyetinI)wi: Io answer to ..ir Lecurcr, -sh tO say tbhat min the discussion in the su-comittee the French equivalent m "likely" was "susceptible," and there" was susceptiblee, ' nd- there fre your Cern nrkcan .)ely jmst as well to the French tern "suscep- the intention of the st-he mmitention of the sub-co^tee if Imm ay thishedit the su;-conttee wlto leave th.is question to the I*.O, position to take ipreventive n tzi t rever.tirveaction, if necessary, m _ hel. caused or 1d.diyI to be wcause ` 1 d kno. tat n to the I.T.O. ven-gto the 7,.C.aegitimate feers.iftiate fears. Howc-gain I here ascn am opp that g ex=ressinZ the feeling of the _-;'b-gco~ttee, providedthe uaAantee in ar9ticules g35 to 3 mst ive to az -.-t concerned the assurance thwillat no mmiceFd be co-ittd -,,he T. - -L2C-YE?. (Francp) (Inrter3reour ioplanations naturally satisfyn): Yuz exctions naturally satisfy en .eveword "susceptible" can give rise that rer. t he r_ susce-ti'le" Crise er it would not be better to reritet'her it would . nt b-e better to as included - or implied - in the ch was inc1uc7ea - br im-vlied - in t 2-. ?? .3 E/PC/T/C.lII/PV/5 American draft Charter.rtcr. HAIRMAN-IF1Te pIeta=rctotion): YTuar rrmrk is of the saaracteriractr. as one mada pry evpious seaker. Tho sentenuldshovad be construed nn conrecwioh, vitworde wcras "in accodwance vithe procpdure Provided ly bheqsuDsecAruect titles of tapter." tItcr*.o lis cn>y if this pro- cclurcsinadequateuguarantees that the question arises, really, and. therefore it shuldo bed isussed under Procedure.ca.er i oceaure. cei ) (Interpretation): I apologize; yet what I say is ior): I a2010c3at I svy is you say, Mr Chairman. I therefore soay, r. I therefore ask pr- deration to this corsieraaion to, thnquestion =nd if I car find a se it to you.1-1 ; prcp-ose it to-. - tion): Thank you, Mr Lecuyer; but may I point.L- lecuyer; but m y I p uld apply quite as much to the merits of thee as much- to the merits the text' 'i kely" J - the nR i sh erpretation - r I am not competent in that case.m n t C cm: Co- et i tht ce. 22. K.l E/PC/T/C.III/PV/5I /R5 NTEIRO DE BARROS (Brazil) (Interpretation) : m-nr) Chairman, my country is very remotedanl I am inv a edifficultult position asgar?ar s communicating with Gy -overnment now, so i w sh to make a reservation conicerning the mention of public Commercial enterprises, thit fs, trading agencies of ,ovmenrneits or erterprises in which there is a government interestI it qis euit ossi p bIeathht tBe 3razinia Government may wisoh t githove ughtful codnsieionrato this- matter. CHAIRMAN: Your observation will be recorded.corI¢ NTEIRO DE BARROS (Brazil) (Interpretation) : Mr Chairman, Mir airman, nour tl h- nco to propese ag our maetin; of 30th October to the agenda with a view to including inew to inclung in a icle 3lr -uncier sub-paragraph (g) of paragraph 3, thedi 'oris "-aving rect or indlirwhiect consequences ch mizpt p;heeent- rt ihamme tr indus-ra development of under- ries."ped cnt urt r i." this point I might say that Mr McGregor's ay that Mr McGregr' s explanatigns Fiver dome time aco answere- your question in advance. :~or amendimewnt was not kept It Wabecause the gSt -Committee t.hu z at youb point w.a met Iy the menrt o at the endof.A .gra-ph4 f . icl 3L, o "or on any of the purp eorganihe an_. a itio a sset fo rh in Arti cle1." We thoufht that i-p under chater V dweninclude a- amendment like th propooed, ne you ,- sthat is if we wanted to say that we shoulmd ntainy to aitm ofmentull empl y levelhigh l6ve of demand;one wereear n-ly reting what is naturally the ion of I.T.O., and we thought it desirable, in esirable, ordd to avoie.the cpn?tition efeuitchn or su terms, to refer po the ofr-oseOs .f the rganistation ?s they are define in paragraph I, so this mere referencedat the enf of paragraph of 'ticl 34y ul epoint.ets Yo- l i t. MR7; r~BMLebCnn):man, w :r egard to h rgg r- tU pra raph 2(a), 7think therej is some obtc non that car be midl `to the 23 K. 2 E/PC/T/C. III/PV/5 definition contained in parenthesis of "public commercial enterprises". I believe that if an enterprise contains in it a government interest that does not necessarily make a public commercial enterprise of it. A g?vernment may own 30 per cent of the shares, for example, and if the majority of the shares are in private hands the control remains in private hands, and the enterprise remains a private enterprise. I suggest, therefore, that we add the words "in which there is a. controlling government interest". I make those suggestions because if we decide to remove reference to public commercial enterprises I should want this paragraph to apply still to those private enterprises in which there is a government interest but which is not a controlling interest.st. CHAIRMAN (Interpretation) : I understand the preoccupationsttins oH Mr rakim, but even if the Commiteletesdfele wo the tlines between bracketspoint-:.ir i, met s for he is spgakinz in fact of privatte eneeprisds an_ these toen w-uld be covered by the paragraph, (a).ra-:e)- M (iUCZn' (LebMaon):irr ChaIrman, nevertheless if we maintain this phrase in b w?y ackelts-sh oud wenot makp the 'roper ion, and I believe it is necessary to add the wordsL ad words government interest", inwe est", ? h ..,Cent t-hve- a inition of public commercial enterprises.al entrenris. I do not wish to anticipate as to whether thesee as tc wheth thsae tdeleted or not. In `-laetrcrd oranotayany case, I c-n s R they ha-e alreasy given rise to _ great number of reserva- say - and this is a remark of a general a remark --f a .en rS charactr -a preliminary text which p :relim.inaryr text w ch part of our report, and in any rt of our r t ,-- c O--- in any caonsiderably amended up again -. a.on sierbly amend.-^e hich will meet at a raftz Dra Comm-iUte which wll meEt a glater stpage. 77idth:,stWimtin he im-o- rtanc ,' 2L K. 3 E/PC/T/C.III/PV/5V5 intereso cf Mr Hakim's remark (dn& there are perhaps several remarks of that kinw vhich might be made at a later stage) I wish the Committee codla limit themselves to a study of the general lines of the draft chart.r- - Moreover, as our discussions in the Sub-Commithev ia-e shown, we are fow Iacing new problems for which twe sordB which are in use are not precise enough, So if we try to, define them more carefully I think we shall over-burden - every sinlle Zine of the text so as to make it illegible. So I would ask the Committee to in knLd enough to limit themselvo ts tthe general lioes Df this draft charter. LEENDERTZENZT (Netherlands): CMr bhairman,o in ur suggestions in the Subm-Comittee we raised a question, which was not further discussed, as regards paragra2ph (a), as to whether perhaps rninteational commodity arrangements could be con- sidered to be included in this Article or noIt. think I was the only one who took the view that they could not be included there, because they vare izualised as existing benweer governmont crganisations exclusively anddo not ooiv under this definition. It might perhaps be a nood thing to haveath-t point clfriOied, if only by being recorded in tpe -roceedings of the Committee. THHAIRMAN: The E Cquieston whicoh yu raised d I(an thoughet w hclarifiif ed tqhe uestion yesterday afternoon at the end of our meeting) bears in reality on Article 4C. When we come back -to it I hope that mention will be made then of international commodity arrangements and whether ythe are to be includen ir ot Or not. 25. PAE L-1 E/PC/T/C.III/PC/5 THE CHAIRMAN (Interproctation): To come back to the question of substance, several reservations have been expressed regarding 2.a of Article 34. I therefore wish to ask the Commottee whether there are any delegates who insist on the insertion of the bracketed passage. It is important indeed that we should give precise instructions to the draftin-committee with a view to its future work, and I wish that the attitude of the Committee might be recorded officially. So far we have only heard reserva- tions, but I wish to know if any delegatilons insist on the incluslion of the bracketed passage. Mr TERRILL (USA): Mr Chairman, may I get that question clever: do I understand that your question relates only to the material within the parenthesis and does not relate to the preceeding phrase "public commercial enterprises"?? - (Interzetation) RMAN: -.Il-1 AThank you for raising this questlon. I am very Much afmaid f Mysel1 was ambiguous because I wa??is not prse enough, I haing feeloln that the reservations expressed refer to th bracaketed ptsage andcto the previous phrase as well. Mr TZRRILL (USA): Would it be in order to state views on that polnt at this time? Mr Chairman, I woullike d only to point out That the exemption of pummercialblic co enterprisdei woul In our view be most unfortunate and pmighterhap?s be tntamount to -the complete greckinE of tpis , a-ter. with its consequent ef-ects <r Wilcox *ilcpox has ointed out before on the entire .Charter I say this for two reasons: one, thaketo mh c suca an exewption Yould set up two staofndamrds comercial conduct for the world and for international traddew; an to,ld give it woucarte blanche to the evasion of other obligations contained in the Charter under Articles 4, 5 and 6 It would be our view that if Governments are to engage mercial operations, they shouldey sho l b0 heli, in th"ty apaci to the same standaondu of ccnuct as any private fimrxes or ied public and pirmivate frs; that is, they should noti engage n harmful commercial priactices n lnternational trade which would frustrate, the objectives of the Intelrnationa 26, Trade Organisation, and Members of the Organisation should have, at the minimum, the right to complain if they feel such a com- plaint is warranted. Referring now for the moment to the previous remark of the delegate from New Zealand,. (I believe he was the person who made the remark) as to the State trading provisions to be found under Article 26 of Chapter 4, I would like to point out that the only relevant provision concerns pur- chases and sales by governmentally-olmed firms. The Article specifies that these should be made on the basis of commercial considerations, that is, commercial considerations as opposed to other kinds of considerations. Therefore it would be our view that there is no overlapping or conflict between the present Article 34 and Article 26, and that the problem of restrictive commercial practices is not taken care of under the first mentioned Article. THE CHAIRMAN (Interpretation): I wish to thank Mr Terrill for his statement, but I cannot answer it now without stating a personal view which would not be in harmony with the impartial attitudeattitude hair. I only wish to record the fact that there are -hat -uhE are erenttwo ':iLffeand that the Drafting Committeerafti-ng Cjimittee o account. Are there any further questions -.ny further qucslons rwerarirg Article 3S o-' . airman, I am not sure whether Mr McGregor in :hEther ¢.r KcC-regorn referred to another reservation which. to anthhe-r resXrvat;h ic h makes at this stage, and that is ::kes rt thi S stnge, .nC tha s of a single commercial enterprise.of a si-ncl e commercial enter- se We had somm discussd I do that in the Subcoziittee anc. I fnot only to say that for the moment,no-.z., but only to say that for omert. on the words "one or ted Kin D o ossi tion orn the ;"c ne or s reserved.n thU- sin. :le com-merc.-a en-zer-ori-se, is rerve".. the United IBL.-N (Inter'retnti cr': TIhe rcserv-ation ma"'O by t United K-nglom v.elea e w1l1 g o on record. Inr T con L7r !.cGregor for further explanations. 27. E/?/-/C. -rTI L- /5 PAE L-2 E/PC/T/C.III/PC/5 Mr McGREGOR (Canada), Not on the last point made by Mr Andrew, but on the one point whether this is to include Governmment agencies; and I should like to express our view very very strongly in favour of the retention of this kind of reference to Government agencies. If we are going to eliminate from this provision all reference- to Government agencies, certain Governments who favour the opera- tion of the cartel say in their own country - one that may be having harmful effects not to the country itself but some other country - might very well do something to put a private combina- tion beyond the scope of the I.T.O. by taking an interest in it, by accepting -a proposal that Government should have a substantial interest in that Company; or if one country operating pretty much on a State-trading basis did engage in practices that had a harmful effect either in combination with other private combinations or alone, I think it is part of our responsibility to see that that kind of operation is checked. I am not representing the Govern- ment of Canada. None of you are representing your Goverrnment, presumably. But the attitude we would take very strongly I am satisfied would be that it should include the Government-sponsored or even the Government-owned enterprise. Germany in years before the war did have a very large part in the control of international combcinations. I think it is important that we have that in ?ind and do not permit the recurrence of that kind off control. 28. M. 1. . E/PC/T/C.III/PV/5. tv-/. IRMANThII."i (interpretation): This remark will go on record. I notice that I& McGregor takes up an attitude which is akin to Mthat ofr Torrill. However, I wish to clarify a point of procedureMcGregor : Mr has told you that you do not represent your governments here. That is true of the Sub-Committee where we were all nominated in our personal capacity and therefore didm not comit our several governments. On the contrary, here in this full Committee it is beyond any 'doubt that we all represent our except governments, including, of course, Mr McGregor,/insofar as he wishes to - express lpersona views so as to enlighten the proceedings of the Committee. +1myself, as Chairman, do not repreyusent mgovernment. 1M REGOR (Cda):): May I add a word to that:I Z cannot commit the Government of Canada to any programmeM !y understanding is that we have come here to discuss something that we will put before our governments, a programma=ne that the Government of Canada, for exampleo,ld wu consider, btut here ios n commitment on my part of the Government of Canada. Let me put it in this way.:. Ours is a democratic country. The Parliament of Canada decides what policiy wll be and not some civil servant that they send over to assist in the deliberations and do what he can to come to some tentative arrangements that will have to be considered by the Government. CHAIRMAN : (interpretation): The scruples which McMr Gregor expressed surely are in his ohonur. I wish to give him full assurance, and on the other handI w wisoh t dispel any ambiguity.I 7 therofore say that, even though the Delegates here (witheduc exception maderfox the Chair) represent their governments, it does not follow thatethcir governments are comrnitted. The mer-s of referenca, -s I said, already envisage that we are only drafting a preliminary text whiwih ill be taken upag a ain laterd an : considerably amended. ILTGES LTG-Elgiu ()n(itproretation)M tr Chairman, I do nzseeOC iMr£2 McGregor' s draft any refercn-e to a Belgian amdmentne iwhich w? said that n wC s tht the worod "harful" sh'ld come aftered' . Thustific_" T.was amendmet v;n 29, M.2. E./PC/T/C.III/PV/5. withdrawn because we were given an assurance that the possibility of introducing "justification" would be included in the articles concerning procedure. Now, as regards c.3., the Belgian Delegation proposed to replace "boycotting or discriminating against particular enterprises" by "any discriminatIon against private enterprises, even if these did not go so far as boycotting", etc., because it appeared to us that boycotting was reprehensible a fortiori. THE CHAIRMAN (interpretation): Regarding the first point, Mr Thiltges said that his amendment was not included by the Drafting Committee as it was possible ifor the Belgian Delegation to have a full guarantee within the frame of the rules of procedure in the subsequent Articles. Regarding the second points his amendment seemed to have been taken into account, but in any case it will be duly considered by the Drafting Comrmittee. I am now going to call on Mr McGregor and ask him to make a very brief statement concerning the general ideas underlying the new draft of Articles 35 to 39. MR McGREGOR (Canada): As in connection with the other Article, No. 34, I shall just refer briefly to the changes which are recorded in this draft from the other drafts. "Members agree that the Organization shall". The United Kingdom draft suggested that it should not be "shall", but "should be empowered". The Sub-Committee considered that, and the opinion was held that it should be continued to be "shall". -kar In connection with the first provision, Mr Mu??er/made a valuable suggestion that it was desirable, instead of having complaints made and action taken in a formal way by the Organisation, that there should be some provision made for a preliminary consultation between the complaining government and those in which the practices were alleged to be carried on. You were all impressed with that and a drafting job was done, and you will find the results of it in No.1. I think you will find in al1 these sections a logical order. The first is that the Organization shall "Arrange, if it considers 30. M. 3 . E/PC/T/C.III/PV/5 . such action to be justified, for particular members to take part in a conference requested by any member who considers that an specific practices .exist which have or are likely: to have the effect described in paragraph of Article 34." That may result in a conclusion of that case, but if a member country is not satisfied with the results, then it can take advantage of paragraph 2, and under that pararaph the Organization is required to "Consider each written complaint which anyMY member may submit, or which" --and this is importan--t "any personos r business entities or other organizationw Within the member 'jurisdiction1:m may submit with the permission of such member", The UnitKd kingdom Dele- gation suggested that instead of saying yan personr o sibeuinss -enitites or other organizations"w ve should merely say "commercial -enterses -, within a member's jurisdiction whicllh aege thant ay business interests are affected". Exception was taken to that by some members in the Subm-Comittene i that it would restrain any organizations other than purely commercial organizations; possibly some consumers' organisation might wish to make representations,n ad the member might bile wlin, to give that body permission to file its complaint with the Orgzaniation. There is another change to "with the permission of such memb:er" youlliLL see in the United Staterti Aicle 35.2. that they suggest a different type of procedure. The proposal to change th"at with the piermssion-of such member" appearn ir the United Kingdom draft and in several otherss a an alternative. Then further on, in paragraph 2, you will see "The organization shall prescribe the minmimu information which should be included in each such complaint". That was not includ ined the original drafts that we made in our Sub-mComittee, but at yesterday's meeting it was decided that it was rather important to put that in. It is designed in part to eliminate what might be frivolous or vexacious complaints it must be serious cases that come before the I.T.O., and by that last sentence in paragraph 2 the Organisation is authorized to say whatni mimum information must be furnished with the complaint. In parapagrh 3 you will see that theg Oraaniztion will ll "Caupon 31. M.4. E/PC/T/C.III/PV/5. -/Pt/T/C-.III/pV/3 - each mefmber concemrned" -- that is d.ater the coplaint hasbeen file. The next step is llthat the Organization "shall ca upon each member concerned to obtain smatements in reply from the comnercial enterprises within itsdjurisaictioallhich are affecteV'.. "It sh.11 call upon each member concernewd" - thctmmuni is, of the country, ho will 'ocate with the x enterprises phat are concernaed. U) to -his point zl Members are not rnformed of preliminary enquixy. This is merely a prstagenary enquiry , to this -st-ae and"only those members that are coparagraphs says: formed. .he cZraph says: "such information as the rrganizationany Member;" that is, they do not=Wy ier;tt that iS, 'they d :ot to - have to corwe themselces only,/those in Which the Commercial enterprise is located - but"fro= any membe--" Then it goes on "then" - we had a longer phrase tinforhere, "on---e basis of such mation" "determine whether further investi.ation ids justified". That is the en of what we would regard as a primary investigatio nt, and it may be disposed ofa this stage. Then par"agraph 4 follows logically: If it is considerd that Farther investiagation is justified, notify ll members' of each such lcopplaint" mp it shall " cal'uzon the coplainant or any member to provide such information relevant to the complaint as it may deem necesgery; and cgonduct or arran-? for hearins at which any member, and thg gar aies elle~e t- have end-aned in thc practice" -- an here is a le ergeno direct the =rLncioie of n r- -ireontact with the commercial enterprise. lm think it as exceedimercialngly =portant th.t the com;rci entunity to shheard. given opport-1t t; be Thoard This is not a on the enterprise; but we must see,e ente.prise; but vie must se gI twhink, that any person car d vth t-at offence shall have an oppcytunity to be adard before ar report is m.-e against that firm. N. s. N.1 E/PC/T/C. III/PV/5 In paragraph 5 is the next st?p, which is just ?n instruction to the Organization that "it shall review all information and come to its findings whether the practices in question have the ?ffect described in paragraph 1 of Article 34," that is to say the harmful effects. Paragraph 6 goes on quite logically again. That is done when the Organization has reached its findings - that it shall report to all members the findings reached and the information on which such findings are based; and if it finds that the practices have had harmful effects it "shall call upon each member to take, in accordance with the member's Iaws and procedures, and that was inserted again to make quite clear that they are going to do it in their own way, "every possible action to prevent the continuance or recurrence of the prac- tices". The words "every possible action" come from the United Kingdom draft; there was a lot of discussion as to what the phrase should be: every action that is possible to the country to prevent the continuance or the recurrence of the practices. We felt that that was surely not an obligation that is too heavy to impose upon any country - to do what it can to prevent the recurrence of harmful practices - and it goes on, "and to effect the abrogation and termination of agreements or arrangements which provide for such practices." Now that last phrase is a modification of something. that you will find in the United States draft, that is Article 35 (5), and in that Article you will see the phrase, "including, but not limited to abrogation and ter- mination of agreements and arrangements, dissolutions, reorganizations, business divestitures, and licensing of patents, to be implemented in accordance with their respective laws and procedures." The question is: Is not that just a little bit too specific, calling upon other countries to do all things, because in some cases they cannot do it. For instance, we in Canada, cannot co?pel dissolutions; reorganizations, orr business divestitreus. But theer is soething that can be done to o abrogatae nd to terminate agreements and arrangements. There you are gettgnG right at the core of the trouble. It was sgugested at yesterd'ays 33. N. 2 E/PC/T/C.III/PV/5/_5 meeginG thaome coscountriesgmijht be quite satisfied merely to toll themb coination that they had ?ono t3o far, that thepr :ricwerevic monopolistic prices and that they were toog hih: therefore. reduce themB Fut if you do that, then yoareu leajputtingutt tI.T.O.he 0. the price-fixing business and giving it vinS responsibility to determine prices should be. Our position - and I am speaking now of our our position - is that international agreementa-greemesprwhich -oduced harmful effects arc really at the basis of all the trouble, and merely to rt them to reduce pricessis onay treiting the symptoms and not going right to ?he ro.t of the disease. Goingparagraph roxrap7, I think there will be no queastion bout that: "pon all membersl <nebs concerned to report fully the action te taken to achieve theseieve thse resultpasagrap h 8: "Prpare and e.a publi, as peditiously as possible after inquiries have been completed, reports" and so on. I think that perhaps we can say that much to the organizations thatons that have not yet been born, thate thed ar to ao thgese thxpeditiouseditious- 7 as possidle, ana not let teem rid to suit the convenience of the international civanl servnts who are going to take thiPs pon. 'reare and publish" in regard to' the publishing of reports, that is an exceed- ingly impoertdant rmeial factop, the 7uglishin; of reports - publicity - does much morothere evice dlovpc to -revent the continuance or the recurrence of such pract"showing ces: ffully dhe finaings reached, thmation on wticn o which such findings are based, and the whaction ich memers concerned han called biec oupon to taNke." rw, you wi1l note there that it does not include a referonce ts what action theey hav taken, and I think the report shobuml, e adhe at tis stage, because somery might very well delay action for a year o? two or threewo r tree agd the or-anization wbe in a position to make a report until a re runtil tphey from the country in which the ?ffence was committed.onco was cD=nied. Then we md that was suggested I think by a Delegated I thir byr a DlegatI who said that which publication of a report is ch u-,blica.tion of a rrt is k that in normal circumstances there should l circumtLances therc should 34.. E/PC/T/C. III/PV/5 be pulbication, and that is what we have included. We have made a proviso that "publication of such reports may be withheld if it deems this course justified." If the Executive Board concurs I take it at, tall hat our references haere re to the work of organization, that t . organization itself may delegate later on to an executive board orrl .r tommission on business practices, certain responsibilities; and tieszand the last sectionAin thee .rticl is thagt the oranshall n zshcl1 "report embers, and make public if it is deemed desirable, the rable, tion has whYvi aken by the members concerned to achieve -the esults described in paragraph 6 of this Article. "That is a very briefribf statement oat is intended and of what changes have been made in en me dn' aticle 35. - -. 0. 1 E/PC/T/C. III/PV/5 MR McGREGOR (Canada): . I would like to make one general comment on, the whole section. In reading this it is quite obvious that it is not* a one-man. draft; it represents in many respects compromises that have been arrived at within the Sub-Committee itseIf . For example, the United States delegation are not at all ready to accept the modified form that is suggested in the last phrase in paragraph 6 in substitution for the more detailed phrasing that they had in their Article. Other compromises have been made in this as in Article 34. I do want to emphasise that it is not a one-man draft: it was drawn up after discussion, and not with the approval of the whole group, because reservations were made. In many respects they were compromises which were accepted. ?entatively, and 1 am afraid that the Unitedted States wiexplode on the one I mentioned just now, and w ,nd there is i sim-lar one on which the U.K. may tfeelthe same way. They may feel thamt I a lgetttin hwem don on some ions that I had discussed with them earlier. However, Hower, it was an ato tempt t put down what the Committgee thouht the concensus of opinion within uhat Sab-Committee. IRMAN: Gentlemen, sometimes one si?s because one is use ones ptimisti?. I had hoped we should complete the studyplete thstudy oday, and even much anr even murlier tut I am bit 7 ed that some delegates have engagements and cannot s an.:annot o on now. I feel, too, that I am making unt I aI ma use of the strength of thm Cormittee and wn, y otso I propose ou that we meet again tomorrow morning at 10.30, and 10.3and at this time. I must apologise for this accelerated elerate f our discussions, but it is imposed by the lead-lineleac7-lne been fixed for us. Tomorrow morning I will ask.:. I -riask to give us a further explanation concerning the aancernin_ e s of his draft. Then we shall have a general h-ave a geneal discusght of which our rapporteur will be able,,ort eur will able As time is short I propose that wehort I p1ropose thate ,60 ?.2 E/PC/T/C. III/PV/5 elect the rapporteur. at this time so as t? enable him to consider what his work is going to be. Are there any nominations? MR NAUDE (South Africa): Mr Chairman, I find myself again in agreement with you. This seems a most appropriate timeme ^ select ourap?orteur. erIt seems we vare ??ressed e far ough to find out who is thd man and what is the group thataphat d carry out this task of writing our report. I have in haven man who ha who hs obviously given a deal of thought-f thoght to ct he subjet we are dere to 'iscuss, a man who will be abody in his report the various nuances of opinionances oIfpinion He is fuubHe. He is furthermore a mam who comes fron a countonally plays the role of bridge betweenole -f' bria2zbetween new. Moreover, he is a man who has re overt he mano has lping us to find some formula on m -us to Ji-n some f ormuln; which we l know of wh?m I amre you wil krow Of'.%dhm I a irman, I am very good at Mr Chairrnan, I am rery good . nd I will therefore propose opl e anr T W411 theref'oreropose s as our rapporteur. !0s*4 r of Combrnes as ourDnzorteur. ed any names ! notUc_-t _ have not menti one any names. e appropriate that th.,at, :-rha- s i -4 ul. be a ro pria that ??????ld also n omina 4ute say three consultant s to eur.OanadIan Our > iraionerr, our report cur. : suggest the r. P:resrtat_-_ es Cf _he U. S. , the U'. arn France. 37. E/PC/T/C.III/PV/5 1½ j ALA??ILLA (Cuba) : I would like to second the nomination proposed.ination proj3ose6d by the South AfrMcan dlelgation of ir McGregor and the other dele ates whorl hMopMcGregor in this very very. f-n this: very vey I5 fi cult work - to spFak on the terpretation): Does anyonre'.ish to spbak on t , pr-posal of the South Afdelagatoon as supported.by the. Cube=. ~aele tlo I may. I am over-(Canada%: I V; l lIke to speak, -if I may.. Ivez- . _-- Iy- the suEgestionr, I may'L b overcome by theBut 1 do not know what a Rapporteur is. If I a;,goin- to be the obedient f it is -t ne of you. I aecline right away, f 'It is going gain I dt me from saying what I want to say, _gin I decline, 3ut, fer L i his whcle thingsounas very, uch to m6 as-:f it had- beer is ked. 7d of a .like to know more of what 1 sexpectea -' ZL rapporteur, t the rapporteur should . s that tnc rapporteur should ningbe . f vnce ommight do his workorrow mor-: as thow he =J:ght tiork4 of advice to him: in my I<-- 1 . ciust lik e to add this bi in ny experience I hmie always founlthat the Secretary of a Com==ttee is a m.ost usefUl man to help one Wite the report, 1EroI' cOG-aill I ay Iask i f ths kind cf wo rk w-I I ke on e in Bnrar.l thean I Imnendc to sta? I -have enoyed y stay in Eniclanve-ybeing much, but I am interested in 4elsewhere. that this will be a long assignment?'at this Twi5ill be a long assnment? 1-r. Khat -.-will not be aad to Indicate tQ a it -.- III not a o..- alwill htJ. rt I nt. assume that he -n-1 have he- draft this Committee which willays, and hien th. s Comzittee irhi ch will rafted. cte r il just review what u ios to pay h?ma?e T Int erdr: I W t ta pay hor:a-e o thE mo-esty e charge him with lack of he sc -e tU iJ-m charge lhi, w\ tack of t called J.pinm. I oause i:hen he s T,^ I ha on hi.- . wish, iowe-er, t, cive hfE ath assurances: he ,s certainly apt tor h-e mIs s s iri-h *.7hicis bs.n,:en-rusted, and he6w:ll also find PAE P-2 E/PC/T/slC. III/PV/ 5 Mr Koriwan the best and most en1ightened of all helps. I have experienced myself how useful his help has been, and I can give Mr McGregor al1 assurances in that respect; but Mr Koriwan is- over-burdened with work and our Rapporteur must not expect Mr Koriwan to do the work of the Rapporteur. He will only help him on questions of form and procedure. and I hope that I myself will be in a position to help him, if necessary. I record Mr. Naude's proposal and the support given it by the Cuban delegate, and I take it that Mr McGregor is now our Rapporteur with Mr Holmes, Mr Wilcox and ?. Lecuyer on the same committee, I confirm that we shall have a meeting tomorrow morning at 10.30 in order toder tO hear the rest oR our -app'rteurls expose', because I think we can ll vr m 1 hirn oporRapj.cteur. expo x~olle wiJ- bear on Articles 40. c '4. Are there any onesticns now.?te (Afer a pause:-) eting stands adjourned.eur n*. eting rose at 6.53 p.m.)3 r . 3 c

GATT Library

jb167hs7924

Verbatim Report of the Fifth Meeting of the Sub-Committee of Committee II on Quantitative Restrictions and Exchange Control : Held in Room 230 on Monday, 18 November 1946 at 10.30 a.m

United Nations Economic Social Council, November 18, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

18/11/1946

official documents

E/PC/T/C.II/QR/PV/5 and E/PC/T/C.II/QR/PV/3-5

https://exhibits.stanford.edu/gatt/catalog/jb167hs7924

jb167hs7924_90220025.xml

GATT_157

E/PC/T/C.II/QR/PV/5. UNITED NATIONS ECONOMIC & SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIFTH MEETING of the SUB-COMMITTEE OF COMMITTEE II on QUANTITATIVE RESTRICTIONS AND EXCHANGE CONTROL held in Room 230 on CHAIRMAN: Monday, 18th November 1946 at 10.30 a.m. DR. H.C.COOMBS (Australia) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminster, S. W. 1.) 1. A. 1. E/PC/T/C.II/QR/PV/5. THE CHAIRMAN: Before we commence our discussions, I will ask the Rapporteur to tell us how his work is going, so that we can plan our programme accordingly. THE RAPPORTEUR (Mr. Meade): You will remember that when we started, I think six days ago - it seems like a century to me! - we decided to start on the balance of payments part, which is really Articles 20, 22 and 23, an I think they have come on quite a lot. There are no doubt particular points which dele- gations will want to raise on them as we go through them, but they presented a very difficult problem because we started with very widely divergent views on these Articles which were put in by a large number of delegations. I have tried, completely on my own responsibility, to put in a draft of these Articles, which I hope may prove a basis for a general agreement, with due changes here and there. You will see that in Article 22, in 2a, there is one very important point on which I have not felt sufficient confidence to put in a single draft, but have put in three alternatives, the last one being a compromise. One of them - whether we should take that Article or the sub-paragraph 2 (a) today or this morning, or have another shot at it out of school first of all - is a matter for the Committee to decide. That is a point we might consider. B follows. -2. - 2 - B1 E/PC/T/C.II/QA/PV/5 Then we are left with Articles 19 and 21, which are less the balance of payments and more the commercial policy side of it. On 21, as you know, the Rapporteur has really not done anything. There was a discussion, you will remember, at which two points of view were put forward, and a compromise was suggested, and it was agreed that the United States and the United Kingdom delegations should put in a joint draft, which is here, and which was looked at, you will remember, on Friday night; and I have incorporated the few changes which were suggested, but there were certain global reservations where the people would want second thoughts on it. Article 19, which is the remaining one, I think, is in a less satisfactory position, and I expect your Rapporteur's work has been less satisfactory on this Article than on the others. The procedure which I attempted to adopt was to put in an Article for discussion which was practically the same as the United States draft, with a few changes in it, which in my judgment I thought would meet with general approval, and my idea was that the Article should come forward for discussion so that the other delegations could bring up in turn their points and they could be thrashed out here. I found it a very difficult Article as Rapporteur because it is quite impossible for me to decide myself which points meet with general assent and which do not, apart from having a meeting of the whole Sub-Committee to dis- cuss it; and I am afraid the procedure I have adopted has caused inconvenience to a number of delegations, and I think in particular to the Brazilian delegation, and I apologize to them for any inconvenience I may have caused in this way; and I hope I have already apologized to the Chilean delegation for this sort of procedure. What I would suggest - the only thing I can suggest - is that we should have another "go" at Article 19: take this text, I suggest, as it stands now, get together all the delegations which have an interest in it, and go through it, and then the Rapporteur could be told by the Committee which were the points which had general approval and should be put in the text, which were the points which delegations were prepared to drop, and which were the points on which delegations wished reservations to go in. I find that in the short time at my disposal it would be quite impossible for me to do that "out of school", because I should have to ask every delegation about their points, and I think it can only be done in general Committee. I apologize if 3 B2 E/PC/T/C.II/QR/PV/5 I have wasted the time of the Committee by trying to adopt this other procedure, and I hope we night be able to fix up another meeting after dinner tonight to go through 19 again. MR RODRIGUES (Brazil): As far as the Brazilian delegation are concerned, there is no reason for apology. We understand all the difficulties of reporting. THE CHAlRMAN: I think we can agree with the Rapporteur that there are a number of issues affecting Article 19 upon which the views of the Committee collectively have not been formally stated, and I agree that it is desirable that we should have a further meeting for the express purpose of considering those points item by item and disposing of them, either by incorporation in the revised draft or by their being dropped or by their being reserved by the country concerned; and if it is acceptable to the Committee I would suggest that we adopt the Rappor- teur's proposal and meet this evening at 8.30 and that we invite to the meetings the representatives of the delegations which have submitted specific proposals on this matter in so far as they are not members of the Drafting Committee. Is that agreeable? (Agreed.) Regarding the other Article, 22, to which Mr Meade referred, where he had found difficulty in attempting a reconciliation by compromise of alternatives that have been submitted, I underst and that delegations have during the weekend been giving some consideration to this, and that it might be possible out of school, as Mr Meade puts it, to reduce the number of alternatives at present before the Committee on draft Article 22, paragraph 2(a); and I suggest, therefore, that we defer consideration of the draft Article 22 also to this evening, by which time perhaps we may have made further progress. Is that acceptable? I suggest, then, that we turn now to Article 20. THE RAPPORTEUR: That is what I should propose. I would like to make a very short remark on it. Paragraph 1 is the general proposition that countries can use restrictions to safeguard their balance of payments. Paragraph 2 is the guiding principles or criteria or whatever one likes to call them. They have caused some difficulty. I hope that this is an acceptable compromise of the different views. 3 is a rather new Article which attempts to resolve many difficulties. I think we must take it as it comes along. I have attempted to B3 E/PC/T/C .II/QR/PV/5. meet the Australian point about having certainty in advance. Paragraph 4 is a very important one. We have had a conmunication from the Joint Committee as well as suggestions from many delegations here - the French, the Indian, the Brazilian and others, I think - that one must be able to use these restrictions selectively, and 4 is made to cover that point. 5 and 6 are more or less the same as teh United Kingdom draft from which we started, but I believe that is all that remains. THE CHAIRMAN: Then we take paragraph1 of Article 20. Perhaps the Rapporteur might read this one. (Paragraph 1 was then read by the Rapporteur.) Are there any comments? MR BARADUC (France) (Interpretation): Mr Chairman, at our last meeting I had made a reservation concerning the first sentece of this first paragraph, but after thinking it over the French delegation at this Conference has decided that it could accept this paragraph. We may have some suggestions of modifications to be submitted to the Drafting Committee or at our next meeting of the Preparatory Conference in Geneva, but at any rate the French delegation intends to recommend this text to its Government. THE CHAIRMAN: Any further comments on this paragraph? Is it accepted? (Agreed.) (Paragraph 2 was then read by the Chairman.) Are there any comments? MR RODRIGUES (Brazil) : MR Chairman, I should like to have inserted in 2(a) (i), after the word "in" in the second line of (i), the words "the level of". THE CHAIRMAN: Paragraph 2(a)(i) would then read: "to stop or to forestall the imminent threat of a serious decline in the level of monetary reserves or". Is that amendment agreed? (Agreed.) Are there any further comments? MR CLARKE (U.K.): I would like to raise a point, if I may. I think it is covered in the draft, but I would like to make certain of it. Supposing a country was adopting import restrictions under this paragraph and wished to reduce the quota on one product but increase the quota on another product, leaving the net effect the same, I take it that that would not be regarded as intensirying the present restrictions? That is to say, one treats the existing restrictions in this context as covering the effect of the whole field of restrictions which 5 B4 E/PC/T/C .II/QR/PV/5 countries apply under this Article rather than the individual items? I think the text amounts to that. If it did not mean that, it would no doubt say "an existing restriction" instead of "restrictions". MR GUNTER (USA): That would certainly be may interpretation. THE RAPPORTEUR: That was in my mind, and I feel it is completely safeguarded in view of paragraph 4; because paragraph 4 says that in doing this you can select imports. It seems to me that that makes it doubly certain. 6 E/PC/T/C.II/QP/PV/5. THE CHAIRMAN: Is there anything else on paragraph 2 (a) ? May I take it then, that paragraph 2 (a) is accepted ? (Agreed) We pass to paragraph 2 (b). (Paragraph 2 (b) was read) THE RAPPORTEUR: There was a question about the words "relax them progres- sively". THE CHAIRMAN: I think we shall have to give the delegate for Brazil a Portuguese text of this paragraph which makes it sensible in Portuguese as well as in English. THE RAPPORTEUR: + I think it is all right in English. MR BARADUC (France) (Interpretation): May I make a suggestion ? We might, perhaps try to make a French translation of Article 20 and maybe then the translation from French into Portuguese might present less difficulty. THE CHAIRMAN: May we take it that in English, at any rate, paragraph 2 (b) is accepted ? (Agreed). We pass to paragraph 2 (c). (Paragraph 2(c) was read). THE CHAIRMAN: Are there any comments ? MR BARADUC (France) (Interpretation): This means the definition of what we mean by "token imports". THE CHAIRMAN: May I take it that paragraph 2 (c) is accepted?(Agreed). We pass to paragraph 3 (a). (Paragraph 3 (a) was read). THE RAPPORTEUR: The problem arose of an attempt to compromise, really, between the extreme view (I am not sure that it is held by anybody in this extreme form, but I am pointing the issue ) that no action should ever be taken without prior consultation and the other extreme view that such prior consultation is in all cases difficult, if not impossible. What the draft says is that members who are imposing restrictions under this article for the first time, as it were - bringing themselves under this articles not having been under it before - shall as a general rule consult the organisa- tion and through it the International Monetary Fund, before imposing restrictions, on these questions of the nature of the difficulties and the 7. C1. C2. E/PC/T/C .II/QP/PV/5. various alternatives, corrective measures and the effects of these but measures on other countries,/that in cases where such prior consul- tation is impracticable they should consult, as soon as possible after imposing the restrictions - the idea being that there may be cases in which you have to take action so quickly that it would be impossible to consult first. I hope this will prove an acceptable compromise of the views. THE CHAIRMAN: Are there any comments on paragraph 3 (a) ? MR PHILLIPS (Australia): There might be other circumstances than the urgency of the crisis which make consultation impracticable. I have not anything special in mind. THE RAPPORTEUR: I imagine it would be the urgency of action that would be most likely to cause prior consultation to be impossible. THE CHAIRMAN: Is there any further comment ? May I take it that this para- graph is accepted ? (Agreed). We pass to paragraph 3 (b). (Paragraph 3 (b) was read). MR LOKANATHAN (India): Mr. Chairman, I should like to suggest a small amendment here. I would suggest that the first line of (b) should be changed. It now reads: "The organisation may at any time invite any member" etcetera. I suggest it should be amended to read: "Any member imposing import restrictions under paragraphs 1 and 2 of this article shall enter into consultation with the organisation within 30 days after the imposition of such restrictions. The organisation shall consult the International Monetary Fund and any other appropriate International specialised agencies in particular in regard to the alternative methods available" etcetera, etcetera. The reason I suggest this amendment is that it seems to me we shall be taking a very grave step if, when a country imposes quantitative restrictions, nothing is done about it, because it seems to me that this is the most crucial matter in the whole document. Quantitative restrictions are supposed to be undesirable. If they are undesirable then we ought to use them as the last resort, and I suggest that when a country is forced by circumstances to have recourse to C3. quantitative restrictions, when being permitted to do so it must certainly enter into negotiation with the organisation in order to see how far the quantitative restrictions may be removed. I may also point out, in this connection, that in the original American draft Charter, in article 20 paragraph 3 (b), that idea was put in and I think there is some sense in it because there should be nothing automatic in the idea of quantitative restrictions. I think, in their preoccupation with their balance of payments difficulties, the British delegation perhaps have not realised that this is going to open the door to many abuses and we are likely to have the same situation which developed affter 1931, and if Britain , because of a difficulty does this, other countries, with less justification, will follow, and we are going to be again in the same situation with which we were confronted in the 30's. I therefore suggest that there should be some regulation by which, when a country employs quantitative restrictions which it is allowed to do without reference to the organisation in the first place, having done so it must seek consultation immediately. Of course, the article as drafted here simply permits the organisation to invite any member to consult with it; it says: "may at any time." I am not satisfied with that. I think it is necessary that the world should know that here is a very difficult situation and therefore that once you open the door to quantitative restrictions every country will follow. MR GUNTER (USA): There are really two situations. This article, as it now stands, gives the organisation the right to invite any member to come in and consult it at any time the member thinks appropriate. I believe the delegate for India has in mind a situation in which a country is intensifying those restrictions and there is nothing--- THE CHAIRMAN: Or putting on restrictions - and presumably where prior consul- tation has not taken place. THE RAPPORTEUR: That point is taken care of in paragraph. 3 (a). MR GUNTER (USA): That is right. The position with regard to now restrictions is taken care of in paragraph 3 (a). It is on the question of intensifying restrictions where there is no automatic consultation unless the organisation 9. E./PC/T/C.II/QP/PV/5. C4. invites it. I think that is the point of view the delegate for India really has in mind, and I wanted to limit it down to what I believe he had in mind. THE CHAIRMAN; Is there any comment on this point ? MR HELMORE (UK): I think we might meet part of the Indian delegate's point by going back to article 3 (a), which deals with the imposition of new restrictions where there is first of all a requirement that a member should consult as soon as possible after imposing such restrictions. We might tighten up the words "as soon as possible". If it is any help we might say "witin 30 days" instead of "as soon as possible" there. That would meet one half of the argument. I should have thought that the words "as soon as possible after imposing restrictions" were in practice likely to be tighter than "within 30 days". MR LOKANATHAN (India): That is right. I was thinking only of the second part because I want the organisation to know that it is really getting into a diffi- culnt situation. I would say "as soon as possible" here also, instead of "30 days". I do not want the matter to be left to the organisation; it is rather that the members should be called upon to go to the organisation so that the rest of the world might know. THE CHAIRMAN: That is where the restrictions are being intensified ? MR LOKANATHAN (India): Yes. 10. E/PC/T/C. II/QP/PV/5. D.1 E/PC/T/C.II/QR/PV/5. MR. HELMORE (UK): I suggest we do not want to drop the first sentence of paragraph (b). That sentence is very valuable in that it gives the Organisation the right to institute consultation at any time when these things are being used, lest people should drop into the bad habit of saying, ''we had them last year, so we will have them this year." It is really the intensification of existing restrictions which is the only situation not covered. MR. CLARK (UK): I think the point of the Indian Delegate could be met by adding at the end of the first sentence of paragraph 3(b) the words: "and shall invite a Member to consult as soon as possible after a Member makes a substantial intensification of its existing restrictions." I do not know what the English would be, but that is the idea. MR. HELMORE (UK): Would this drafting be all right: "and shall invite a Member substantially intensifying any such restrictions to consult accordingly within 30 days." I am not quite sure whether we ought not to add "after such intensification has taken effect," but it would make the sentence clumsy, and I think the meaning is clear. MR. CLARK (UK) We regard that as an improvement. THE CHAIRMAN: Is there any comment on this suggested amendment to meet the Indian Delegate's point? As there are no comments, I take it that the words to that effect are to be included. Are there any other comments on paragraph 3(b)? MR. HELMORE (UK): I have a very minor comment which I do not think need be taken into account by the Rapporteur. I want to point out that this is the fifth way of referring to "international specialised agencies" I have come across in various parts of this draft Charter. We havered a long tine whether is should be "competent international specialised agencies". Now it is "appropriate international specialised agencies." It is a point which indicates that these four words should not be regarded as sacrosanct. I hasten to suggest that the word "competent" was suggested to us by the French Delegate. 11. D. E/PC/T/C. II/QR/PV/5. THE RAPPORTEUR: The Legal Adviser has just been through the Report of Committee I on employment, and has removed the word "international" which precedes "specialised". MR. HELMORE (UK): This is obviously a point to which the Interial Drafting Committee will have to pay attention. THE RAPPORTEUR: I suggest we leave it to them. THE CHAIRMAN: I take it, then, that paragraph 3(b) is adopted. We come to paragraph 3(c). THE RAPPORTEUR: The paragraph reads as follows: "Any Member before it imposes new or intensifies existing restrictions on imports under paragraphs 1 and 2 of this Article may, if it so desires, consult with the Organisation with a view to obtaining the previous approval of the Organisation for restrictions which it intends to impose or for the conditions which would justify it in applying restrictions in the future. The Organisation shall invite the International monetary Fund to participate in the consultations. As a result of such consulta- tions, the Organisation may approve in advance the imposition or intensification of import restrictions by the Member in question or the conditions which would justify it in applying restrictions in the future insofar as the general extent, degree and duration of the restrictions are concerned; and to the extent to which such approval has been given, the action of the Member imposing restrictions shall not be open to challenge under paragraph 3 (d) of this Article." Perhaps I might add that this is, of course, the place where I have tried to take account of the desire of the Australian Delegation to be able not merely to get prior approval for a particular set of restrictions, but to get prior approval for conditions in which restrictions might be justifiable in the future. Under this Article, my idea is that it would be possible for a country, but not necessary for a country, to go to the Organisation, and in consultation with the Fund, to get an agreement between that Member and the Organisation, that if ever its reserves fell below such find such a specified figure, it would be justified in putting on restrictions to keep them up to that figure. MR. HELMORE (UK): I have a purely drafting point. I doubt whether it is good English, good French or good Portugese to ask the Organisation 12. D.3 E/PC/T/C.II/QR/PV/5. to express its approval of conditions. I should have thought that conditions which justified the imposition of restrictions could only meet with the se-. .re disapproval of the Organisation. I do not know what effect it would have anyway. Could I suggest that after "or" we should make it read "or for the imposition in the future of restrictions under specified conditions" -- in line 7? MR. BRONZ (USA): There is the sale constructions about seven lines further down, which will require to be altered. THE CHAIRMAN: I think that in the second part it can be left out. I do not think it is necessary to repeat it there, because it reads "As a result of such consultations, the Organisation may approve in advance the imposition or intensification of import restrictions by the Member in question." THE RAPPORTEUR: That would mean leaving out the next part? THE CHAIRMAN: Yes, and go on "insofar as...." THE RAPPORTEUR: That would greatly simplify the drafting. MR. HELMORE (UK): May we have the exact words? THE RAPPORTEUR: The last sentence would read: " As a result of such consultations, the Organisation may approve in advance the imposition or intensification of import restrictions by the member in question" ... we would then leave out the words " or for the conditions which would justify it in applying restrictions in the future".... and go on "insofar as the general....etc." THE CHAIRMAN: I take it those two drafting changes are agreed. MR. LOKANATHAN (India): I have another difficulty. While I endorse fully the last part of the sentence"to the extent to which such approval has been given the action of the Member imposing restrictions shall not be open to challenge under paragraph 3 (d) of this Article," I feel that paragraph (d) of this Article has really two aspects, the challenging aspect and the suffering aspect. I quite endorse that no country should 13. D.4 E/PC/T/C .lI/QR/PV/5 be allowed to challenge, but I fail to see how the Organisation should be prevented from giving some relief to the suffering country. Therefore, I feel that either in (d) or in (e) we should make it possible for the member to appeal in such cases for relief. This is important because you do not even provide for consultation of the affected countries in (c). It is only the Organisation that takes a decision. It may be it is the right decision, but the affected country may not have been consulted. Therefore, I have a feeling that some provision should be made whereby, while the action of the Member should not be challenged, the effect of that action should be open to consideration in so far as that particular Member is injuriously affected. THE RAPPORTEUR: I do not think it entirely meets the Indian Delegate, but I would like to make the point clear. Previous approval under paragraph 3 (c) of the general extent, degree and duration of the restrictions would not relieve the Member from the challenge that it was imposing them in a manner which unnecessarily damaged the commercial interests of another Member. In other words, the approval is only for the general extent of the restrictions. If they were being/applied, even within that extent, in a way which caused unnecessary damage to the interests of any other Member, the other Member could still challenge them. I am not sure that meets the whole of the point of the Indian Delegate, but I think it meets part of it. MR. HELLMORE (UK): Would an amendment to this effect help? I think the intention of the Rapporteur in putting in the words "to the extent to which such approval has been given" was to meet precisely this point; that is to say, the Organisation would only say, "We agree that you are in difficulty with your balance of payments, and restrictions are justified. We give you a certificate in advance that your situation complies with the conditions expressed in paragraphs 1 and 2, but the words "to the extent" were meant to safeguard unnecessary damage to commercial interests." 14. H. fols. E.1. E/PC/T/C.II/QR/PV/5 MR. LOKANATHAN (India): My difficulty comes in here. How would the member justify that action on the grounds of being injuriously affected? MR. HELMORE (U.K.): I suggest, as an amendment, that at the end of 3(c) we should add: "shall not be open to a challenge under paragraph 3(d) of this Article insofar as it relates to con- formity with paragraphs 1 and 2 of this Article, or Articles 21 and 22." And I am not quite sure that we need leave in "Articles 21 and 22." Perhaps the Rapporteur could tell us to what extent the approval of the Organization was given. Was it only to relate to paragraphs 1 and 2 of this Article? THE RAPPORTEUR: I should imagine so. I did not have in mind, and I certaintly think we should not have here in mind that the Organization could give advance approval to break the rules against non-discrimination being laid down, but merely advance approval of the general degree of the restrictions. What I had in mind was that a member could say, "Would you agree that I am in balance-of-payments difficulties and that I should be justified in restricting my imports in June to 95 per cent of what they were last year, say for the next year or 18 months?" The Organization might say yes to that, and, if it said that, then another member could not challenge that part of the decision but it could challenge any other part. Within that it could challenge the member by saying, "You are restricting by more than 95 per cent." In other words, "You are doing more than you have approval for." It could also challenge the member by saying, "You are only restricting to 95 per cent but you are doing it in such a way that it causes unnecessary damage." MR. LOKANATHAN (India): When the Organization gives that sanction, would it take care to ensure that no unnecessary damage to the commerical interests of any country will be inflicted? MR. GUNTER (U.S.A.): I belive that the words suggested by the United 15. E. 2. E/PC/T/C.II/QR/PV/5 Kingdom delegate meet the point, and I think they are an improvement on the draft. MR. HELMORE (U.K.): That is to say, add the words "insofar as it relates to conformity with paragraphs 1 and 2 of this Article" at the end of 3(c)? MR. LOKANATHAN (India): That meets my point. MR. GUNTER (U.S.A.): Yes. MR. HELMORE (U.K.): Then on this side of the table, at any rate, (including the Rapporteur) there is agreement on adding those words, Mr. Chairman. MR. PHILLIPS (Australia): I doubt whether they are necessary, but I have no objection. That is certainly the intention. THE CHAIRMAN: Are there any other comments on that amendment? M. BARADUC (France) (Interpretation): The French delegation agree. THE CHAIRMAN: If there is nothing further on paragraph 3 (c), I will read paragraph 3 (d). This is as follows: "(d) Any Member which considers that any other Member is applying import restrictions under Paragraphs 1 and 2 of this Article in a manner inconsistent with the provisions of paragraphs 1 and 2 of this Article or of Articles 21 or 22, or in a manner which unnecessarily damages its commercial interests, may bring the matter for discussion to the Organis- ation; and the Member imposing the restrictions undertakes to discuss the reasons for its action. The Organisation may, if it is satisfied that there is a prima facie case, consult with the International Monetary Fund on any matter falling within the competence of the International Monetary Fund, and may thereafter recommend the withdrawal or modifica- tion of restrictions which it determines are being applied in a manner inconsistent with the provisions of paragraphs 1 and 2 of this Article or Articles 21 or 22, or in a manner which unnecessarily damages the commercial interest of another Member. If restrictions are not withdrawn or modified in accordance with the recommendation of the Organisation within sixty days, other Members shall be released from such obligations incurred under this Charter towards the Member applying the restrictions, as the Organisation may specify." Are there any comments? MR. BRONZ (U.S.A.): I am afraid we may have some difficulties with the prima facie phrase. We appreciate that the delegate who 16. E. 3. E/PC/T/C .II/QR/PV/5. presented it was trying to clarify the situation, but this provides that the Organisation must be satisfied that there is a prima facie case before it consults with the I.M.F. Now the information about the state of a member's balance-of-payments is frequently known only to that member and to the Fund. The information may be given to the Fund on a confidential basis. The complaining member may, therefore, not be in a position to know with sufficient precision how to make out a prima facie case. The International Trade Organization, not having the confidential information, could similarly not find there is a prima facie case, and the case might be dropped simply because the only organisation with the information had not been con- sulted up to that point. THE CHAIRMAN: Can the Rapporteur tell us why this phrase was included? THE RAPPORTEUR: At our meeting on Friday night, the suggestion was made by the delegate of Chile, and I have put it in for the consideration of the Committee. I think the delegate of Chile not had in mind that the member making the complaint ought/to be able to make a frivolous complaint, but should have a general prima facie case and establish its case before action was taken. SENOR VIDELA (Chile): We felt it would follow the general rule that the burden of proof shall be on the accuser. But if there is not agreement on this, I will reserve it as a suggestion made by my delegation. THE CHAIRMAN: The point of the U.S. delegate is that it might not be possible for the accusing country to have the information on which to base a case. MR. BRONZ (U.S.A.): Perhaps we should draw some distinction as Mr. Helmore's phrase in paragraph 'c), by saying that the complaining country should mke out a prima facie case as to its commercial interests being damaged, but not necessarily as to the balance- of-payments situation, on which it may not be in a position to make out such a prima facie case. Perhaps something to that 17. E.4. E/PC/T/C.II/QR/PV/5. effect would meet the point? THE CHAIRMAN: That would mean - if it were satisfied that there was a prima facie case that the complaining country's commercial interests were being unnecessarily damaged. That would not do. THE RAPPORTEUR: Not "unnecessarily" but "being damaged". MR. PHILLIPS (Australia) ; The case might be met by moving the phrase down three lines, and making it read: "The Organisation may consult with the International Monetary Fund on any matter falling within the competence of the International Monetary Fund and, if it is satisfied that there is a prima facie case, may thereafter recommend....." MR. BRONZ (U.S.A.): No, you want more than a prima facie case; you want a real case. MR. PHILLIPS (Australia); That is true. I am sorry. THE CHAIRMAN: Supposing we said, "provided that the Organisation, if it is satisfied that there is a prima facie case that the country s interests are being affected, considers the complaint" and then go on to say, "the Organisation may, in its consideration, consult the International Monetary Fund"? THE RAPPORTEUR: That would get it. MR. LUTHRINGER (I.M.F.): I think it is very important in this section there there should really be no limitation on the discussion of this balance-of-payments situation with the Fund, and I am not sure that even this amended version would not do it. So far as the Fund is concerned, it would much prefer, if feasible, to have in this section a right on the part of the Organisation on its own initiative to take these questions up with the Fund, because you are dealing with this general balance-of-payments situation. The only effective enforcement which you have is complaint by an injured country, and if you restrict that right in any way, it greatly weakens the application of this section. THE CHAIRMAN: I do not think the last suggestion which I made would in any way prevent the Organisation from consulting the International 18. E.5 . E/PC/T/C.II/QR/PV/5 Monetary Fund but would merely limit the obligation of the Organisation to consider a complaint. It would mean that it could ignore a complaint or dismiss a complaint without any further consultation if it were satisfied that no prima facie case had been made. It is true that could not apply - because of the possible inability of the coil laining country to have the facts - to tho state of the restricting country's balance of payments, and would therefore have the effect of limiting the right of a country to complain about somebody else's restrictions to cases in which it was adversely affected. They could complain on a number of grounds that the restrictions were not necessary, or not necessary at all, or even if necessary, were being applied in a way in which it was unnecessarily harmful to their own interests, but they could not complain on either ground unless they were adversely affected. I am not quite sure whether the Committee would consider that to be a reasonable limitation, but I think there is something equivalent to that in law. Do you not have to show some equivalent? MR. BRONZ (U.S.A.): Yes. MR. CLARK (U.K.): If it is that the country's commercial interests are affected; not"unnecessarily." THE CHAIRMAN: Adversely affected. Unless the country is adversely affected, it has no right. If adversely affected, it has the right of complaint, and that seems to me to be fairly useful, but it prevonts the Organisation being flooded with frivobus complaints, and does place, as the Chilean delegate suggested, some obligation on the complaining member to establish something of a case at that. 19. F follows. F1 E/PC/T/C.II/QR/PV/5 What would the precise words be then? THE RAPPORTEUR: I would suggest simply "if it is satisfied that there is a prima facie case that the complaining member's commercial interests are adversely affected". THE CHAIRMAN: We want to link that with the consultation. That was the point of the representative of the Fund. So that perhaps we might say that "if the Organisation is satisfied that there is a prima facie case that the com- plaining member's commercial interests have been adversely affected", and so on. MR LUXFORD (International Bank): Does that mean that if the country cannot establish that its interests are adversely affected the Organisation would have no jurisdiction to consider the case, eventhough it was satisfied that there was no justification for a balance of payments remedy? THE CHAIRMAN: It is right back in paragraph 3(b). MR LUXFORD (International Bank): That is only consultations; there are no sanctions. THE CHAIRMAN: Apart from that, I think your interpretation is correct. MR LOKANATHAN (India): It should be consistent with the principles of paragraphs 1 and 2, and under that any member's actions can be challenged. MR GUNTER (USA): I think the point of the Fund representativeis this: that there is nothing in this that would allow the Organisation to initiate action under the complaint procedure, 3(d). That is their point. Is that right? MR LUTHRINGER (IMF): That was the first part of the point, and since it does not appear feasible to have that in this section it seems to me that anything that may restrict the right of a member to complain is likely to weaken the force of this quite considerably. I suppose no member would have really grounds for complaint unless it could show that its exports were being restricted as a result of this action; but if "prima facie" means anything more than that I think it is difficult to see what it accomplisnes. MR LOKANATHAN (India): As regards the first point, we have to take note of the fact that the Organisation in some way or other is constantly brought into the question. We have it in 3(a), 3(b) and 3(c). Every time it is open to the Organisation either on its own initiative or on the initiative of a member to consider these questions, and therefore the fact is that the 20. F2 E/PC/T/C.II/QR/PV/5 Organisation is always apprised of the fact of a balance of payments difficulty. It is only with regard to the second matter that the question crises whether there should be a prima facie case established. THE CHAIRMAN: If you assume that a country is applying quantitative restrictions for the protection of its balance of payments it is hard to imagine, however justifiable that may be, circumstances in which it would not be easy for any country which has commercial relations with it to show that its commercial interests were adversely affected. As I see it, the chief virtue (I agree it is not a very large one) is that it does exclude purely frivolous complaints; and the fact that you had to state a case would perhaps deter a country from making a complaint in a case where they thought it likely that the Organisation would uphold the action that had been taken; so that that seems to me to be the issue. I do not feel myself that the limitation expressed in that way is really any limitation on the right of countries to make a complaint; it is largely a procedural thing, which would have the effect of excluding frivolous complaints and of obliging countries to document a case to some extent. MR LUTHRINGER (IMF): As I understand the explanation, you would feel that so long as a complaining member could establish that it had been adversely affected by this, even if it were not some question of discrimination or harsh application, it would still have the right to complain. I think that would meet my point. I think it would be particularly desirable to avoid anything which would limit the right of complaint. Is not that necessarily correct? THE RAPPORTEUR: I would agree with your interpretation. I would agree with that solution. THE CHAIRMAN: Would you read the words as they now stand? THE RAPPORTEUR: "The Organisation may, if it is satisfied that there is a prima facie case that the complaining member's commercial interests are adversely afffected, consider the complaint." Should we not say "it shall then consult with the IMF"? MR PHILLIPS (Australia): "The Organisation shall, if it is satisfied that there is a prima facie case", and so on. I think you should have a "shall" in there, and then "it may" or "in this consideration it may". 21. F3 E/PC/T/PC .II/QR/PV/5 MR CLARK (U.K.): "It may then, after consultation with the IMF on any matter falling within the competence of the IMF, recommend the withdrawal or recommendation..." I think it should be required to consult with the Fund on matters falling within the competence of the Fund. There should be no "may" about it. THE CHIRMAN: Yes. MR PHILLIPS (Australia) I think that does leave the position, does it not, that the Organisation has got to consult with the Fund even if the case is perfectly clear? As you said earlier, there would be no difficulty in establishing that the complaining member's interests are affected, but it might be a very clear-cut case where the restrictions were perfectly justified or where they were completely unjustifiable. Do we want, then, to require the Organisation to consult with the Fund and to consider the complaint? I suppose it has actually got to consider the complaint to decide whether it is a prima facie case or not. My impression was that you were unnecessarily elaborating. THE RAPPORTEUR: I do not understand the draft quite that way. As we have it now it would mean that they Organisation, if it was satisfied that there was a prima facic case that the complaining member's commercial interests were adversely affected, would have to consider the complaint. It could stop there. It could consider it and say it is not going any further, if it was not going to recommend against any restrictions. If it is going to recommend against the restrictions it has got to consult with the Fund. It may then, after consultation with the Fund, recommend the withdrawal of the restrictions. So the procedure would be this: the member would complain, the Organisation would have to be satisfied that there was a prima facie case that the com- plaining member's pemmercial interests were adversely affected. If it were so satisfied it would have to consider the complaint. If it wanted to recommend the withdrawal or modification of restrictions it would have to consult first with the Fund on the balance of payments. That would be the effect of the draft we now have before us. MR CLARKE (U.K.): I should have thought that was right, Mr Chairman. I do not think the ITO should be allowed to say a country is saying it is in balance of payments difficulties when it réally is not and make a recommendation 22. F4 E /PC/T/C. II/QR/PV/5 accordingly of a very serious character without consulting the Fund first. As the draft is now, that would be clear. THE CHAIRMAN: There is consultation in the other case. MR CLARKE (U.K.): If it decides it wants to turn down the complaint straight away there is no reason why it should consult the Fund. THE CHAIRMAN: It may still want to consult the Fund and then turn the complaint down. MR CLARKE (U.K.) Certainly. THE RAPPORTEUR: Yes. MR CLARKE (U.K.): But that would not be cut cut by this draft. THE RAPPORTEUR: May I read it as it now stands? "The Orgnaisation shall, if it is satisfied that there is a prima facie case that the complaining member's commercial interests are adversely affected, consider the complaint. It may then, after consultation with the International Monetary Fund on any matter falling within the competence of the International Monetary Fund, recommend the withdrawal or modification of restrictions which it determines are being applied in a manner inconsistent," etc. MR VIDELA (Chile): I think it is quite sufficient. The idea of the Chilean delegation is to protect in the same way the other side, because in this paragraph only the right of the complainant is considered. THE CHAIRMAN: Yes. Is that amendment acceptable? Any further comments on that paragraph? MR PHILLIPS: I would like to ask the Rapporteur whether "other members shall be released" in the fourth line from the bottom may be taken as including a single member - the possibility of releasing any one member. THE RAPPORTEUR: In should take it to be so. MR PHILLIPS (Australia): I think it should allow that possibility. THE RAPPORTEUR: I am not sure; I should have thought this left it to the discretion of the Organisation almost entirely. THE CHAIRMAN: That, I take it, is what you want? THE RAPPORTEUR: Otherwise I think you would have to say "all other members"; "other members" would surely mean that the Organisation could decide. MR PHILLIPS (Australia): And the decision might be that it was one member. 23. F5 E/PC/T/C .II/QR/PV/5 THE RAPPORTEUR: I should have thought so. THE CHAIRMAN: To say "other members shall be released" rather suggests that. It says then "as the Organisation may specify", and whether that applies also to members as well as to restrictions or to obligations I do not know. You might make it clear by saying "other member or members shall be released", and so on. MR PHILLIPS (Australia): Yes; something like that. 24. MR CLARK (UK): How would that read now ? THE RAPPORTEUR: "and other member or members". MR PHILLIPS (Australia): "the other member". THE CHAIRMAN: "the other member or members". THE RAPPORTEUR: Yes. MR CLARK (UK): I think this is dangerous. The implication of this is that other members would have had to complain first to be released. The implication of it as amended would be that it would be only complaining members whereas our idea is that it should apply to all members potentially. THE REPPORTEUR: "such other members shall be released from such obligations incurred under this Charter as the organisation may specify" - inserting the word "such". THE CHAIRMAN: Yes. Is there anything else on (d) ? MR BARADUC (France): Mr. Chairman, I apologise for calling your attention to a matter which is not entirely within our competence as a drafting committee, or even within the competence of Committee II. However, we must consider the fact that we are giving very extensive powers to the organisation. We quits agree to that, but it is necessary to know how this procedure will work and how it will be put into effect, and in order that all members may really trust the organisation I think we should qualify this procedure. I wonder whether we could not set up within the organisation itself a Supreme Court; it would be a kind of Court of appeal. It would have to see to it that the final decisions of the organisation were impartial, objective and independent. This is not our task, but I believe that as a drafting committee we could submit a resolution along those lines to Committee II which would itself forward it to Committee V. THE RAPPORTEUR: This sub-committee is dealing only with quantitative restrictions and exchange control, and there are, in a large number of the other parts of the commercial policy provisions of the Charter, references of this kind. I wonder whether it is really the task of this sub-committee to draft such a resolution. It is laziness on the part of the Rapporteur, perhaps, but I feel my hands are very, very full and I wonder whether this is really a matter to be brought up to Committee II for them to forward to Committee V. 25. G1. E/PC/T/C.II/QR/PV/5. G2. E/PC/T/C.II/QR/PV/5. THE CHAIRMAN: Would the French delegate repeat the resolution he suggests ? MR BARADUC (France): Mr. Chairman, I was suggesting that our committee should consider a resolution which would be submitted to Committee II, which would forward it to Committee V, in order that we may study the setting up of a procedure within the organisation and the eventual setting up of a kind of Court of Appeal which would make it possible for members to have full con- fidence in the decisions of the organisation. I quite agree with the Rapporteur that this is not perhaps a matter for our sub-committee, but I should like to call your attention to the fact that we are going to raise this question in the Plenary - Meeting of Committee II and most probably Committee II will decide to forward a resolution along those lines to Committee V. Therefore I think we might have anticipated the task of Committee II by working out such a resolution. MR CLARK (UK): I feel in some difficulty about this, because it does raise very wide questions which go far beyond the sort of thing with which I can deal on this committee. I really am not sufficiently in touch with all that is going on in Committee V, on the other parts of the discussion, to be able to contribute very much to the drafting of such a resolution in this committee. I should have thought it much better to take it to Committee II fully. Our view on this is that in this particular field, at any rate, we favour a strong organisation with strong powers for the organisation. We do feel this is a matter running right through the work of the Conference. THE CHAIRMAN: I think this question of the powers and constitution of the organisation and the question of special organs for dealing with special functions is a very complex question. It does affect the work of every committee. It raises problems about the structure and methods of the organisation and I think it would be unwise for us to embark upon consideration of it here. It may be that it will be very difficult for us to deal with it, even at Committee II, in full. My own feeling, for what it is worth, is that we shall probably be obliged to leave these questions of organisation pretty substantially untouched at this meeting, because there will be so many issues raised by the various proposals affecting the organisation that I think a good deal of work will need to be done in reviewing the various parts of the 26. G3. E/PC/T/C.Il/QR/PV/5. revised articles to see what type of organisation will be required to carry it out. I would suggest to the French delegation that they leave the matter here and perhaps consider the form of resolution which might be considered in Committee II. MR BARADUC (France): I agree. THE CHAIRMAN: Is there anything further on (d) ? we pass to paragraph (e). (Paragraph (c) was read). THE RAPPORTEUR: One small drafting change will be necessary there. It is the same point as was raised by the United Kingdom delegation on 3 (c) - that the organi- sation will not approve the conditions which justify the restrictions. MR PHILLIPS (Australia): Could we say "has previously issued with approval under paragraph 3 (c)" ? THE RAPPORTEUR: Yes, because it is already covered at the end of paragraph 3 (c) and we need only the barest reference back. "has previously approved such restrictions in advance under paragraph 3 (c)". That would cover it. MR HELMORE (UK): Yes. THE CHAIRMAN: It is suggested that it should read "in so far as the organisation has previously approved such restrictions in advance under paragraph 3 (c) of this article". MR HELMORE (UK): We shall not require "previously" and "in advance" shall we ? THE CHAIRMAN: We can delete "previously" and leave it "has approved such restric- tions in advance". MR LUTHRINGER (I.M.F.): Does this mean that even though the conditions which justify the application of these restrictions have greatly changed, that merely because some time previously the organisation approved them, it cannot suggest that the restrictions be withdrawn ? THE CHAIRMAN: There is no suggestion that they cannot suggest that the restrictions be withdrawn. Having been given to the organisation under paragraph 3 (b), that would apply irrespective of the circumstances in which the restrictions were imposed. The purpose of this article is that if a country and the organisation agree that if a country's balance of payments position conforms to certain objective criteria, it will be permitted to apply restrictions, and those con- ditions subsequently develop and it does apply them, the organisation shall not 27. G4 E/PC/T/C.II/QR/PV/5. recommend the withdrawal or relaxation as provided for under paragraph 3 (d) - that is, that it cannot support a complaint from another country. 28. (H.fols). H.1 E/PC/T/C .II/QR/PV/5. MR. HELMORE (UK): Surely we can leave the whole of Paragraph 1 (e) out, because it is already covered by paragraph 3 (c), in the last few words "shall not be able to challenge under paragraph 3 (d) of this Article." THE RAPPORTEUR: I suggest that is the solution. THE CHAIRMAN: Is that acceptable to the Australian Delegation? The suggestion is that it is not necessary to include subparagraph (i) of (e), since it says in paragraph 3 (c) at the end "shall not be open to challenge under paragraph 3 (d) of this Article." MR. HELMORE (UK): Paragraph 3 (d) provides for a challenge procedure. That is limited in two ways; first of all, by paragraph 3 (d) which says you cannot operate paragraph 3 (b) except to the extent that you have previous approval. Paragraph 3 (e) is a further limitation on the action of the Organisation and the Fund which relates to domestic policies; that is to say, the limitation on the action under paragraph 3 (d) is expressed first of all before, and secondly, after; and it is unnecessary to repeat paragraph 3 (c) again here. MR. BRONZ (USA): I agree that it is wise to drop this language from paragraph 3 (e), but I am not sure we have wholly met the point of the Fund in this regard. I have always felt from this language that if the Fund gives prior approval under (c), if it were wise it would probably specify in the conditions that it reserves the right to alter, amend or approval any approval that it might have given at some future time. Possibly it would clarify things to specify the things that the Organisation could review in regard to its prior action if the conditions had changed. THE RAPPORTEUR: I thought that was covered, particularly as it is now drafted, because the Member has to obtain previous approval of the Organisation for the restrictions it intends to impose. The Organisation, after consulting the Fund, can give its approval with any conditions that it likes. It might say "you can restrict to this amount for one year, and thereafter you can go on doing it if the conditions are the same." 29. H.2 E/PC/T/C.II/QR/PV/5. MR. BRONZ (USA): Of they could say, "You can do it for one year, but we reserve the right to review it during the year if conditions change." THE RAPPORTEUR: It is perfectly open to the Organisation. It is a bargain between the Organisation and the Member, and the Organisation can attach to it any condition that it likes. MR. LUTHRINGER (IMF): I think the point could be taken care of administra- tively under this language; that is, the advance approval of certain restrictions, I think, would be contingent upon the continuance of certain conditions, or a worsening of conditions. In other words, as I understand these provisions now, it would not be necessary to make the only condition a given level of reserves, but it night easily be a given level of reserves and certain other related circumstances. I think that clarification of this would follow from the dropping of paragraph 3 (e) (i). THE CHAIRMAN: Is it agreed that we delete subparagraph (e) (i)? I take it that is agreed. Is there anything else on paragraph (e)? MR. BARADUC (France) (interpretation): I suggest that we insert before the words "lasting equilibrium" in the last line but one the words "sound and". THE CHAIRMAN: Is there any objection to that? I think it would read better if we referred to "equilibrium in their balance of payments" rather than "to their balance of payments". We will now take paragraph 4, which reads: "In giving effect to the restrictions on imports imposed under this Article, a Member may select imports for restriction in such a way as to promote its domestic employment, reconstruction, development or social policies; but the Member shall avoid all unnecessary damage to the commercial interest of other Members and will accept an invitation to consult with any other Member which considers its interests to be damaged." MR. HELMORE (UK): I think we ought to insert "unnecessarily" before "to be damaged." 30. H.3 E/PC/T/C .II/QR/PV/5. THE RAPPORTEUR: A word has slipped out here in typing. It should have read "to be so damaged." MR. HELMORE (UK): I would prefer that drafting. THE CHAIRMAN: Is there anything else on paragraph 4? If not, we will pass to paragraph 5, which reads: "If there is persistent and widespread application of quantitative import restrictions under this Article, indicating the existence of a disequilibrium which is restricting international trade, the Organisation shall seek consultation with the International Monetary Fund. The Organisation may then in collaboration throughout with the International monetary Fund, initiate discussions to consider whether other measures might not be taken, either by those countries whose balances of payments are under pressure or by those countries whose balances of payments are tending to be exceptionally favourable, or by any appropriate international institution or institutions, to remove the underlying causes of the disequilibrium. Members agree that they will take part in such discussions." THE RAPPORTEUR: I should like to bring to your attention the fact that while yesterday I had a note from the Legal Adviser saying that in the Report of Committee I "international specialized agencies" should be called "specialised agencies", a note has been sent in to me to say that they should be called "intergovernmental specialised agencies." I think this point might be left to be sorted out. THE CHAIRMAN: "appropriate specialised agencies" is more inclusive than either of the others. MR. HELMORE (UK): Is it intended to mean something different? THE CHAIRMAN: That is what I was wondering. THE RAPPORTEUR: It should be "any appropriate intergovernmental specialised agency or agencies." Should I include that? THE CHAIRMAN: I think so. It would then read "or by any appropriate intergovernmental specialised agency or agencies." MR. HELMORE (UK): I would point out that by using the word "specialised" there you deny the Economic and Social Council an opportunity of taking part. THE RAPPORTEUR: In view of the duties which are going to be on the Council as a result of Committee I's work, that is perhaps not wise. 31. THE CHAIRMAN: I think we should exclude "specialised". MR. GUNTER:(USA): I have a minor drafting change to offer in the third line before the word "disequilibrium" I would suggest we include the word "general". We have used "disequilibrium" in talking about individual countries, and here we are talking about a general disequilibrium. MR. CLARK (UK): This is something entirely different from fundamental disequilibrium. THE CHAIRMAN: Would not "general" be too restrictive in this sense? Presumably disequilibrium would not have to be so general as to be restricting international trade on a large scale to warrant the action of this sort. There might be a group of countries which for special reasons would be affected by the disequilibrium. 32. I fols. H.4 E/PC/T/C.II/QR/PV/5. I.1. E/PC/T/C.II/QR/PV/5 MR. LOKANATHAN (India): Disequilibrium in a country like the United Kingdom will have a much greater effect than disequilibrium in a number of other countries THE CHAIRMAN: What about "widespread"? MR. CLARK (U.K.): I think "general" is a good word in this context. THE CHAIRMAN: You do not think it implies that it has to be com- pletely general? MR. GUNTER (U.S.A.): No. M. BARADUC (France): Shall we put in "general" then? THE CHAIRMAN. Yes. Is there anything else on paragraph 5? Then paragraph 5 is agreed. Paragraph 6. reads: "Throughout this section the phrase 'quantitative import restrictions' includes the restriction of imports by State Trading Organisations to an extent greater than that which would be per- missible under Article [27] of this Charter, provided that no Member shall be required to dis- close information which would hamper the commer- cial obligations of such a state trading organisation." MR. HELMORE (U.K.): There is a typing error in this - the word "obligations" should be "operations". MR. GUNTER (U.S.A.): I want to ask the United Kingdom delegate a question. I was discussing this with Mr. Hawkins before the meeting, and he said he thought there was something which had come up in the state trading chapter that would take care of this. He was not sure, but he thought you would know about it, Mr. Helmore, and he thought it was unnecessary here. MR. HELMORE (U.K.): If it is unnecessary here, I am delighted, but what troubles me is that the subsequent Article (I think it is 21) which refers to the obligations in administration when you are restricting imports for balance of payments, for instance, refers to prior publication in certain circumstances, I agree that the general safeguard for state trading organisations is contained in the state trading Article, but if a state trading organisation was being directed by the state to operate, under this Article I believe that the prior disclosure provision would apply by virtue of Article 21. Therefore I would like to leave these words here, with the suggestion that if the Interim 33. I.2. E/PC/T/C .II/QR/PV/5 Drafting Committee finds them unnecessary, when it looks at the whole of the chapter together, of course they can be withdrawn at a later stage. MR. GUNTER (U.S.A.): I will accept that tentatively; but I would like to talk to Mr. Hawkins about it. THE CHAIRMAN: We could put a note to that effect in our instruc- tions to the drafting committee......... The delegate for Chile has just drawn my attention to draft message from Committee II. I am not quite sure what stage this has reached but I think it has been dealt with by the originators from the Joint Commiittee on Industrial Development and , I think, been approved by the drafting committee of that body but not by the Joint Committee itself. It is a request to this Committee to provide in Article 20: "The Joint Committee also requests that in Article 20 provision should be made to cover the position of a Member who, as a result of its plan for industrial development or reconstruction, anticipates that its accruing international monetary resources will be inadequate to finance the needed imports of capital goods unless it imposes regulations in respect of certain classes of consumser goods." 34. I.3. E/PC/T/C .II/QR/PV/5 Quite apart from the fact that we have not got this message officially, and it has not yet been approved, I think I am right in saying that that that request would be met by a combination of the paragraphs included under 20. THE RAPPORTEUR: Yes,2 and 4 I think meet it fully, because 4 says 4 says that when you are imposing these restriction, you can select what imports you restrict. That means it will be possible to restrict consumer goods and not capital goods, and under 2(a) (i) restrictions can be imposed to forestall the imminent threat of a serious decline in monetary reserves, so that I think both points are covered. THE CHAIRMAN: I think we can leave that matter at this stage. If we do get this message formally, then we shall be in a position to advise the Joint Committee that their request continued here has been adequately provided for in Article 20. Will the Committee agree with that interpretation of the situation? MR. HELMORE (U.K.): I do not want to overload the Rapporteur, but in view of the time table, it might be as well if he will prepare a draft answer to the draft message! When we receive the message officially, we can deal with it quickly. MR. LOKANATHAN (India) : I agree that it is fairly reasonably covered, but I am not sure that it may not be desirable to bring it in a little more positively. Personally I am satisfied, but delegations not represented here may not feel that the point is adequately met and may have some difficulty. MR. HELMORE (U.K.): That is precisely the point I had in mind in suggesting that the draft answer to this request should be prepared with the idea that it may be incorporated in the report of this Committee, pointing out the effect of 4 and 2. 35. I.4. E/PC/T/C. II/QR/PV/5 MR. LOKANATHAN (India): I would suggest explaining it a little. THE CHAIRMAN: Yes, I think that would be very useful, to make it quite clear in the reply precisely how this request has, in fact, been met by paragraphs 2 and 4 of Article 5. MR. HELMORE (U.K.): I take it that it would appear in the report of Committee 2, and would in that way be published? THE CHAIRMAN: Yes. Is there anything else on Article 20? MR. LOKANATHAN (India): May I make a suggestion before we conclude? Article 20, which we have been considering is so intimately bound up with the I.M.F. that I am wondering whether it would be possible, or desirable, for us to send these things formally or informally to that body. Part of our difficul- ties arise on account of our diffierence in meeting the balance of payments difficulty under the provisions of the Fund itself. Apart from their opinion on these clauses which we have drafted, it will also be desirable to get to know if the Fund is likely to consider certain other matters which are obviously inadequate. Then there is the question of a reasonable waiver of interest and principle. I see that the United Kingdom delegate smiles, but, as you find in the Angle-American financial agreement, when there is a balance of payments difficulty in a trade year the country is entitled not only to be excused from payment of interest or principle in that year, but it gets a permament waiver. I think that is a very important principle, and I think it is the duty of the International Bank to provide for such cases that, when a country is in balance of payments difficulties it should not be called upon to repay at all for that year. I would even say it should be excused from the agreement. There are several other directions in which I feel that the Fund should be in a position to make use of Article 20, though they are less important. My point is that we ought to ensure that the Fund offers much more facilities to make this Article 36. I.5. E/PC/T/C.II/QR/PV/5 less necessary. I do not know whether it is proper for me to make such a suggestion? THE CHAIRMAN: I take it you suggestion is that these Articles, when we have agreed them, should be forwarded to the Bank and the Fund, perhaps with a request that they consider the action which could be taken in order to make dependance upon this type of provision in the ideal Charter less necessary? MR.LOKANATHAN (India): Yes. MR.HELMORE (U.K.): May I suggest that the most appropriate way to achieve that object would be, in the report of Committee II, to refer the assistance we have had, particularly from the representative of the Fund, on these Articles, and to ex- press. the hope that at the next meeting in Geneva., the observers from the Bank and the Fund will be able to present us with the views of those bodies on these things as they stand? MR. LUTHRINGER (I.M.F.): I think the suggestion of the U.K. dele- gate would be the best way to meet this point. This Article contemplates very close working relationships between the two institutions, and I feel that it would be very helpful if the Directors of the Fund could have a meeting to study this draft very closely and make any suggestions which they might have on it to the drafting committee in the later stages I am not quite clear; is the next meeting to be in Geneva or is the drafting com- mittee to meet there? MR. HELMORE (U.K.): The suggestion is that the drafting committee meets in New York to tidy up, mainly, sitting from about. the 20th January to the 28th February. I would not suggest that the observations of the Fund, for instance, should be com- municated to that body since it seems hardly appropriate that in tidying up a draft, the observations of another specialised agency should be brought in. It would be much better if they come to the next substantive meeting of the preparatory 37. I.6. E/PC/TC/II/QR/PV/5 committee itself at Geneva in April. MR. W. HELL (International Bank): We also like the suggestion of the United Kingdom delegation. I would also mention to the Indian delegate that while the Bank has clear power, in a given case, to make arrangements for deferring a country's commitments in foreign exchange, nevertheless it must be kept in mind that the Bank is not free itself from the obligation of paying in foreign exchange, and that therefore, any widespread use of the formula of deferring payments in foreign exchange would mean that the Bank could not meet its obligations, or that it would have to call on all members to make good that failure of the one country to make payments in foreign exchange. MR. LOKANATHAN (India): It was far from my intention to go into the merits of the matter, Mr. Chairman. THE CHAIRMAN: Can we take it that it is agreed recommend in our report that the attention of the Fund and the Bank should be drawn to the relavant Articles, and that they should be invited to be represented at the second session of this Conference in Geneva, and that it would be helpful to the Committee to have the formal expression of their views pre- sented to them then? MR. LUTHRINGER (I.M.F.) : Thank you, Mr. Chairman. M. BARADUC (France) (Interpretation): I apologise for returning to a question which has been settled, but I would suggest a slight modification of sub-paragraph (c) of para. 3 of this draft. I hope this will not mean additional work for this Committee an the Rapporteur. This sub-paragraph (c) gives a member who imposes new restrictions, or intensifies old ones, a chance to consult with the Organisation. We would like the same procedure to be applied, to a member who main- tains. existing restrictions. MR. HELMORE (U.K.): The United Kingdom delegation would not object to such a provision. It could be done by inserting at the end of the first line "or maintains",after " imposes new or intensifies". 38. J1 E/PC/T/C.II/GR/PV/5 THE RAPPORTEUR: I suggest the simplest way is to say, "any member applying or intending to apply restrictions under paragraphs I and 2 of this Article". MR. HELMORE (U.K.): And there is a consequential emendment to be made in the third sentence. THE RAPPORTEUR: The first sentence could then stand, because the restrictions it would intend to impose would include the one it was already doing but which it was intended to carry on. THE CHAIRMAN: How would it read? THE RAPPORTER: "Any member applying or intending to apply restrictions on imports under paragraphs I and 2 of this Article." MR BARADUC (France): That is all right. THE RAPPORTYRl The last bit of the sentence would be "may, so desires, consult with the Organisation with a view to obtaining the previous approval of the Organisation for restrictions which it intends to impose or to maintain or for the imposition or miaintenance in the future of restrictions under specified conditions". THE CHAIRMAN: This is in the sixth line? THE RAPPORTEUR Yes. Then there was previously an amendment which read, "or for the imposition in the future of restrictions under specified conditions"; so that amended would be further amended to read, "or for the imposition or maintenance in the future of restrictions under specified conditions". The whole sentence would then, I think, read like this: "Any member applying or intending to apply restrictions on imports under paragraphs 1 and 2 of this Article may, if it so desires, consult with the Organisation with a view to obtaining the previous approval of the Organisation for restrictions which it intends to impose or to maintain or for the imposition or maintenance in the future of restrictions under specified cenditions." . . It has been pointed out to me that "the imposition and maintenance" has got out of order: "maintenance" should come before "imposition". MR HELMORE (U.K.): And there is a further amendment required where the same phrase comes again later on. THE RAPPORTEUR Yes: "maintenance or imposition or intensification". THE CHARMAN: Are there any further comments on Article 20? .. Now, I 39. J2 L/PC/T/C.II/QR/PV/5 understand that we are obliged to postpone then meeting of Committee II scheduled for this afternoon, and that raises the question of whether it would be desirable for this Sub-Committee to continue its discussion this afternoon We necessarily must leave until tonight draft Articles 22 and 19. That leaves for consideration this afternoon Articles 21 and 23, I believe. MR BRONZ (USA): Article 21 was completed on Friday, I think. THE RAPPORTEUR: Yes, we did approve that on Friday, but some sort of global reservations were made then. Can they be withdrawn now? MR HELLORE (U.K): We ban withdraw ours now. THE CHAIRMAN: If the reservations on 21 are morely global we could probably deal with then also tonight, since it appears likely that most people will withdraw them. Then could delegates neet this afternoon to discuss 23? (Agreed.) THE RAPPORTEUR: I understand the Secretariat will give notices to all the delegations interested in Article 19. THE CHAIRMAN: Then we will meet here this afternoon at 3 o'clock and then again at 8.3C. The meeting rose at 12:55 p.m. (For Verbatim Record of Afternoon Session see E/PC/T/C.II/QR/PV/5/ - Part II.) 40. K L.1. E/PC/T/C II/QR/PV/5 PART 2. THE CHAIRMAN: We come now to Article 23. First, there is the question of the global reservations on Article 21. That Article was adopted at our last Meeting, subject to the right of Delegates to have a look at it. Does anyone want to raise anything with regard to this Article? MR.HELMORE (UK): I am now in a position to translate my global reserva- tion into something more specific, unless the Rapporteur can show me that the amendment which has been put into my hands has already been covered by the wording. THE CHAIRMAN: If you have anything to raise, I think we will leave Article 21 a little, as two Delegations are at the moment represented by deputies. We will consider now Article 23. THE RAPPORTEUR:This Article turns on the problem of common membership and the solution which I am putting forward tentatively is the ingenious one of saying that there shall be common membership except in those cases in which there is not common membership, in which case the Member who is not also a Member of the Fund shall enter into a specific exchange arrangement with the Organisation, after, of course, the consultation with the Fund, and that this special agreement shall become part of its obligations under the Charter. I do not know whether the UK are, or are not, prepared to accept the bit in square brackets in my present draft, The bit out of square brackets was really their draft, which said that there should be common membership, except in the case of a country which, being a Member of the Organisation, exercises its right to withdraw from the Fund; and if you required common membership and said to the Member of the ITO that it had to remain a member for three years, you would, of course, have removed from that country the. right to withdraw from the Fund, which is one of the important clauses of the Fund, that you can withdraw at a moment's notice. The suggestion was that you should. have common membership, but that if you withdraw from the Fund, you would make a special exchange agreement with ITO. I have inserted-words which say that you need not even become a Member in special cases. In general, there is membership of both, but if in special cases,/you joined the Organisation and did.not want to join 41. L.2 E/PC/T/C.II/QR/PV/5 the Fund, it would be possible to make a special exchange agreement with the Organisation which would become part of your obligations under the Charter. Of course, I personally feel that this is the right way to go about it; this way of having a special exchange agreement if you do not have common membership, because obviously, I feel that you cannot leave a Member who is not a member of the Fund completely free to do what it wants in exchange matters, since exchange depreciation, multiple currency practices, and exchange control can offset practically every other obligation. On the other hand, if you tried in this Article to spell out in detail the exact exchange obligations which a country not a Member of the Fund would have to undertake, you would be so seriously duplicatin the Articles of Agreement of the International Monetary Fund that you would have to spell a lot out again, and that is duplication that we want to avoid. Therefore, I recommend to the Committee this solution of having a special exchange agreement which might differ from country to country, but which would satisfy the Organisation and the Fund in those cases where there is not common membership. If that were accepted, the problem that would remain is whether or not you should only have the special agreement possibility for a country which, having become a Member of the Fund, then withdraws, or have it as a possibility for a Member of the Organisation which never became a Member of the Fund. MR. HELMORE (UK): In General, as the Committee knows, and as we have said before, we are in favour of a requirement of common membership. That seems to us to be justified on logic. On the other hand, we recognise there may be special arguments against it. So, the general form of this Article would meet our views. On the question whether the passage in square brackets should be included or not, and whether we should provide from the start for a country which joins the ITO and refrains not from joining the Fund, I am/quite so certain, and before I say any more about that, I would like to hear the views of other Delegates. 42. E/PC/T/C .II/QR/PV/5 . MR. GUNTER (US): As you all know, when we first got out the proposals, we provided for common membership. Later, in writing the draft Charter, we dropped the idea, for a number of reasons. At that time there were a number of countries that had not come into the Fund. At the time of the Charter, a number of countries had not come into the Fund which we had hoped would be in the Fund and the ITO, and we felt it very desirable not to preclude countries from joining the ITO just because they were not members of the Fund. We recognise, however, that there are many advantages in having common membership. Specifically, since two countries that are participating in this Conference are not Members of the Fund, and in view of the fact that certain other countries which we hope will come into both Organisations are not present at this Conference, we would like not to close the question entirely until the Spring meeting. At the present time we hope that the two members that are present at this Conference and not Members will become Members by that time, and also the general situation with regard to countries that are not participating in this Conference say be somewhat clearer. We would prefer not to close the question entirely before next Spring. MR. KAFKA (Brazil): I would like to join in the suggestion made by the USA Delegate, and I should like also to raise another question. Since you allow here that a Member who has withdrawn from the Fund can then enter into an exchange agreement with the ITO, that really implies that if a country withdraws from the Fund in order to be able to devaluate, it can then come into the Organisation and have a special exchange agreement. That gives it an advantage over all other Members. I think there should be a proviso regarding the unloyal use of this possibility. MR. HELMORE (UK): The last point is one about which we have naturally had to think in considering what the content of an exchange agreement should be, and it says that the member must enter into an exchange agreement with the ITO. The lookingglass version of that is that the 43. E/PC/T/C .II /QR/PV/5. ITO must enter into an agreement with the Member. I do not see how you could lay down in advance what the provisions should be. It must be left to the determination of the Organisation in consultation with the Fund and the Member who has just left the Fund to work out what the answer is. Any attmept to lay it down in advance would, I think, defeat the main object of this type of clause, which is not, as it were, to Frighten countries off joining, both Organisations. MR. PHILLIPS (Australia): We would still prefer separate membership of the two Organisations, but we realise we are in a minority on that issue, and I think that if there is to be common membership, this is a very skillful attempt to get over the dificulties involved in it. In the circumstances, we think it is probably the best solution, seeing that there is to be common membership. We would have to reserve our decision on this point. 44. M fols. M.1. E/PC/T/. CI/QR/PV/5 MR. HELMORE (U.K.): I wonder if we could deal fairly quickly with this by suggesting to Commiittee II that they say in their report that the majority of people, think that common membership is the ideal solution? If that is accepted, then we suggest this is the right way to do it, and then I think we should go on to say that whether it is necessary to provide in this clause for a country to be able to join the I.T.O. when it is not a member of the Fund depends on who is going to join I.T.O. at the time, and we should suggest some words that would provide for that contingency if it arises but; as we do not know what the circumstances will be at the time I.T.O. is set up, we leave them in square brackets. I think that meets the various points of view that have been ex- pressed. MR. KAFRE (Brazil): Mr. HoImore's explanation of the point I raised has cleared up my doubts, but I do not think the draft exactly expresses that, especially in the last phrase of paragraph 4, which provides that the agreements shall provide for the future, but it does not say anything about a country not being admitted if it has acted disloyally before. MR. CLARK (U.K.): I wonder if this is not looked after in paragraph 2? The purpose of paragraph 2 was to look after that situation. MR. KAFRE (Brazil): Yes. THE CHAIRMAN: I think the suggestion made by the U.K. delegate is the only way we can deal with this. Record the majority view and indicate that if there is to be common membership, then clearly the problem of withdrawals has to be faced, and this is probably the best way of dealing with it. On the other hand, if there is not common membership, then some provision will have to be made for the terms of admission covering matters which would clearly be dealt with by the International Monetary Fund. A form of words will have to be worked out to deal with this as satisfac- torily as possible, putting them into square brackets until the situation of the membership of the I.T.O. is established and clarified. ~~~~~ I.. M2. E/PC/T/C.IIQR/PV/5 THE RAPPORTEUR: I am sorry to be a nuisance and to throw some doubt on the draft, but a doubt has been raised in my mind by the remarks of the Brazilian delegate. what happens if a member withdraws from the Fund and cannot roach an agreement which is satisfactory to both parties? MR. KAFRE (Brazil): Then a member is under an obligation to remain a member of the Organization, but cannot do so unless there is agreement, and the agreement has to be accepted by both sides. MR. HELMORE (U.K.): I think it is an entirely theoretical issue; that is to say, either the Organisation and the member who has just left the Fund would come to an arrangement, or they would not. If they came to an arrangement, then the question falls. If they fail to come to an arangement, it would be because the member who has just left the Fund was, let us say, determined to do something in exchange matters which would just be a breaking of the obligation in paragraph 2 of this Article. That could be the only reason. THE CHAIRMAN: Yes. THE RAPPORTEUR: But not in the opinion of the member. THE CHAIRMAN: That is the issue, quite clearly. You could have a situation in which a country might resign from the I.T.O. because it. could not approve of a certain action, and it might then find that the nature of the agreement which it requires to enter into with the I.T.O. would also preclude that form of action. In that case it would be obliged to resign from both, it would seem to me. At least, if it did not resign, the Organisation would have to expel it for failing to enter into an agreement. MR. BRONZ (U.S.A.): The Organisation might invoke one of the penalty clauses, like article 30, or a member might invoke a general clause for violation of any of the obligations in the Charter, and a withdrawal of benefits accordingly. THE RAPPORTEUR: That, I presume, is the answer. If you could not - 46- agree, and the Organisation believed that you wore impairing the Charter, the impairment clause would be brought into operation and you would, in effect, be expelled. THE CHAIRMAN: Or at any rate sanctions would be exercised against you. Expulsion, presumbly, is the ultimate action. M. CALVET (France) (Interpretation): Does it not mean, that under those circumstances, for .all members who wish to enter the Organisation but not the Fund, it will be necessary to make a special agreement with the Organisation, and should not this agreement be of a uniform type for all the members? The position would be rather difficult if the Organisation had to approve a series of agreements of different types with their members for there would be the danger that each member would try to have special treatment of his own, and would try to get advantages over the other members. THE CHAIRMAN: It is rather difficult to decide in advance that the terms of any such agreement would have to be absolutely uniform from country to country. It seems to me, and it is fairly clear, that the Organisation would develop certain principl 's which it would seek to apply in each case, but I think it would be unwise to attempt to proscribe in advance the nature of the principles, for you would be getting into a field which is already covered considereably by the Monetary Fund. Secondly, it would parhaps tend to tie the hands of the Organisation unduly in handling what will, in any case, be a fairly delicate situation. MR. CLARK (U.K.): It seems to us that one could not have a uniform type of special agreement because this is, of its nature, a very individual affair. We are only thinking of this applying to a few countries at the very most, and our general thought here would be that the country which did not want to join I.M.F. would start its negotiations with I.T.O. and I.M.F. by explaining why it did not want to join I.M.F. An attempt would be made to meet it on that particular point, and it would assume the other obligations of I.M.F. which it was prepared to meet. There might be a country - 47 - E/PC/T/C. II/QR/PV/5 which wanted a little more freedom from depreciation than the I.M.F. allowed because it had not got the I.M.F. quota to help it, but that some country might be prepared to go the whole way with a full I.M.F. obligation about multiple currency practices or exchange control. M. CALVET (France) (Interpretation): This would weaken the importance and authority of the Bretton woods Agreement, because it might mean that some members would be granted special facilities. MR. CLARK (U.K.): But those countries would not be members of the Fund and would not, therefore, be getting advantages from the Fund, drawing rights, and so on. So it would not be unreason- able. All we are trying to do here is to meet their position, to prevent their relative freedom of action in such matters from frustrating the purposes of the Organisation. However, I think only two or three countries could possibly be considered in this connection. MR. GUNTER (U.S.A.) I think it is important to remember that the International Organisation will be under great pressure to see that privileges do not go to particular members as opposed to the majority of members, and that there will be pressure on both organisations, the Fund and the I.T.O., because the whole procedure is in collaboration with the Fund. MR. LOKANATHAN (India): I think that any member who wants to take advantage of Article 20 and the I.T.O. has necessarily to incur certain obligations under the Monetary Fund, whether he is a formal member of the I.T.O. or not. Even if the draft is revised so as not to provide for common membership, it is of the utmost importance that we should ask the members of the on IT.0. to take/certain obligations which are relevant and ap- propriate for this purpose. Therefore we must have an alter- native draft. Common membership should be provided for or, if that is not possible, we must provide that persons who wish to take advantage of various Articles must also take on the minimum M.5. E/PC/T/C.II/QR/PV/5 responsibility necessary to ensure that Article 20 is properly administered. MR. HELMORE (U.K.): That is, in effect, what is done here with the square bracket. Without the square bracket, we provide for common membership, with a provision to keep the instant right of withdrawal from the Fund alive by saying, "If you get back into that position, then you must accept those Fund obligations which are relevant to the I.T.O." The only question is whether we admit that position from. the start, and that, we suggested, following the U.S. delegate, we should leave over until we see whether, in fact, it is a real question or not. MR. LOKANATHAN (India).: Then we draft something to the effect that we recognise the desire to have common membership, but it may be that some member is unable to be a member of both, and in that event we suggest that such and such a procedures should be followed? MR. HELMORE (U.K.): Yes, that is it. THE RAPPORTEUR: It will be covered in the report. THE CHAIRMAN: Shall we take this Articlec paragraph by paragraph? I think that would be the best way. Will you read it, Mr. Heade? THE RAPPORTEUR: "The Organisation shall respect the authority and jurisdiction in respect of exchange matters assigned to the International Monetary Fund by the Articles of Agreement of the International Monetary Fund, and shall seek co-operation with the Fund to the end that the Fund and the Organisation may pursue a co-ordinated policy with regard to exchange questions within the competence of the Fund and questions of quantitative restrictions or other trade measures within the competence of the Organisation. " THE CHAIRMAN: Are there any comments on that? MR. LUTHERINGER (I.T.O): I wonder whether the words "in respect of exchange matters" could not be omitted from the second line? I am sure it would make the legal staff of the Fund a great deal happier if they could be omitted. As it stands it seems - 49 - E/PC/T/C.II/QR/PV/5 to suggest that the jurisdiction of the Fund is only in respect of exchange watters, but it may be other matters as well. I do not thing it would make a great deal of substantive difference, but it would improve the thing from the Fund's point of view. if it read simply: " jurisdiction assigned to the International Mone- tary Fund by the Articles of Agreement." N follows. M. 6. - 50 - N1 E/PC/T/C.II/QR/PV/5 THE CHAIRMAN: Any comments on that? MR GUNTER (USA): The wording as suggested by the representative of the IMF is all right as far as we are concerned. MR HELMORE (U.K.): I think the general question of co-operation between the ITO and the Fund is covered somewhere in the chapter on Organisation and Functions. MR LUTHRINGER (IMF): I think it is as much the appearance of the thing as anything else which is important here. It seems to suggest a limitation, and I cannot see that it would affect the sense of the paragraph from the ITO point of view materilally. THE CHAIRMAN: Any comments? MR LOKANATHAN (India): Is it suggested that we delete the first two or three lines? MR LUTHRINGER (IMF): That was not the idea, so far as I am aware. MR LOKANATHAN (India): Only to say what I think is suggested would be a little strange, would it not, because we always have respect for every international organisation; therefore I think there is no point in putting it in in that way. THE CHAIRMAN: Could it be better to leave out the whole of that and say, "The Organisation shall seek the co-operation of the International Monetary Fund", with the hint that they may pursue co-ordinated policy in relation to exchange ratters? MR LOKANATHAN (India): In other words I suggest we should say "The Organisation shall act in respect of exchange matters in conformity with the .... " THE CHAIRMAN: I think that raises very serious difficulties. MR. LOKANATHAN (India): The best thing is to delete those three lines, I think. THE CHAIRMAN: Would you see any objection to paragraph I reading, "The Organisation shall seek to co-operate with the International Monetary Fund to the end that the Fund and the Organisation may pursue a coordinated policy with regard to exchange questions within the competence of the Fund and Questions of quantitative restrictions or other trade measures within the competence of the Organisation" ? 51. N2 E/PC/T/C.II/QR/PV/5 MR LUTHRINGER (IMF).: That would be entirely satisfactory to us. THE CHAIRMAN: Would that be acceptable to the Sub-Cormmittee? (Agreed.) Now we come to paragraph 2. (Paragraph 2 was then road by the Chairman.) Are there any comments? MR KAFKA (Brazil): Instead of the words "trade action" I would prefer the words "restrictive trade practices". MR HELMORE (U.K.): It might not be restrictive; it might be positive. MR KAFKA (Brazil): That is true. It is not vary important - as long as we all understand it. THE CHAIRMAN: Is paragraph 2 acceptable as it stands? (Agreed.) Now we have paragraph 3. (Paragraph 3 was then road by the Rapporteur.) I notice in the second line the word "of" has crept in: "exchange of techniques". It should, of course, be exchange techniques". THE RAPPORTEUR: Yes; that is right. THE CHAIRMAN: I see that in one case we say "may" and somewhere else we say "and shall forthwith". Can you explain that? THE RAPPORTEUR: I think the idea was (I do not know whether the drafting was right) that the country which is not a member of the Organisation may do so if it wants to. If it is already a member of the Organisation it has then got to. THE CHAIRMAN: Could not we say "may be admitted to the Organisation if it enters into a special exchange agreement", otherwise you do not get it? THE RAPPORTEUR: Yes: "may join the Organisation if it is willing to enter into..." THE CHAIRMAN: We had better say "if it enters". THE RAPPORTEUR: Yes. MR CLARKE(U.K.) "may become a member of the Organisation if it enters into", MR PHILLIPS (Australia): I hope this will be taken as a drafting point and not as the point of view of Australia. What is the position of a member of the Organisation who is Compelled to withdraw from the lMF by the Fund? Would this wording cover him? Ought it to cover him? MR CLARKE (U.K.): We could say, "...a member of the Organisation which ceases to be a member of the International Monetary Fund...." MR PHILLIPS (Australia): Yes.- THE RAPPORTEUR: "...that a member of the Organisation which ceases to be a member of the International Monetary Fund...." N3 E/PC/T/C.II/QR/PV/5 THE CHAIRMAN: Is there anything else on that? MR GUNTER (USA): I believe that the change we have now made makes the last clause unnecessary in the square brackets, that is, "and which would release it from its obligation under this Article to join the International Monetary Fund..." MR CLARKE (U.K.): Yes. MR GUNTER (USA): That is just by way of shortening it. THE RAPPORTEUR: Yes; so that it would read "...which would become part of its obligations under this Charter", and then "and provided further that", and so on. MR GUNTER (USA): You would leave in "and provided further"? THE RAPPORTEUR: Oh, yes. THE CHAIRMAN: Is there anything else on that? Is that agreed? (Agreed.) Now we have paragraph 4. (Paragraph 4 was then read by the Chairman.) MR PHILLIPS (Australia): This is a matter of drafting. Would "the common purposes of the Organisation and the Fund" imply that you would have to find identical purposes? MR LUTHRINGER (IMF): The purposes have a great deal in common but they are not identical. It would seem to me that the "common purposes" would be the right emphasis on it here. THE CHAIRMAN: I think there is some danger in cutting it out, although I see. what is in your mind. After all, it would not be proper for the exchange agreement to be phrased in a way which would impose upon the country entering into that agreement obligations which might conflict with purposes of the International Monetary Fund with which the International Trade Organisation had no concern. .I do not know whether there are any such, but the purpose of this is to prevent the exchange action defeating the purposes of the Organisation primarily, is it not; and it would at the same time therefore be proper to prevent it from frustrating the same type of purpose in the International Monetary Fund; but if the Monetary Fund has other purposes then it is no concern of this Organisation whether a country which is not a member of the Fund acts in a way which tends to frustrate those purposes. I am not quite sure myself, just looking at it at first glance, whether it would not be proper to delete the reference to the Fund. THE RAPPORTEUR: That is what I was going to propose, Mr Chairman. MR CLARKE (U.K.): I think there is a point here. In the field of this Article N4 E/PC/T/C.II/QR/PV/5 when we are thinking of making exceptions to the principle of common membership, we are raising quit serious potential difficulties of conflicts of jurisdiction between the ITO and the Fund. At the moment they look as if they might be rather difficulties on paper, but in actual fact, as these Organisations develop, issues might arise, and I think there is great advantage throughout this Article in stressing the common work and the joint work of the Organisation and the Fund in relation to these special agreements; and although from a pure drafting point of view it might be the right thing to say "the purpose of the Organisation" here I think there is great strength in saying "these common purposes" and that ramming/home again in that Article and in the subsequent Articles. THE CHAIRMAN: You have got the words "in collaboration throughout with the International Monetary Fund". That does protect the common working of the two organisations. After all, the Organisation has not got the function of protect- ing the purposes of the International Monetary Fund. MR CLARKE (U.K.): I do not think we are talking here of the purposes of the Organisation and the Fund separately so much as of the common purposes of the two - of the general purpose of setting up those two international organizations. 54. 0.1 E/PC/T/C .II/QR/PV/5 MR PHILLIPS (Australia): You could leave out the words "and the Fund!', because they are objects of the Organisation too. MR LUCHRINGER (IMF): It is suggested to m, that we should say "those purposes which are common". I agree with Mr Clark's observations. I think it is useful to have it in here as putting it in the right context. I think if you omitted the word "common", then there would be a great deal more force in the question that the Chairman has raised. THE CHAIRMAN: I confess I cannot see what is added by the insertion of "common" and "and the Fund", except to suggest that you want to protect some purposes other than the purposes of the Organisation. MR LUCHRINGER (IMF): This is a very difficult subject. It may not be one of the purposes of this Organisation to assure the achievement of the purposes of the Fund, but I think there is a very real danger that something done here might weaken the Fund indirectly. It has been pointed out that it is assumed that this would be an exception which would be very limiting in its application. If it were not, I can cer- tainly foresee a great deal of confusion with the Fund - if, for instance, this thing were set up in such a way that people could with- draw from the Fund and then work out a more favourable or looser 4 arrangement with respect to exchange depreciation and that sort of thing. I think that a provision of this kind might have a rather serious effect on the Fund. MR LOKANATHAN (India): I thought that was the very reason why the words "common". and "the Fund" here are very appropriate. MR LUCHRINGER (IMF): Yes, I think so. MR LOKANATHAN (India): Because it seems to me that the matters that we are concerned with are so much part of the International Fund arrangements also that it is desirable to keep that point constantly in mind, and therefore I think it is but right that we should say "the common purposes of the Organisation and the Fund" in relation to exchange matters should not be frustrated. I agree that there is some appropriateness, in keeping the word "common" and the words "the Fund" here. 55. O.2 EPC/T/C .II/QR/PV/5 MR HELMORE (UK): Does it help to substitute a loss technical word like "objectives" for purposes"? "Purposes" has a rather technical meaning in connection with the Fund, because Article 1 of the Fund is headed "Purposes" . MR LUCHARINGER (IMF): I should think the substitution of the word "objectives" would be satisfactory. It is the principle rather than the particular word that I have in mind. THE CHAIRMAN: Have you any comments to make Mr Rapporteur? THE RAPPORTEUR: I am afraid I have no comment. I am rather inclined to agree with you. I was thinking of it from a rather legalistic point of view. THE CHAIRMAN: So was I. I am not concerned about the argument here. My sole reason for making the point is that I do think there is a danger of some confusion, and I take it what is meant here is those purposes which are common to the Organisation and the Fund. MR HELMORE (UK): Yes. THE CHAIRMAN: The ones that appear in both, so to speak. MR CLARK (UK). Yes. We do not mean, for example, the Fund should have some- thing available under adequate safeguards. It is the sort of ideological and philosophical side of the thing that we are thinking of here. MR LUCHRINGER (IMF): I am not so sure I agree with that - that, for instance, the use of quantitative restrictions instead of reliance on that aspect of the Fund's operations might not really be regarded as something in conflict with the common purposes of the Organisation. THE CHAIRMAN: That is the point I have in mind, that if there is any danger, as there appears to be, of this being interpreted as placing an obligation on the Organisation in its agreements to protect the purposes of the Fund which are not common to the Organisation, then it does seem to me that this goes further than a provision of an Organisation which will include coun- tries, or possibly include countries, that are not at present members of the Fund, ought to go. MR CLARK (UK): If one took this to the extreme and imagined a.state of affairs in which a membr was making an agreement and that agreement proved satisfactory to the Organisation, but the Fund did not regard it as 56. 0.3 E/PC/T/C.II/QR/PV/5 satisfactory, how would you view the situation? THE CHAIRMAN: It would depend entirely on the grounds on which the Fund objected to it. As it seems to me, if the Fund objected to it on the Grounds that it was inconsistent with a purpose which was a purpose of but the Organisation/about which the Fund was in a better position to judge because it was a matter concerned with exchange or some such matter, then I should say the Orgnisation should accept the judgment of the Fund that the agreement was an unsatisfactory;one because in relation to one of the purposes of the Organisation about which the Fund was in a good position to judge it was unsatisfactory, I say in that case it should be quite clear that the Organisation should accept the judgment of the Fund and reject the agreement. If, on the other hand, the Fund said: "This is not satisfactory to us because it conflicts with one of our purposes which has nothing to do with the field of activity of the International Trade Organisation", then I think the Organisation should reply: "We are very sorry, but this is consistent with the purposes of our Organisation, and therefore since the only objection you can raise to it is that it con- flicts with a purpose which it is not our intention to further, we must accept the agreement." If you could imagine each organisation with five purposes, three each in common and two each not in common, and if the Fund's objections arose from one of the two, then I think they should be overruled. If the Fund's objection; arose from one of the three which they held in common, then they should be supported. MR HELMORE (UK) : think you are right in logic, I doubt very much whether any of us could very easily think of a purpose of the Fund which had not something in common with the purposes of the Organisation, but I think you are quite right to safeguard the point that there might be one, and I believe we might all agree just by changing the order of the words and saying "purposes common to the Organisation and the Fund". THE RAPPORTEUR: Mr Chainman, I think that means your three and not your two. MR HELMORE (UK): Yes, it does - only I do not believe there are two. THE RAPPORTEUR: No - but if there were. "the purposes common to the Organisation and the Fund". THE CHAIRMAN: I think that is all right. 57. 0.4 E/PC/T/ C .I I/QR/PV/5 MR LOKANATHAN (India): We should not ignore the fact that in this paragraph we are concerned with the Exchange Agreement. We are not concerned with all the purposes of the Fund or with all the purposes of the Organisation. We are really concerned with the Exchange Agreement and therefore there are certain purposes common to both. That is really the point.We are not concerned with any of the other purposes. We are concerned with ex- change matters. I accept Mr Holmore's suggestion. THE CHAIRMAN: Is there anything further on paragraph 4? We pass to paragraph 5. (Paragraph 5 was read.) THE CHAIRMAN: .Are there any comments on paragraph 5? MR CALVET (France) (Interpretation): Is there not an inconsistency between paragraph 5(i) and paragraph 4? Although paragraph 4 deals with the prior purposes of the Special Agreernent and paragraph 5 deals with the application, it seems to me that there is some kind of inconsistency between paragraph 4, in which the Organisation has to judge upon the merits of the agreement, and paragraph 5, in which the International Monetary Fund decides if the action of a member is contrary to the terms of the agreement. THE RAPPORTEUR: It seems to me that the draft is not inconsistent in this respect for the following, reasons. If I may take just one example - take exchange depreciation. Paragraph 4 says that the rules in the Special Agreement about exchange depreciation must satisfy the Organisation that they will not frustrate its objectives - of course, having collaborated throughout with the Fund in drawing them up. That is to say there is a rule in there (this is, of course, a fantastic rule I am instancing) saying that the country must not depreciate the exchange, by more than 70 per cent in any one year. Under pararaph 5(i) the member accepts the decision of the Fund as to whether it has depreciated its exchange rate by 70 per cent or 80 per cent, whereas under paragraph 4 it is the Organisation in consultation with the Fund which has to make up its mind whether if it confines itself, to a 70 per cent depreciation in any one year it will in fact not frustrate the objectives of the Organisation. That is, I think, the distinction intended, and I think it is a real one. 58 & 59. P. 1 E/PC/T/C .II/QR/PV/5 It is the Fund which would have to look up the quotation of the country' s currency and so on, and decide whether it had depreciated it by so much. In making the agreement the Organisation has to be satisfied whether the rules are such as to be consistent with the objectives of the Organisation. MR. CALVET (France) (Interpretation): It seems rather strange that the Organisation has nothing more to say when the special exchange agreement has been concluded, an agreement to which it has been a party, and regarding the application of which it has nothing more to say. THE CHAIRMAN. I think there is some point in that difficulty, and it must also be looked at in connection with the situation contemplated in the latter part of paragraph 3 -- the case of a country withdrawing from the Fund. It does seem to me that it might be, to put it mildly, embarrassing if a country, having withdrawn because of a serious disagreement about its exchange policy, had then, in order to retain membership of the Organisation, ostensibly to accept the judgment of the Fund as to whether it was in fact conforming to an agreement it had entered into in relation to these things. While it would seem to me to be completely reasonable that the Organisation should rely upon the Fund in asking its mind up in these matters, I would suggest for the consideration of the Committee that it might be wise, in the light of the possible feelings on the situation at the time, to make the actual decision embodied in Paragraph 5 the function of the Organisation, at least nominally, however much it may be Year that it will rely upon the International monetarry Fund for advice as to the nature of the decision it should make. MR. LUTHRINGER (International Monetary Fund): It seems to me there is nothing improper about the two parties to the agreement asking the third party to decide a matter of this sort, particularly since I think most of the questions will be of a pretty technical nature. I doubt whether Members would contemplate open evasions of or departures from this agreement. I think that in many respects, of course, these provisions will be close to the pertinent provisions of the Fund, and I think there might be a good deal of difficulty if you had both bodies interpreting action in the light of the agreement. I think the psychological point which has been mentioned would perhaps be equally applicable to the making of the agree- ment. THE RAPPORTEUR: May I make a suggestion, and see whether it is agreeable to all the Delegations, or not? Could one turn paragraph 5 into two parts, the first of which would say, "The Organisation will seek and accept the opinion of the International Monetary Fund whether action by the Member in exchange flatters is contrary to the terms of the special exchange agreement." That means that the Fund does in fact decide, but the member posts the letter to the International Trade Organisation, and receives the decision from the Organisation. MR. HELMORE (UK) Could I suggest one further amendment? Instead of the words "contrary to", I suggest we might have "permissible under". I think that very often these will be questions of whether, having agreed to do so and so except in types of circumstances, the circumstances are now such that the contingent freedom should be applied. I think the word "permissible" is better. It is less of. an implication that anybody who has one of these exchange agreements is likely to abuse it, THE RAPPORTEUR: As a matter of drafting, I suggest, as a consequential change, that paragraph 5 should start... "A Member which has made a special exchange agreement under paragraph 3 of this article undertakes to furnish the International Monetary Fund ... etc." Article 6 would start off...."The Organisation shall seek and accept the opinion of the International Monetary Fund whether action by the Member in exchange matters is permissible under the terms of the special exchange agreement, and shall act in collaboration with the International Monetary Fund on all questions which may arise." That assumes that paragraph 5 (ii) is accepted. THE CHAIRMAN: I am not sure whether paragraph 5 (ii) ought not to be altered in the same way, to require the information to be furnished to E/PC/T/C. II/QR/PV/5 61. P.3 E/PC/T/C.II/QR/PV/5 to the Organisation rather than to the Fund, provided that the Organisation can do what it likes with it. THE RAPPORTEUR: I must say that if in (ii) you change the International monetary Fund to the Organisation, I do not believe it would make any difference, in fact, to what would happen. MR. HELMORE (UK): It is awkward internationally to address a letter to a body of which one is not a Member. THE CHAIRMAN: It is particularly difficult if it is an Organisation of which you have been a Member and have withdrawn. MR. CALVET (France Interpretation) : Would it not be better to say that Members in such a position would send the necessary information to the Organisation, which would forward it to the International Monetary Fund? THE CHAIRMAN: I think that is the idea. The Rapporteur could probably work out a form of words. THE RAPPORTEUR: ...."to furnish to the Organisation for transmission to the International Monetary Fund such information...." THE CHAIRMAN: Is it necessary to say "for transmission to", provided it is clear that the Organisation can do so? MR. HELMORE (UK): I should have thought the point about transmission to the Fund was amply covered by the present paragraph 6. MR. GUNTER. (USA): In the last line but one, you might say "its functions and the functions of the Fund", which would imply that the information goes to the Fund, without quite saying it. THE RAPPORTEUR : ..."to furnish the Organisation with such information in order to carry out its functions and the functions of the International monetary Fund.." MR. HELMORE (UK): That would mean that the Organisation was going to carry out the functions of the Fund. THE CHARIMAN: If paragraph 6 stands, and if the Organisation "shall act in collaboration with the International Monetary Fund on all questions which: may arise on the wrorking of a special exchange agreement under this Article," I think that is clear authority for the exchange of necessary information. 62. P.4 E/PC/T/C.II/QR/PV/5 THE RAPPORTEUR: I should have thought, after that opinion, that all that is necessary really is to change, in paragraph 5 (ii), the International monetary Fund to the Organisation. One of the functions of the Organisation is to consult with the Fund, having shown it all the informa- tion. It is clear that the information will go on to the Fund. Would it be acceptable, therefore, simply to change paragraph 5 - "A Member which has made a special exchange agreement under paragraph 3 of this Article undertakes to furnish the Organisation with such information.,." The rest would stand. THE CHAIRMAN: What would you do with what was previously paragraph 5 (i)? THE RAPPORTEUR: Paragraph 6 would read: "The Organisation shall seek and accept the opinion of the International Monetary Fund whether action by the Member in exchange matters is permissible under the terms of the special exchange agreement, and shall act in collaboration with the Inter- national Monetary Fund on all questions." MR. LOKANATHAN (India): In the last but one line of paragraph 5 (ii), the "its functions" obviously refers to the International Monetary Fund. Does it still refer to the International Monetary Fund? MR. HELMORE (UK): It is the Organisation's function of mailbox in this context, THE RAPPORTEUR: It is part of the function of the Organisation to consult the Fund. MR. LOKANATHAN (India): The meaning of the phrase "its functions" has been altered. MR. HELMORE (UK): The Organisation's functions relating to the special exchange agreement are to act in collaboration with the International on Monetary Fund/all questions which may arise in the working of the agree- ment. THE RAPPORTEUR: And to seek and accept the opinion of the International Monetary Fund whether the action is permissible. 63. P.5 E/PC/T/C II/QR/PV/ 5. THE CHAIRMAN: Is there anything else an paragraphs 5 and 6? . Then draft Article 23 is agreed, subject to the general statement regarding: the proble... of common membership, which presumably will stand over until April. THE RAPPORTEUR: That matter will be referred to in the Report. In regard to this Article, I shall state that Australia reserved its general position, but can make the ifs and buts clearer in the Report. THE CHAIRMAN: We will now adjourn until 8.30 p.m. and unless otherwise advised, we will meet in this room. (The meeting adjourned at 4.30 p.m.) (For verbatim report of evening session, see E/PC/T/C.II/QR/PV/5 Part 3). 64. A..B.1 PART 3. E/PC/T/C.II/QR/PV/5 (The meeting resumed at 8.30 p.m.) THE CHAIRMAN: I propose we now deal with Article 19. This has been discussed before, but there were a number of propositions put forward by individual Delegates which still require final decision in that the Drafting Committee has not formally decided whether they met these points by inclusion of appropriate words, whether they are to be dropped, or whether the countries concerned will reserve their position in relation to then. MR. HELMORE (UK): Could I, for the convenience of Delelates, ask you, Mr. Chairman, about your intention with regard to the reminder of the business tonight, assuming we sit that long and succeed in finishing Article 19? THE CHAIRMAN: I think we still have Articles 19, the global reservations on article 21, and Article 22. I think that Article 22 was the one on which there were several alternatives. It was hoped that we would perhaps by this evening be in a position to reduce the number of alternatives but I rather we have not quite reached that stage yet. I suggest that we dispose of articles 19 and 21, and then decide whether it would be wise to defer consideration of Article 22 a little longer in the hope that those alternatives alight yet be removed. MR. HELMORE. (UK): I would hate to suggest that we do anything out of order, and still more out of the order which you have suggested, but in the interest of the prevention of cruelty to animals, I wonder whether we could decide whether we are going to deal with. Article 22 or not, because if we do not decide to deal with it, there is at least one person in the room, for whom I feel responsible, w'ho might be allowed to go home. THE CHAIRMAN: Perhaps the Rapporteur can toll us whether we can deal with it with advantage this evening. THE RAPPORTEUR: There is no doubt that a very great advance has been made on Article 22. We have narrowed the field of conflict to one main issue. and a second issue which may or may not come up. It is a frightfully important point. we have had a shot at running the provisions about 65. B.2 E/PC/T/C.II/QR/PV/5. inconvertible currencies and the provisions on the transitional period into one. We have got a general line of attack on that, and I believe that if we are given another half a day, we might get agreement on it, perhaps, in which case an enormous work would have been done. I think this is so important that it is worth taking that extra time. When I say "we" have got agreement, I will explain what I mean. I have been consulting the United States, the United Kingdom and France on this, because they are typical of the three groups of countries which are concerned. The United States has a convertible currency and no QR, the United Kingdom under the Loan ,Agreement will soon have con- vertible currency, but will have QR; and France has inconvertible currency and QR. The point of dispute centres round those three types of countries, and what should be the position. I believe that the right procedure, if it can be managed, is this, that the Rapporteur, tomorrow, should be free to write a report on Articles 19, 20, 21 and 23. Unless I have some time to write that report, I do not see how it is going to be done. What I should like to do tomorrow would be to write that report, and I suggest that we ask the Delegations of the three countries which I have named in the course of tomorrow morning to have another. solid crack at article 22 and try to put forward, not as the Rapporteur's draft, but as a joint draft of those three Delegations, either an agreed Article, or an Article with the alternatives. Then we must see that. It could be seen at the same we time as my reports on the other Articles, so I am not sure that / should be losing an awful lot. It is such a big issue that I feel it is worthy having one more attack on it. Also, in my opinion, the prospect of agreement is reasonably good. THE CHAIRMAN: Is it the view of the Committee that we accept the recom- mendation of the Rapporteur in this matter? .. . We will not consider Article 22 this evening, and we will invite the representatives of the United States, the United Kingdom and France to consider this matter further tomorrow, and prepare for us a revised draft Article, with or without alternatives. 66. E/PC/T/C II /QR/PV/5. MR. CLARK (UK): This is a mandate to prepare something by midday tomorrow? There will be a discussion of it by this Committee tomorrow afternoon or evening; whatever it may be. THE RAPPORTEUR: Something must be produced - if not agreement, then disagreement. THE CHAIRMAN: I take it that is agreeable to the Committee. MR.CLARK (UK): Could Mr. Bardduc and Mr. Gunter have a meeting tomorrow in our Delegation's room? Mr. BARADUC (France): That would be all right with me MR. GUNTER (USA): Yes. THE RAPPORTEUR: I shadll have no duties tomorrow morning except to write the report. THE CHAIRMAN: We will now proceed with Article 19. I thnk that in dealing with this Article it might be wise for us to take the points as recorded in the Rapporteur's note, and decide for each one of them whether it is proposed to incorporate appropriate words in the Article, and when we have wdealt ith it in that very, we could then pass to the various paragraphs of the Adraft rticle itself as amended in that form. I think we have dealt with the question of the Chilean Delegation's reservation relatingg, to agriculture and fisheries, and that has been recorded here. It has resulted in the Chileagn Delegation reserving its position on that matter, and similarly the matter dealt with in sub-paragaph (ii). There Report then goes on: "There remain the following matters for consideration:-" "(i) The Chilean delegation proposed that article 19 2 (e) should. be so worded as to make it clear that the restrictions should not be so operated asrm to permit restrictions on imports of a product which were already en route at mthe tie of the imposition of the restrictions. I understand that it is unlikely Athat rticle 15 (3) will be so drafted as to make this certain. The matter, therefore, needs reconsideration by the sub-committee." Would you like to speak, Mr. Videla? MR. VIDELA (Chile): We have here the draft report of the Technical Sub-Committee gin reard to Article15 (3) There was not agreement on these questions, and therefore, in accordwance with our discussion 67. B.4 E/PC/T/C.II/QR/PV/5 . of the other day, we would like to add the following words: "and shall admit all supplies of the product in question which were on route at the time at which the public notice was given." I think that amendment would cover the point. THE CHAIRMAN: That amendment would follow the sentence in the middle of Article 19 (e) which begins... "Any member imposing restrictions on the importation of any product.....etc." MR. HELMORE (UK): I would prefer not to comment for the moment on whether this precise amendment is acceptable, but to say what the policy of the UK would be in the application of any such restrictions. In general terns, it would be as follows. There are two cases to consider. One is where there is a total prohibition. I cannot conceive that it would ever be likely to arise under this, since, according to the rest of the Article, it would mean a total prohibition of the production of the product in question. I suppose in the case of fisheries it might arise in the sense that there would be such a glut on the market that you decide that fishing must stop for a fortnight, but in that theoretical case of the total prohibition, we should addit products that were enroute. In the more normal case of the imposition of a limit on the amount of the products to be admitted, which might be expressed perhaps by saying that 100 units would be admitted during the next month, if there were 20 units en route we should count those against the 100; that is to say, the products would not be excluded, but they would be counted against the total amount to be admitted in the period in question. I do not know whether that explanation of what UK policy would be is at all acceptable to the Chilean Delegation. If it were, I should hope that words could be found to give expression to it, or that that way of looking at it could be recorded in the report, with an injunction to the Drafting Committee to seek to provide us with an acceptable form of words. MR. VIDELA (Chile) As far as concerns fishing, I do not think Chile will send fresh fish to England, but we are interested in whaling. We have signed the agreement on whaling, and that. Whaling Convention is against the UK policy. 68. C1 E/PC/T/C. II/QR/PV/5 I have not studied that point but I may suggest there is something there. I cannot say now. I shall need to study the question of' the whaling. MR HELMORE (U.K.): On the question of whaling, I gather that that is already covered by the international convention, and in any case I do not think the domestic product. whale oil arises here. THE CHAIRMAN: Does anybody else care to comment on this? MR HAWKINS (USA): Mr Chairman, I think this gives us no difficulty. In fact, our general position was that there should be not advance notice but that supplies on route should be admitted under any of the provisions involving changes in duties or the abolition of restrictions. It strikes me as a little strange that a provision of this sort should be inserted in this one place. THE CHAIRMAN: I think perhaps I could explain that when this matter was raised earlier it was suggested to the Chilean delegation that this was a question which would properly be dealt with by the Technical Sub-Committee of Committee II, but that Committee has substantially completed its work - at least, it has stopped work, and has left that question quite unresolved. The record of their deliberations merely records differences of opinion upon this matter, so that it is therefore quite uncertain as. to whether the appropriate Article of the Charter which deals with this does in fact ensure that in the application of quantitative restrictions in the way contemplated all supplies on route would be admitted, and we did give an assurance to the Chilean delegate at that time that if the position was not clearly covered in the report of the Tehnical Sub- Committee then he would be entitled to raise the matter here again. So that I suggest there is no difficulty about our dealing with it. If we deal with it and make a decision hero which subsequently becomes unnecessary because of a decision recorded by the Technical Sub-Committee on the appropriate clause of the Charter, then the Drafting Committee will presumably delete this because it is covered more appropriately elsewhere; but it seems to me to be proper in the circumstances for us to attempt to deal with it here in its limited application to quantitative restrictions. MR HAWKINS (USA): I have no objection to it except on purely formal grounds. I should think it would be desirable, however, to indicate in some way that the Drafting Committee should give consideration to it in connection with the general provision. 69 C2 E/PC/T/C .II/QR/PV/5 THE CHAIRMAN: Yes. Is there any other comment on the proposal? MR VIDELA (Chile): I would like to explain the position of the Technical Sub- Committee. At first we were doing the same as the other Committees - I mean discussing things word by word - but then two weeks ago the direction was given about the date of the 20th November and we were advised to change our procedure. Then, as the matter was very very long and difficult and a highly technical matter, we decided to adopt the new procedure, and that was why we had only a general discussion, taking note of what had been agreed and what had not been agreed; and a general. recommendation on Article 15 was made, and a note was made to the effect that the delegations of Australia, France, Belgium-Luxembourg, Netherlands, Canada, India, New Zealand, Norway, South Africa, Czechoslovakia and United Kingdom were unable to accept the paragraph in question; and Canada gave notice in ease of an administrative ruling. We did not take a vote because we were forbiddon to do so under the new procedure. That is the explanation of it. MR HELMORE (U.K.): May I make a concrete suggestion on the form of our report? I suggest that the Repporteur might be instructed to record that this point was raised and that, on the assumption that this point cannot be provided for in Article 15(3), it was thought possible to provide for it in this paragraph by the insertion of an amendment on the following lines - and then would follow the amendment read by the Chilean delegate. Now, from the United Kingdom part, if that were put in, as it is perfectly right and proper that it should be, we should have to say that we could not accept it; but we could accept it if the Chilean delegate were prepared to have it read as follows:- "Provided that any supplies of the product in question which were on route at the time at which the public notice was given shall not be excluded, subject to their being counted, so far as practicable, against the quantity permitted to be imported in the period in question." THE CHAIRMAN: Could I make a. minor suggestion.- that that would make it obligatory for a country to-count a commodity against the quota; and that, it seems to me, might be left open. Your position would be met if it were provided that the goods en route should be admitted, but maybe counted against the quota for the ensuing period? MR HELMORE (U.K.): Shall not be excluded but may be counted, as far as practicable in case the quantitative rate was greater than the quantity to be imported, which is unlikely. May I read it again? "Provided that, any supplies of the product 70 C3 . E/PC/T/C.II/QR/PV/5 in question which were en route at the tilme at which the public notice was given shall not be excluded." That means they must be permitted to be imported, but may be counted, so far as practicable, against the quantity permitted to be imported in the period in question. MR VIDELA (Chile): Supposing a boat is arriving and then it is found that it has all the quantity which is allowed on board, and then the next day another boat arrives MR HELMORE (U.K.): If the second boat-load was on route at the time, the goods cannot be excluded and the country in question would go over its quota. The only point is that after notice has been given then an account has to be taken of the goods en route at the time in the quota. MR VIDELA (Chile): I think it is something to consider. While you cannot change your legislation you deny the right of considering the goods an route. That is something to consider. MR HELMORE (U.K.): It means the goods en route must not be shut out. MR VIDELA (Chile): I think all those countries are not affected by this in the same way. It may result in a modification of our own loss. I do not see why the British law is consolidated, however. I think you may also make an alteration afterwards if it is reasonable. MR HELMORE (U.K.): I do not want to get into a. discussion which really ought to have taken place in the Technical Sub-Committee, but I think there is a real possibility of drawing a distinction between the application of duties to goods on route and the application of quantitative restrictions to goods en route, and in general, speaking without notice and subject to confirmation, I would have thought personally that this sort of clause would satisfy the general point of goods on route which suddenly become subject to a quota - that is, that they must be admitted, they cannot be dumped in the sea, but they do count against the quota. But that would want further consideration before I could accept it. MR VIDELA (Chile): For my part, I quite agree with this, but it is not a matter for the Technical Sub-Committee to decide on. THE CHAIRMAN: There is no question that we can discuss it here. I think this point is now fairly clear. There are two alternatives - or three alternatives, if you can have three. One is that there should be no undertaking in relation to goods on route. The second is that at the other extreme, so to speak - - 71 C4 E/PC/T/C.II/QR/PV/5 admitted without being taken into account The third one is that they must be admitted but they rnay be taken into account against any quota fixed for the ensuing quota period. I think the best thing would be if we could just got the views of the individual delegations on that point, and then perhaps we could decide how we are going to deal with this matter. Would the United States delegate say something on this? MR HAWKINS (USA): Mr Chairman, I feel quite safe in saying that we could accept the provision that goods on route would be admitted without charging against the quota. I say that subject to the, need for further investigation, but I think that is so. Certainly we can accept the second, that is to say, that they would be admitted -definitely would not be excluded but would be charged against the quota. I think we could accept the first one. MR. PHILLIPS (Australia): I think we would prefer the United Kingdom draft. We might on further consideration, go the whole may. I certainly think the United Kingdom draft would be acceptable. MR KAFKA (Brazil): I agree with either draft. MR BARADUC (France) (Interpretation): I have no particular opinion on the question. THE CHAIRMAN: It is clear that we could, if the second alternative (or the middle one, if I can call it that) was acceptable to the Chilcan delegation, get unanimous agreement on that. It is equally clear, I think, that we could not get unanimous approval of either of the other two alternatives; that is to say, that they should be capable of being excluded or necessarily admitted without being recorded against the quota. Would you be prepared to accept the comparative alternative of the United Kingdom? MR. VIDELA (Chile): I think so, because this very useful discussion will be taken into consideration before anything is decided on. 72 D1. E/PC/T/C.II/QR/PV/5. Then they would have an assurance that you would cover that shipload. THE CHAIRMAN: Could we ask the Rapporteur then to record a note of this decision in relation to quantitative restrictions with a request to the drafting committee that they should include provision, if it is not covered in the general articles, in the appropriate place relating to quantitative restrictions. Is that agreed ? THE RAPPORTEUR: On the middle compromise. THE CHAIRMAN: Yes, the middle compromise. The next point I think we should deal with is the first point raised by the Brazilian delegate. The Rapporteur's note reads "They desire that there should be provision for the use of restrictions during a post-war transitional period for the orderly liquidation of uneconomic industries created by the war. This point might be met by the insertion of the words:- 'or of industries developed in any Member country owing to the exigencies of the war which it would be uneconomic to maintain in normal conditions' after the words 'orderly liquidation of temporary surpluses of stocks owned or controlled by the Government of any member country' in Article 19 2 (a) (iii)." Would the Brazilian delegate care to add anything to his previous remarks on this ? MR KAFKA (Brazil): No, thank you, Mr. Chairman. THE CHAIRMAN: The suggestion is open to comment. MR HAWKINS (USA): May I ask a question ? Is this intended to refer to Government-owned enterprises or to private enterprises ? MR KAFKA (Brazil): I think it might refer to private enterprises principally. THE CHAIRMAN: I think perhaps we had better record our views country by country, if nobody has any further comments to make or queries to raise. The delegate for France ? MR BARADUC (France) (Interpretation): I am not particularly concerned by this provision. THE CHAIRMAN: Australia ? MR PHILLIPS (Australia): I take the some position as France. THE CHARIMAN: The United Kingdom ? MR HELMORE (UK): I will try to be a little more positive and say we have no objection. D2. E/PC/T/C. II/QR/PV/5. THE CHAlRMAN: The delegate for U.S... ? MR HAWKINS (USA): I have definitely a question about it. I am not quite sure, The justification for the exception is that it is very similar to the preceding ones - that is the restrictions facilitating the disposition of surpluses and which I think is fairly justified, because property is being liquidated. You would have it imported in large quantities without spoiling the market. I am not quite clear how this would work - whether this would include private enterprises built up during the war which are said to be uneconomic. The purpose is to liquidate them and I cannot understand how you can liquidate them by this means. MR KAFKA (Brazil): might endeavour to explain the process envisaged, it is that you establish a quota beginning, say, in 1947, and you tell your manu- facturer that this quota will be progressively released after the provisional period fixed in the Charter. In that way you would force the Manufacturer either to go out of business in an orderly way, without provoking bankruptcies and their consequences, which might be quite serious in countries where a large number of such industries has been created, or to increase the efficiency of his industry so that at the end of the period he would be able to compete. What we are afraid of is that if we have no such disposition, then we might, when imports of such products start on a large scale, have a whole series of bankruptcies which would badly upset our economy. In that case we should then invoke article 29 and possibly also the financial assistance which might complicate matters. MR HAWKINS (USA): I will accept this for the time being, subject to the possibility of raising it in full committee again, after further consideration. THE CHAIRMAN: I take it then, that it would be at this stage generally agreeable/ to the committee to include it, subject to the right of any delegation to raise the matter in full committee after further thought. I take it that the words underlined in paragraph 2 (a) on the first page "or of industries developed in any Member country owing to the exgencies of the war which it would be uneconomic to maintain in normal conditions" are accepted for inclusion in article 19 2 (a) (iii) ? THE RAPPORTEUR: In the draft report which I shall be working on tomorrow, I shall work on the assumption that it is acceptable, and then my report can be altered D3. E./PC/T/C. II/QR/PV/5 . as well as the article if necessary. THE CHAIRMAN: Yes. On the second point submitted by the Brazilian delegate, would the Rapporteur like to road this? THE RAPPORTEUR: I will read the whole paragraph. "They desire that there should be provision, with due safeguards against misuse, for the use of restrictions as an anti-dumping measure against intermittent dumping which it would be inappropriate to meet by means of anti-dumping duties under Article 11. This poit might be met by the addition of a now sub-paragraph 2 (g) of Article 19 on the following lines:- "IImport restrictions necessary to prevent sudden and intermittent dumping of products, which it would not be practicable to prevent by means of anti-dumping duties under Article 11. Such restrictions shall be imposed only in conditions in which anti-dumping duties would be permissible under .Article 11, and shall be subject to discontinuance if the Organisation, after consultation with the Member imposing, them, so recommends. THE CHAIRMAN: . would the delegate for Brazil like to add anything on this ? MR KAFKA (Brazil): Not at the moment. THE CHARIMAN: The suggestion is open for comment. MR HELMORE (UK): We do not like this suggestion very much, as opening yet another door to somewhat uncontrolled use of import restrictions. I appreciate the spirit in which the safeguard of requiring a Member to discontinue has been put down, but I do not think it would be very valuable in relation to the use of quotas to meet sudden and intermittent dumping, because if it were sudden, the cure would be taken suddenly and if it were intermittent,. probably they would be off again by the time the Organisation had required their removal. But I wonder whether in any case the main point of the Brazilian amendment is not met by the provisions for emergency action elsewhere in the Charter ? MR KAFKA (Brazil): If I may comment upon this, I was thinking less of sudden sporadic dumping than of intermittent dumping, which goes on repeatedly over a period of time. In a case like that it is rather complicated to impose and take off duties, so what I was thining of when I proposed this amendment was as that you might construct a quota which would let in/much of the product which had been subject to dumping as would come in if it were imported without dumping - that is to say, at the normal export price. If you had a quota of D4. E/PC/T/C . II/QR/PV/5. this kind you would assure the supplying country of being able to import into your country as much as they could without dumping and you would avoid the effects of dumping on your home market price. The basis is that generally costs of production a are/much more stable affair than the varying duties on dumping which could be imposed. You would have to vary dumping duties. MR HAWKINS (USA): Would the definition of "dumping" be substantially as in article. 11? MR KAFKAN (Brazil): I believe so, yes. MR HAWKINS (USA): Then I am not clear as to the reason for a quota as against an anti-dumping duty. An anti-dumping duty to counteract dumping is defined there and it would be enough to offset the reduced price. It could be put on instan- tancously. It could be put on quickly. It could be put on as quickly as a quote and the difficulty I see is that it is hard to adjust it in such a way that it does no more than offset the actual dumping. MR KAFKA (Brazil): I think I have not made myself clear. The idea is this. For instance, Country. A exports motor cars to Country B. You could ascertain the nomal export price, based on the normal costs of motor cars and you can then ascertain what quantities would be imported if the product were exported at this price. You could base your quota on that and if your reduction costs are.fairly stable then that would be all right. It might happen that the motor car industry of Country A.would dump intermittently to prevent the establishment of an industry in Country B at varying levels so that you would have every time to ascertain in accordance with the provisions of article 11 the exact height of the anti-dumping duty to be imposed, which would be difficult; at least it would consume a lot of time and this would result either in holding up your imports because consular invoices would not be granted while the investigation was in progress, or it would result, if such invoices were granted, in the dumped product entering at the dumped price. MR HAWKINS (USA): That problem could be met by entering the suspected products under bond pending an ascertainmrent whether they are being sold at dumped prices. Our difficulty is in seeing how you could apply a quota as against an anti- dumping duty to counteract what is really dumping. I think there is a dange. of the quota going away beyond what is necessary merely to offset dumping prices. D5. E/PC/T/C .II/QR/PV/5. There is the other point (I think the United Kingdom delegate mentioned it) that if there is a sudden flood of imports, action can be taken quickly under article 29. (E.fols) 76 a . E. 1 E/PC/T/C. II/QR/PV//5 MR. KAFKA. (Brazil): As there is a possibility of entering the pro- duct under bond, that would not really dispose of the question of delay, because the produce entered the home marked by previous delay and there would be the possibilityy of having to return it, and so on. As to the danger of the quota going way beyond, if you have consultation with the Organisation, that could easily be remedied. MR. VIDELA. (Chile): Really I am looking for something to counter- balance the letter (e). That was the reason why 'I reserved on letter (e) the position of Chile. I do not see why the agri- cultural products in a particular county should be protected and not other products as well. The undeveloped countries would be in much more danger than the others. I have not studied this point, but I am in sympathy with the proposal of the Brazilian delegation because I think it covers my point of view. THE CHARIMAN: It would be possible to accept your reservation. MR. HELMORE (U.K.): I wonder whether the Brazilian delegate could explain to us a little more why Article 29 does not meet his point? MR. KAFKA (Brazil): Precisely because Article 29 is designed to deal with emergencies, and therefore the restrictions imposed under Article 29 would be essenitially short-term restrictions. In the case of intermaittent dumping, we might have to put on a quota for a relatively long period of time MR. HELMORE (U.K.): I would like to ask the United States delegate whether he really agrees with that interpretation of Article 29? It is not my impression of how something like Article 29 has been operated by the United States itself in one particular case. MR. HAWKINS (U.S.A.): The general purpose of Article 29 is to deal with an emergency situation. In general you would expect that it would be short-term, but it does not necessarily have to be under the terms of the Article. 77. E. 2. E/PC/T/C. II/QR/PV/5 MR. KAFKA (Brazil): Perhaps we might come to an agreement on this basis. There is another reason. why Article 29 does not alto- gether satisfy us. That is because it permits the imposition of restrictions under this Article if importations cause or threaten scrious injury to the domestic producers. The most domestic producers do not important case against dumping is where/ exist because of intermittent dumping. If something of that sort could be included in Article 29, paragraph 1 - "threaten. serious injury to domestic producers" or "threaten the establishment of domestic producers operating at economic levels" - that might satisfy us. THE CHAIRMAN: Was not some change made in Article 29 to meet that point? I thought the point was raised in discussion at some point. MR. HAWKlNS (U.S.A.): There was a change made there to protect an interest from injury in another country where it had prefer- ential treatment. It was changed to fit that case. THE CHAIRMAN: I seem to remember someething coming up about this case of an injury to an industry about to be established. THE RAPPORTEUR: Is it possible to treat it this way: Not to clear it up finally here and now, but in the report to record the proposal of the Brazilian delegate, so that if it were met under article 29 (1) it would not have to be met here, but if it were not met under that Article, the Brazilian delegation would want it met here and would reserve their position to that extent? MR. KAFKA. (Brazil): That would do perfectly. THE RAPPORTEUR: This is really not clearing it up, but recording in the report the terms under which the view of the Brazilian delegation would be cleared up. THE CHAIRMAN: I think it might be helped if we knew what the views of the delelegations were on the possibility of dumping to prevent 78. E. 3. E/PC/T/C. II/QR/PV/5 the establishment of an industry, which I gather is the situation which the Brazilian delegates has in blind, being permitted under Article 29. Could the words "threaten serious injury to domestic producers of similar product" be regarded as covering potential producers, or should we have to alter them so that they would cover potential pro- ducers? MR. HELMORE (U.K.): I wonder whether we could postpone this point for a few minutes while we endeavour to obtain a copy of the latest draft of' Article 29, and then return to it? THE CHAIRMAN There is a third point which has been submitted by the Brazilian delegation, in which they suggest that export restrictions should be permitted for the preservation of scarce natural resources even if there is no restriction on domestic consumption as would be provided by 32 (j). would you care to add anything on this, Mr. Kafka? MR. KAFKA (Brazil): Not at the moment. THE CHAIRMAN: What sort of situation had you in mind? MR. KAFKA. (Brazil): I gave an example when I first raised this point of our having resources of manganese, for example, which are really ample for our present or prospective uses, but if we continued exporting them without limit, as we have been doing in the past, then they might very soon be exhausted. The main objection, which I recognise it a very fundamental objection, raised against this was that such permission might be used in order to prevent the establishment, based on your raw material, in another country of a like industry as we have at home. However, I think that this objection could be met if we made this subject co the supervision of the Organisation. We would submit to the discontinuance of such a restriction if the Organisation as advised because it found it was being abused for monopolistic purposes.. 79. E.4. E/PC/T/C .II/QR/PV/5 THE CHAIRMAN: What are the views of the delegations on this ques- question? MR. HAWKINS (U.S..A.): There is a rather fundmmental point raised here. The whole question of equal access to resources is absolutely involved. A country with large national resources could easily take advantage of a general provision like this to deny the access to those resources which other countries ought to have. I know thay that is not the purpose of the provision, but there is serious danger of this misconstruction and. misuse. I should think that a provision of this kind must be explained a great deal further, and hedged around pretty carefully, and it would probably be regarded with great deal of misgiving by countries which find themselves poor in mineral and other resources needed in manufacturing industries. Without being able to say that it is definitely objectionable, I think it raises rather serious questions. MR. HELMORE (U.K.): I think we should take very much the same veiw as the U.S. delegation. We already have in paragraph 2(a) provisions to cover distribution of products in short supply. We also have in paragraph 2 (b) provisions to meet a shortage of essential products. I should have thought that goes some way so take care of a situation of this kind, and. I would doubt very much if it is desirable to go further, except to the extent that 32 (j) would already allow. MR. PHILLIPS (Australia): There are difficult points raised here, to which perhaps we have not given adequate consideration, but at first sight it seems possible that it sight be better to consider an alteration of Article 32 (j) rather than put some- thing in here. On the whole, we .are inclined to favour the Brazilian delegate's argument, but we realise that there are serious difficulties which the U.S. and U.K. delegates have mentioned. E. 5. E/PC/T/C.II/QR/PV/5 M. BARADUC (France) (Interpretation): I fully support the reservation made by the U.S. delegate, which was repeated by the U.K. delegate. If we do not take a very clear position and say quite specifically what we mean in this Article, we shall act contrary to the general spirit of the Charter. THE CHAIRMAN: Could we deal with this? It seems to me, from what the Brazilican delegate has said and from what the other delegations have also said, that it is recognised that there are possible circumstances in which acts of this sort might be justified, subject to careful supervision, but it is also clear that none of the delegations have given the precise cir- cumstances in which this action should be taken suafficient thought for them to be very definition about it. 81. F follows. F.1 E/PC/T/C I I/QR/PV/5. I think that if we ask the Rapporteur in his report to record this question with a note to the effect that the Sub-Commiittee considered that there were possibly situations which should justify action of this kind, but that the general principle involved would raise serious patters of principle which required further consideration, and suggest that the matter be left over for reconsideration at our second session, when further thought has been given to it, that might meet the Brazilian Delegations point at this stage. MR. KAFKA (Brazil): I think that would meet our point, or alternatively we might try to get together with the US. and UK Delegates, and see how we could hedge this round. We do not want to open possibilities for abuse at all. THE CHAIRMAN: We have a lot of rather major points of principle still out- standing on which consultation is taking place, and since this point is, while important, not a matter of major principle to the subject matter we are considering, I hesitate to push too much on to already overburdened people for private consultation, If the Brazilian Delegate would accept my suggestion, I think we might deal with the latter as I have outlined. MR. KAFKA (Brazil): We are agreeable to that. THE CHAIRMAN: The Belgian Delegation suggested that Article 19 2 (e) should read: "Import quotas on agricultural products, imported in any form whatsoever, when such quotas become necessary because of price depreciation on the domestic market due to the combined effects of national production and the importation of a particular commodity. Quotas may be applied as soon as price depreciation reaches the point where sales on the domestic market are effected below the normal price. By normal price is understood that which covers the cost price of domestic production." The Netherlands Delegation have proposed the deletion of the word temporary" at the beginning of 19 2 (e) (ii) and of the provision that the surplus should be made available to certain groups of domestic consumers free of charge. The point of that is that the Rapporteur has not had time to discuss this matter with the Delegations concerned. Are the Belgian or Netherlands representatives here? 82. F.2 E/PC/T/C.II/QR/PV/5 MR. BARADUC (France) (Interpretation): I am not quite certain whether the Belgian Delegation insist on their point of view. I would not like to be very definite about it, but this is the understanding I have gathered. THE RAPPORTEUR: I have not had time to consult then. MR. BARADUC (France) (Interpretation) ; Perhaps the best thing, would be to consult the Belgian Delegation again, and to leave discussion of that question open to the plenary meeting of the Committee. THE RAPPORTEUR: I might perhaps call on the aid of the Secretariat in this matter. Possibly the. Secretariat could get in touch with the Belgian Delegation while I am writing my report tomorrow, and see whether they really wish these points to be brought up in the full Committee II or not. If they said they did not wish to press the matter, I could drop the whole thing from the report. If they said they wished the points to be discussed, I could put it in square brackets in some form in the report. I am sorry not to be more helpful myself, but I have come to the end of my time. THE CHAIRMAN: I think we can leave those two points and ask the Secretariat to make inquiries. They seem to me to be rather difficult questions; indeed, they are quite fundamental to certain sections of this Article. THE RAPPORTEUR: 'In-case the answer is that these Delegations do wish to press this, would it be possible, for my guidance in writing the report, very quickly to ask Delegations here what their broad reaction would be? MR. HELMORE (UK): Like a famous President of the United States, we are against it. THE RAPPORTEUR: Against both? MR. HELMORE (UK): Yes. MR. PHILLIPS (Australia): The Australian Delegation oppose both proposals. MR. KAFKA (Brazil): We have no definite views. MR. BARADUC (France) (Interpretation): The French Delegation hesitates to take a position against the Belgian Delegation, given the relationship which exists between Belgium and France, but for my part I must say I do 83. F .3 E/PC/T/C.II/QR/PV/5 not think this suggestion is a very reasonable one. MR. HAWKINS (US.): I would not favour the Belgian proposal, for the following reason. The situation is caused by the combined effects of national production and the importation of a particular commodity. I do not see why it should all be taken out on the imported product. It seems to me a case where the burden of the restriction ought to fall on both in the interests of keeping international trade at the maximum. I should not, therefore, favour the proposal. THE RAPPORTEUR I feel that, in view of the opinions that have been expressed, I should be right, should I not, if they do wish this to be reported, to have it as a reservation rather than in the main text? THE CHAIRMAN: I think so. It does represent a pretty substantial departure from the general outlines of the Article as we have it drafted. I think it would be pretty difficult to incorporate it without a substantial change. I think the best thing would be for the Belgian Delegation to put it in as a reservation. THE RAPPORTEUR: I will follow those lines. THE CHAIRMAN Does the same apply to the suggestion from the Netherlands Delegation? This refers to a suggested amendment of Article 19, 2, (e) (ii) - the suggestion is that we delete the word "temporary" in the first line so as to remove a `temporary" surplus and also delete words in the second line about making the surplus available to certain groups of domestic consumers free of charge. The relevant part would then read: "To remove a surplus of the like domestic product by making. the surplus available .to certain groups of domestic consumers at prices below the current market level." THE RAPPORTEUR: The Netherlands Delegation said: "We are of opinion that .the sentence stating that the surplus should be made available to certain Groups of domestic consumers free of charge or at prices below the current. market level should be deleted. We think a country should have the opportunity to create stocks in order to meet requirements in times of shortage. Also, we doubt whether it would be a wise thing refer to .84. F.4 E/PC/T/C.II/QR/PV/5 only temporary surpluses. In curtain countries conditions are such as to. make it impossible to curtail production of certain products." I take it that that means, in effect, that they would like it to read that these restrictions are necessary for the enforcement of governmental measures. which operate to remove a surplus of a like domestic product, and it comes almost to the Belegian suggestion, does it not -- that if there is a surplus due to home production and. imports, etc. That is why I put thaem together. I thought they were practically the same suggestion. MR. HELMORE (UK): As I now understand the Netherlands proposal, I am still against it, but perhaps when the Secretariat are asking the Netherlands Delegation whether they wish to press this, they could also say that it would greatlyy assist the Committee if we had the words in front of us as the Netherlands Delegation would like them to read. THE CHAIRMAN: I think the Rapporteur's report is substantially correct, and : that their meaning is to remove a temporary surplus for the like domestic products. MR. HELMORE (UK): That is what they said. I find it difficult to believe that they mean it. THE CHAIRMAN: As far as we undeerstand it, I take it that the Netherlands Delegation's proposal is practically identical with the Belgian proposal, and in the light of the general opinion expressed, we should advise the Rapporteur to recomend the Belegian and Netherlands position on these two proposals as substantially one of reservation, subject to anything that may be decided in the full Committee, when the Delegations concerned have had an opportunity to speak on it again. There are still a number of more general questions for the treatment of quantitative restrictions, such as those of the Union of South Africa. MR. HELMORE (UK): Before we get on to the general points, I am ready now to return to the Brazilian point about dumping, which we postponed in order to obtain a copy of the latest version of Aarticle 29. I believe this to be accurate, but I cannot take complete responsibility for it. I am ready to produce it because, in so far as it is relevant to this point, it is in the same form as it was in the draft Charter. 85. F.5 E/PC/T/C II/QR/PV/5 The apposite, words are "If as a result of unforeseen developments- and of the effect of the obligations incurred under or pursuant to this Chapter, any product is being imported into the territory of any Member in such increased quantities and under such conditions as to cause, or threaten, serious injury to domestic producers of like or similar products, the Member shall be free to withdraw the concession or suspend the obligation....etc." It sees to me that the Brazilian Delegate was ready to accept this as substantially meeting his point in the case of an established industry, but where it was a matter of an industry to be established, he was not satisfied, because he said there would be no domestic producers of like or similar products to be threatened, and I would agree with him in that inter- pretation. But I want to suggest that the protection against imports of whatever kind and imported under whatever conditions of an industry to be established, is deaIt with in the Joint Committee which has been considering industrial development, and that there is ample protection there for action to be taken in advance. After all, it is not a question of sudden dumping when an industry is going to be established. It is a question of making up one's plans and considere ing what one is going to do, and working. out a form of protection which is the most suitable to the particular conditions. There are a great many thing s which can be done, as set out in the report of that Committee. MR. KAFKA. (Brazil): I should like to say that if we accepted this, we should have to make some reference in Article 19, under Chapter 1, on similar lines to the reference that was made this morning. in the Procedure Sub-Committee to the Joint Committee's report on Article 18. The second point is that when you draw up your protective arrangements under the provisions of the Joint Committee's recommendations, you base them on a certain stable level of export prices, while here we are dealing with an unstable-level of export prices. That does not meet the point, therefore, although it goes a long way towards meeting it. 86. F fols. G1 E/PC/T/C.II/QR/PV/5 MR HELMORE (U.K.): I think it is necessary to make a cross reference because the relevant passage of the draft Article attached to the Report of the Committee on Industrial Development roads: "If a member in the interests of its programme of development proposes to employ an protective measures which would conflict with any of its obligations under or pursuant to the charter, it will inform the Organisation", etc.; and then there is a procedure for consultation or negotiation in the case where an undertaking has been given to an individual member; and both the relevant sub-paragraphs end with the words, "The Organisation may release the applicant member from the obligation in question or from any other relevant obligation in the Charter, subject to such limitations as the Organisation may impose." I cannot believe that under those words, if there were a genuine apprehension of duming, measures could not be taken to deal with it. MR KAFKA (Brazil): I think that would meet my point. I notice that in order to bring into force the exception in Article 29 the product has actually to be imported in such increased quantities. Again there is some slight doubt; and I think it would be better if that could be amended. It might be better to say, "if there is a threat of increased quantities being imported", or something like that; because when you take an anti-dumping measure what you really do is not to take your measure after the commodity has been imported but prior to its being imported, when you see that conditions in the country of origin are such that they will be importing in increased quantities. THE CHAIRMAN: Do you wish to pursue that point here? It does seem relevant rather to a discussion in the appropriate Sub-Committee. If you want to open the question of the protection provided in 29, it would, I feel, be preferable to raise it there. If you feel that your main point about the protection of a potential industry is met by the section in the chapter on Industrial Development which Mr Helmore has just read, I think we could leave it at that point. MR KAFKA (Brazil): Yes. Perhaps we could just make a note that in respect of the potential industry my point is met but in respect of the established industry there is this doubt I raised just now; and I think some reference might be made in the report that unless that doubt were met under Article 29 I should like it met under the Quantitative Restrictions section. THE CHAIRMAN: Will you note that? 87 G2 E/PC/T/C.II/CR/./5 THE RAPPORTEUR: Yes, I think I have got that. MR HELMORE (U.K.): If that is going to be noted - and I agree it should be - I hope the note will also show that other delegations thought the point was already sufficiently covered. THE RAPPORTEUR: I shall put it this way, that the Brazilian delegation are not sure whether it is covered and want to be measured on that, and other delegations - without specifying them - express the view that it is adequately covered. MR HAWKINS (USA): That is my view. MR BARADUC (France)(Interpretation): I agree. MR PHILLIPS (Australia): It would not imply that all delegations necessarily thought that. THE CHAIRMAN: The South African delegate is here. Have you any points to put before the Sub-Committee on this Article? MR BEYLEVELD (South Africa): Is it referring to the suggestion that there should be general rules? THE RAPPORTEUR: I was thinking of the paper E/PC/T/C.II/14 and wondering whether there were points there that ought to be taken into account in our examination of Article 19. MR BARADUC (France) (Interpretation): I think there is also a proposal from the Chinese delegation which we have to deal with. THE RAPPORTEUR: I have that in mind. MR BEYLEVELD (South Africa): After the discussion of Article 20 and the way our thoughts are running about quantitative control in relation to exchange, we do not think it is necessary to pursue our suggestion there. THE CHAIRMAN: There is a proposal from the Chinese delegation in the document E/PC/T/C.II/PV/W63, I think it is, but I do not think there is a representative of the Chinese delegation here. MR VIDELA (Chile): Before we turn to that I would like to comment on letter "D" of the South African delegate's notes. I think it is very important. THE RAPPORTEUR: I will read this out: "Seasonal commodities should not be subject to quota restrictions during periods when some domestic products are not available. The possibilities of storage of some commodities may, however, be taken into account in determining free periods." THE CHAIRMAN: You would wish to submit that....? MR VIDELA (Chile): I do not know really the position here. 88 THE CHAIRMAN delegate for South Africa said that in view of the changes E/PC/T/C.II/QR/PV/5 section of the Charter, his delegation did not wish to press for the adoption of the suggested rules. THE RAPORTEUR: Should be mentioned in the report? MR VIDELA (Chile): I mention it wa as a reservation of the Chilean delegation to gon in the report. THE CHAIRMAN Are there any comments on that suggestionm MR HELMORE (U.K) I am not absolute sure that I undestand exactly wes]his thissn' a resolution toorw hodrea aioptedf vd eentually. VIEELA D(Cile):HILsuappse thutaoriginally the South African delegation made R os u~rhaoclz so bservations--. : : eMRof Be ELEeVELD(outhefea): bmitted a whole s~t thrul:, as Waiting to hHar frim th Southge oe D(Cie)om t,owahwiohearheS Afrgicane deglegate, aond beforgg e takin not thkeat he is nt pressn it I would li tosnoon rerva.tin. ~; f the uciture now is different from the way T mAP Ae. Apparently hgsapproach/iI e s ccteurw mtw Ai n which it was Aconceived by a the South frican delegates.pparently hispproach the condigions itdown to under w undquaer which enntativehditi. wtow ichlquaahv tructure now is to provide that they cannot beuld istr be th -theueJture norovidonxthiy can b is ursposos.h his xcelpeciisted ecilhxlssohoal ICtnkcou onlof gyr rddnng pn cudig sorcetr docnftovrrsion to cth effetthat the demnlowshould otpsotithe impospermitqatassddmpiton alofrioson ies during periodscom i civil or domestic products rowenoo. a ilaiveambli DELADhsELle): Shall eMR heapeort to tpeh Rpporteur?eEL CHAIRMAN: I do not HAthinkii dtatsaidr oad ot at. I thinktnkis is quite an important point, really. I think before leave it to the Rapporteur we should get the views of the delegations on it, unfeless it iis lt that it wants further thougt, in which case we could deal it in the same way as we did with a preveious one, when we note problem and said that required further consideraltioen by the delegates and left it to be dealt with in our second session unless delegataes are prepared to express an opinion on it now. G4 E/PC/T/C.II/QR/PV/5 MR HAWKINS (USA): I confess I had the greatest difficulty in following the point. Could you road it once more? THE CHAIRMAN: The Union of South Africa submitted a set of rules which should operate to permit the use of quantitative restrictions. The present form of the Article which proscribes the use of quantitative restrictions except in certain specified circumstances makes the form of his proposal inappropriate. I suggested, however, that it could be met by adding a general note - presumably in paragraph 1 - which precludes the use of quantitative restrictions except in the circumstances listed; and to add there a clause which would provide that none of the following restrictions should permit the imposition of a quota on seasonal commodities during periods when similar domestic products are not available. I am not sure what the implication would be, MR HELMORE (U.K.): I have been trying to look and I find great difficulty in applying it to any of them. I cannot believe it could be meant to apply to equitable distribution of products in short supply, the maintenance of wartime price control, the orderly liquidation of temporary surpluses, the orderly liquidation of industries developed during the war, nor to export prohibitions temporarily imposed to relieve critical shortages of foodstuffs; nor do I think it should apply - though it could - to import and export prohibitions necessary to the application of standards for the classification and grading of commodities. It certainly should not apply to "D", which is export or import quotas composed in accordance with the inter-governmental commodity arrangements concluded under chapter 6; and in "E" I find a great difficulty in attaching any meaning to it since these restrictions are applied in connection with restriction of the quantities of the like domestic product. If there is no like domestic product being produced at that season I do not quite see how it fits there. It seems totally inappropriate to add-. THE CHAIRMAN: If I may interrupt, I am not quite sure about "E". I think it could quite easily apply there. THE RAPPORTEUR: I was going to suggest that it should be included as a proviso to "E". It seems to me not to refer to any of these except "E' but in "E" it might be reasonably said that you should not restrict these things when they are not being 90 H1. produced at home, because you take your proportion as working over a year. THE CHAlRMAN: You could easily add a domestic limitation of production which would under (c) justify imposing a quota all the year, presumably, whereas at some times of the year there would in fact be no production. I think it is reasonable to say at first glance, at any rate, that the only exception to which this could apply would be (c). Whether it would be desirable in the case of (b) I think requires a little thought, but speaking purely for myself the suggestion does seem to me to be one which is worth a little consideration. May I suggest that we leave it as we did the other one. We note that it has some possible relevance in the case of (c) and that delegations should give the matter some further thought. MR HELMORE (UK): May I say after attempting to show that it could not apply, that the Rapporteur might consider the suggestion that if this is to be adopted, it could best be adopted by saying that the specified period in article (b) should be chosen with due regard to seasonal changes in production. I believe that would meet the point. THE RAPORTEUR: Could not one leave it in this way: without trying to draft it into the thing at this time, note the point, as you say, and say that it might have some relevance to 2 (c) and that it is a matter which should be brought up at the next round to see whether delegates as a whole want it put in and, if so, in what form. So perhaps we may leave it as I suggest, saying that it has a possible reference to (e), we have not thought out an exact draft but it is a matter which should be borne in the minds of delegates for consideration next round. THE CHAIRMAN: Is that acceptable to the delegations ? (Agreed). There remains I think, the proposal put forward by the Chinese delegation. I understand it has been submitted. THE RAPPORTEUR: when I studied this it immediately occurred to me that a good deal of it is covered in the joint committee work . Again, I am afraid, as I have been working on the other articles so hard, I have not had time to ask the Chinese whether they still wish to press it. It came informally after the work on the joint committee had progressed a good deal. I am still not sure whether it was actually put in before they fully realised the outcome of that. As the Chinese 91. E/PC/T/C.II/QR/PV/5. H2. delegation are not represented here tonight may I again, as Rapporteur, ask the Secretariat to inquire whether the Chinese wish to press it, in the light of the outcome ? THE CHAIRMAN: In doing so, would it be reasonable to inform the Chinese delegate that, while we have not had a chance to hear his views on this, it was the general feeling of the sub-committee that a good deal of the substance of these propositions had been met in the proposals put forward by the joint committee, particularly in reference to the message to Committee II, to provide by the selection of imports to give prodominance to capital requirements and so on, whore there is a shortage of international exchange for all purposes. MR HELMORE (UK): That applies, I think, to the second of the two suggestions by th Chinese delegation. I am not sure that it applies to the first. THE CHAIRMAN: No, I do not think it does. MR VIDELA (Chile): We made a suggestion on these lines. MR HELMORE (UK): I think it is a little wider then the suggestion previously made by the Chilean delegation, because if I were playing poker I would suggest that the last two lines of this amendment contained two jokers. THE CHAIRMAN: I think you underestimate the number. MR HELMORE (UK): I never indulge in games of poker where there are more than two jokers. THE CHAIRMAN: I feel we do have to reach some sort of view on this question. The proposal in the first paragraph does appear to be drafted in terms that are so general in their implications that it is difficult to see how they could be fitted into the type of draft article which we are now considering without very greatly increasing the range of the exceptions.So far as the second paragraph is concerned, I think there is some reason to believe that the main substance of that is cared for already. If the committee agrees with that general view of this we may ask the Secretariat to inform the Chinese delegation that at a preliminary glance that was the feeling of the sub-committee, and ask them whether in those circumstances they wish to record a resolution or to re-submit their views on this question, Is that agreeable ? (Agreed). MR VIDELA (Chile): May I call attention to Paper 3/2/34 where the Chinese delegation made some wide remarks on this ? (Document was handed to the Chairman). 92.. E/PC/T/C.II/QR/PV/5. H3. E/PC/T/C.II/QR/PV/5. THE CHAIRMAN: I think it is perhaps desirable that I should read this note from the Chinese delegate which sets out his view of this particular point so that we can be clear as to where newstand. (The Chairman read the document). (I fols) 93. I. 1. E/PC/T/C.II/QR/PV/5 That provides the background against which we can view the two later paragraphs submitted, in which the Chinese delegation put forward their proposals in more specific terms, but I do not think there is anything; in it which would change the general summing up that I made earlier. Is that the view of the Committee? MR. VIDELA (Chile): Except to change the country. We brought forward the same arguments. THE RAPPORTUER: I thought the Chinese argument was more like the Indian argument, of which a note is to be made in my covering note to the effect that the Indian delegation do not want to make a formal reservation but would like it mentioned in the report. As I understand this particular point of the Chinese delegation, it is nearer the point of the Indian delegation than to the Chilean delegation. I may be wrong, but I thought that was the sense of it. THE CHAIRMAN: I certainly think the extract from that statement referred particularly to the problems of the proportion between the importers and the domestic produced product, which is substantially different from the two points covered in this paragraph. Can we leave it at that? The Secretary will consult the Chinese delegation and make certain whether they were to reserve their position on these points. I think that covers all the specific submissions. I do not know whether there are any representatives of other delegations here who would wish to submit proposals in relation to Article 19? Can we decide, then, that, subject to the points to be covered in the Rapporteur's report, which has been mentioned during the discussion, that Article 19 is approved? M.BIRADUC (France) (Interpretation): I do not want to raise a question of substance, but it seems to me that at the beginning of article 19 there is a question of import licences as a means 94. I. 2. E/PC/T/C.II/QR/PV/5 of protection. I think we are all agreed that as for as import licences were concerned, they were not exactly res- trictions but a sort of administrative protection - Here M. Baradue said in English: Not "protection". You understand, Mr. Helmore, what I mean. We have very often spoken of the use of import licences as an administrative mean in order to know what is exactly the amount of imports. If we say "restrictive import licences", I agree. MR. HELMORE (U.K.): I think that is what it means as it is now drafted, without the addition of the word "restrictive", because the Article relates not to quotas or import licences but to prohibitions or restrictions. M. BARADUC (France): Through quotas. MR. HELMORE (U.K.): Made effective by import licences. If a licence makes effective a prohibition or licence, it is a prohibitive or restrictive licence. THE CHAIRMAN: And if it is not, it is not affected by this Article. THE RAPPORTEUR: I think it is all right. THE CHAIRMAN: I think so. Can we take it that Article 19 is agreed? Article 21 we went rhough the other night and it was agreed subject to a general reservation on the part of members that they would like a little time to read it through more carefully, on the understanding that they could raise any points again. Have delegations any matters to raise in connection with Article 21? MR. HELMORE (U.K.): As one of the global reservers, may I say that we withdraw our global restriction but have a couple of suggestions to make relating to the drafting of paragraph 2(c), to which perhaps we could come in order. They are not very significant, they are purely drafting changes. I. 3. E/PC/T/C.II/QR/PV/5 THE CHAIRMAN: Seeing that we have been through Article 21 para- graph by paragraph before, unless delegates particularly wish it, I suggest that we take this as adopted unless delegates wish to raise any particular points, in which case we will deal with them point by point rather than taking the whole Article again. Is that agreeable? M. BARADUC (France) (Interpretation): I want to state that we have made a general reserve as regards Article 21, but now we agree to adopt it as it is without any restrictions. MR. SHACKLE (U.K.): The point is quite a small one. At the be- ginning of (c) of paragraph 2, we talk about import licences and permits. If you do have a quota allocated among supplying countries, you may need to administer it by means of licences. Naturally, in those cases those licenses will have to contain an indication of the source from which the imports may be drawn. To get this straight, I think the best way is to make it read like this: "(c) Import licences or permits which may be issued in connection with import restrictions (whether or not within the limits of global quotas) shall not, save for purposes of operating quotas allocated in accordance with sub-paragraph 2(d), require or provide that the license or permit be utilised for the importation of the product concerned from a particular country or source. (d) In cases where these methods of licensing are found impracticable or unsuitable, the Member concerned may apply the restrictions in the form of a quota allocated among supplying countries." And then as before, with some consequential changes in the lettering of the following sub-paragraphs. THE CHAIRMAN: Is there any comment on this? MR. HAWKINS (U.S.A.): I accept it. M. BANADUC (France): I think it is an improvement. MR. SHACKLE (U.K.): I think the word "subsequently" in the last line but one of sub-paragraph (c) - now (d) - could possibly come out I.4. E/PC/T/C.II/QR/PV/5 without any damage, and possibly that would be an improvement. MR. HAWKINS (U.S.A.): I think it was intended to leave it out to begin with, and it got in by mistake. MR. SHACKLE (U.K.) : I think so. THE RAPPORTEUR: I hope the U.K. delegation will escuse me if I pull their leg, but I would like to point out to the Committee that the only delegation which found any trouble with this was one of the two delegations that submitted the draft. And that the draft previously had a new sub-paragraph starting at (d) and that it was the leader of the U.K. delegation who, at our last meeting, said ,we should remove that and put in "provided". Otherwise I think the U.K. delegation have been a great help! MR. HELMORE (U.K.): If be provoked by the Rapporteur, I would say, Mr. Chairman, this just shows how right you were in not having any more private consultions with the U.K. delegation. THE CHAIRMAN:can I take it that all that global reservations have been removed, and that Aricle 21 is approved? THE RAPPORTEUR I can now do Aticles 19, 20, 21, 23 and report on their, I hope tomorrow. Then that draft report will have to be duplicated and circulated, and we await the redrafts draft of Article 22 from U.S. and U.K. and French delegations. Have we any timetable we can give ourselves? MR. LACARTE: What are you opposing do? THE CHAIRMAN: We cannot meet tomorrow. MR. LACARTE: You have Committee 2 tomorrow afternoon. Will you have a meeting on Wednesday? 97 follows J.1 E/PC/2/C.II/QR/PV/5. THE CHAIRMAN: The most appropriate time seems to be to meet on Wednesday at a time and place to be notified to you in the Journal. If the private consultation group of representative characters could advise me or the Rapporteur, or the Secretariat, tomorrow of the state of their consultations, we could then plan to have a complete set of propositions to put before the Committee when it if meets on Wednesday. I take it the Committee agrees to that course. MR. BARADUC (France) (Interpretation): May I ask a question regarding the French translation of the articles. As far as I understand the position, the Rapporteur will submit these Articles in the English text for translation into French, and the Secretariat will remain in touch with the French Delegation. I would very much like to have the French translations checked before the final text is submitted in the full Committee meeting. THE DEPUTY DIRECTOR (Mr. Lacarte): We have already had a similar request from the French representative on the Procedure Sub-Committee, and what we have done has been to advise the Documents Section and the Translation Section that that Delegate would like to see the French texts before they are run off. A similar arrangement can be made here. We hope it will not delay things unduly, but we can do that. (The Committee rose at 10.48 p.m.) 98.

GATT Library

vb414mg2206

Verbatim Report of the Fifth Plenary Meeting held at Church House, Westminster, S.W.l on Tuesday, 26th November 1946 at 10.30 a.m

United Nations Economic and Social Council, November 26, 1946

United Nations. Economic and Social Council and Preparatory Committee of the International Conference on Trade and Employment

26/11/1946

official documents

E/PC/T/BV/5 and E/PC/T/PV/5-6

https://exhibits.stanford.edu/gatt/catalog/vb414mg2206

vb414mg2206_90210005.xml

GATT_157

E/PC/T/BV/5 UNIITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIFTH PLENARY MEETING held at Church House, Westminster, S.W.1 on Tuesday, 26th November 1946 at 10.30 a.m. Chairman: M. M. SUETENS (Belgium) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL 58 Victoria Street, Westminster, S.W.1) 1 E/PC/T/PV/5 THE CHAIRMAN (Interpretation): Gentleman, the meeting is open, The first item of our agenda is the President's Report on Credentials. I have myself examined, with the help of the Vice-President, Mr Augenthlor, and Mr Renouf, of the Legal Department of the Secretariat, and found. the credentials to be in proper and right form. This question is dealt with in Document 8. We can now pass to the second item. The second item is the adoption by the Committee of the Resolution submitted by the United States Delegation aiming at the convmcation of a meeting which would negotiate multilareral commercial agreements concerning mostly tariff concessions. The relevant documentt, which you have in front of you, bears the reference E/PC/T/27. Are there any remarks to be made concerning this Resolution? . . . The Resolution is adopted. The third item of the agends is the adoption of three Resolutions. The first of them concerns the Report of the first meeting of the Preparatory Committee. (Document E/PC/T/28). The second Resolution concerns the appointment of a Drafting Committee. (Document E/PC/T/29.) 2 B1 E/PC/T/PV/5 The third concerns the second session of the Preparatory Committee, E/PC/T/25. Are there any remarks concerning these resolutions? They are adopted. The fourth item on the Agenda is the adoption of the resolutions and the reports of the different Committees. Committee I was presided over by Mr Wunsz King, Chinese Ambassador to Belgium, and I ask him to present the report of his Committee. MR WUNSZ KING (China): Mr Chairman, before formally presenting the Report of Committee I, I would like to call your attention to a typographical crror in document E/PC/T.16, on page 12, seven lines front the bottom, in regard to the draft resolution on international action relating to employment. The words, "The Preparatory Committee of" should be deleted. They were allowed to creep into the paper quite inadvertently. It is a pure typographical error. Having cleared up this point, I have the honour to present to you and to the Plenary Session of the Comittee this Report of Committee I, to which is appended the text of the suggested Chapter on Employment, containing seven articles. At the same time, you will seethat there is also included in the report a draft reslution on international action relating to employment. These texts and the report itself have been unanimously approved by Committee I. I therefore venture to submit this document to you for your consideration and adoption. THE CHAIRMAN: (Interpretation): I wish to thank Mr wunsz King, and I should like to ask if the Committee will approve the report of Cormittee I. The report is approved. I call upon the Chairman of Committee II, Dr Coombs, to present his report. DR COOMBS (Australia): Mr Chairman, I understand that the Report of Committee II, which is embodied in E/PC/T/30 has been circulated. I have the honour to present it for the consideration of the Committee, THE CHAIRMAN interpretationn): Everybody has been able to become acquainted with that document. Are there any remarks? Is everybody agreed to adopt it? It is approved. In the absence of Mr Malik, the Chairman of the Mixed Committee, composed of Committees I and Il, I call upon the Vice-Chairman of that Mixed Committee, Dr.Coombs, to present the report. DR COOMBS (Australia): Mr Chairman, I understand that the report of the Joint Committee on Industrial Development has been circulated to the Committee. On 3. B2 E/PC/T/PV/5 behalf of Mr Malik, the Chairman of the Joint Committee, I have the honour to present the report for the consideration of the Committee. THE CHAIRMAN (interpretation): I take it there are no remarks to be made concerning this document. Therefore, it is adopted. In the absence of Mr Dieterlin, the Chairman of Committee III, I call union Mr Gonzalez, the Vice-Chairman of that Committee, ask him to present the report of that Committee. MR GONZALEZ (Chile) (interpretation): Mlr Chairman, I have the honour to present the report of our Committee which has been circulated, and I hope that it will be approved. THE CHAIRMAN (interpretation): everybody has become acquainted with this report. I take it there are no remarks. Therefore, it is adopted. I now call on Mr Helmore Chairman of Committe 4, to present that Committee's Report. MR HELMORE (UK): Mr Chairman, I have the honour to present the report of Committee IV, which was appointed to consider the policy of intergovernmental commodity arrange- ments. I should like to call the attention of the Committee to the fact that we included in our Report a draft resolution, to which I understand we shall return in a fow minuts. THE CHAIRMAN (interpretation): Are there any remarks concerning the Report of Committee IV? It is approved. In the absence of the Chairman and Vice-Chairman of Committee V, I call upon the Executive Secretary, Mr Wyndham White, asking him to present the report of that Committee. THE EXECUTIVE SECRETARY (Mr Wyndham White): Mr Chairman, in the absence of the presiding officers of Committee V, it falls to me to have the honour to present to the Plenary Session the Report of Committee V which has been circulated as document E/PC//T/18. THE CHAIRMAN (interpretation): Are there any remarks? This Report is therefore adopted. Now we have a resolution to consider. This concerns Industrial Development, and will be proposed by the Chairman of the Joint Committee of Committees I and II. This document bears the number E/PC/T/26. Dr. Coombs is 4. B3 E/PC/T/PV/5 called upon to present this resolution. DR COOMBS (Australia): Mr Chairman, I understand that the terms of the resolution are before the Committee. I have much pleasure in moving its adoption. THE CHAIRMAN (interpretation): Are there any remarks? The resolution is adopted. We have to examine now the Note from the Secretariat concerning a resolution "relating to intergoveramental consultation and action on commodity problems prior to the establishment of the International Trade Organization." This resolution will be presented by the Chairman of Committee IV, Mr Helmore, together with am amendment suggested by the United States delegation. MR. HELMORE (UK): Mr Chairman, I have the honour to present the resolution which was sent forward by my Committee in its report. The relevant passage in the report which refers to this resolution will be found by delegates in paragraph of document E/PC/T/17. THE CHAIRMAN (interpretation): The United States delegate might wish to speak on his amendment. MR WILCOX (USA ): Mr Chairman, I propose the amendment to this resolution which is set forth on page 3 of docment 24. The resolution as originally proposed by the Committee requests the Executive Secretory of the Preparatory Committee to Keep in touch with such consultation with respect to intergovernmental commodity arrangements. The only change that is made in this resolution is to request the Secretary Gemeral of the United Nations to appoint an Interim Co-ordinating Committee for Intergovernmental Commodity Arrangements; to perform this function with the Executive Secretary of this Committee as Chairman, and a representative from the Food and Agriculture Organization to be concerned with agricultural primary commodities, and a person to be selected at the discretion of the Secretary-General to be concerned with non-agricultural primary commodities. An identical resolution is being presented by my Governmen at the session of the Food and agriculture Oranizationts Commission which is now meeting in Washington. THE CHAIRMAN (interpretation): Is everybody acquainted with the text of this note? THE EXECUTIVE SECRETARY: Mr Chirman, as representing the Economic Department of the United Niations and, in that capacity, the Secretary-General I morely wish to enter a slight reservation on the form, without insisting that from the point B4 E/PC/T/PV/5 of viewof the Secretary- General a modification in the form of this resolution is necessary. I would merely wish to have it noted that I feel that this resolution should be interpreted in such a way as to enable the Secretary- General to carry out the spirit or the objective of the resolution in such manner as he may deem the most appropriate constitutionally. I think that there is an argument for saying that action of this kind resides more properly in the Economic and Social Council itself on the motion of this Committee rather than by executive action taken by the Secretary-General on the motion of this Committee; but, as I say, I do not think that that need involve any amendment in the terms of the resolution. I merely make that statement as an indication of an interprotation of the resolution that may be necessary in carrying it out. WILCOX (USA): Mr Chairman, that interpretation is entirely acceptable. THE CHAIRMAN (interpretation): In view of those remarks, I take it there are no observations. The document is therefore adopted. fols. 6. C & D 1 E/PC/T/PV/5 THE CHAIRMAN(Translation): The Committee of which I have the honour to be Chairman, is on the point of finishing its first session. I will recall that it cwes its origin to a resolution of the Economic and Social Council of the United Nations of 18 February, 1946, which decided to call an International Cenference on Trade and Employment for the purpose of promoting 1 expansion of production, exchange and consumption on goods and, in preparation for this Conference, "to constitute a Preoaratory Committeee to claborate an annotated Draft Agenda, including a Draft Convention, for consideration by the Conferance". This Preparatory Committee brought together the delegations of eighteen countries, which were selected in such a way as to represent the various groups incerests participating in world trade. The government of the USSR was unable to be represented at this session, but we all hope that it will senda delegation to the next session. It is only fair to say that if the decision of the Economic and Social Council gave official sanction to the creation of our Committee, it owes its existence primarily to the continuous and effective action of the United States and British Governments who, in November, 1945, as an annex to the financial agreement which they concluded with each other, proposed a number of principles for collective action to afford to International Trade the security which it requires and to assure its development. After showing that trade, production, employment and consumption could not increase unless there were agreement on the principles governing trade, this document proposed firstly the elaboration of a Charter laying down these principles, and secondly, the setting up of a special rganisation, called in advance the ITO which would enable nations to co-ordinate their policy and which, further, would be responsible for superising the working of the Charter and cnsuring that its rules were respected. The United, States Government went further and claborated a concrete Draft Charter which was submitted to the various governments. After proceeding to general exchange of views, the Proparatory Committee decided to take this draft as a basis for discussion. Our work was considerably enough facilitated by this and it is impossible to thank the American Government/for the effective assistance it rendered us on this occasion. 7. C & D 2 E/PC/T/PV/5 The Preparatory Committee worked without interruption from the 15 October onwards. After dividing into Committees according to the general items of its agenda, it held on all problems submitted to it far-reaching discussion which revealed both the high quality of the experts sent by the various as and a desire for sincre and open collaboration. The Committee - and this is worth emphasising - did not work in a sealed chamber. It obtained all the collaboration which second necessary to it and did not fail to make contact both with the spocialised inter-governmental institutions, particularly the International Monetary Fund, and with a certain number of extra-governmental Organisations such as the World Poderation of Trade Unions and the International Chamber of Commerce. qcan only congratualte ourselves on our relations with these organisations. Thanks to these efforts, this godwill and this collaboration, the Committee, after six weeks, has succceded in drawing up certain number of concrete proposals and recommendations which I shall have the honourof summarising for you, following the order of the Committees. Thc object of the first Committee was to consider problems of employment. That was an object of major imprtance as employment appears in the title of the Conference, on the same footing as Internations Trade. The Chapter of the suggested Charter dealing with this problem has been considerably developed. It has been unanimously agreed that States shouldundertake concerted action for the attaiment and maintenance of full productive employment of their labour and of a high and stable levelof effective demand in their territory. It has also been unanimously agreed that this action should not be left to the discretion of the various governments but should be made the object of procise undertakings, for certain countries might experience difficulties in assuring the obligations in the sphere of trade provided for by the Charter if other countries were not bound by the obligation to do all in their power tomaintain a high and stable level of effective demand. But there is a risk of individual action on the part of the various states not being sufficient. The specialised international institutions can, each within the framework of its respective duties, make a direct contribution tothe maintenance of the volumes of employment and the stability of demand in the world. Therefore, provision must be made for an international Body under whose 8. C &D E/PC/T/PV/5 sponsorship the various national governments and specialised international institutions can collaboorate in co-ordinated action to maintain the volume of employment. The Body which seems most suitable for this task is the Economic and Social Council of the United Nations. A draft resolution in this sense is annexed to the Report of the Committee. Particular attention has been devoted to the problem of the industrialisatic and general economic development of new countries. By reason of the repercussions it may have on world economy and international trade, the Committee considered it necessary to have this problem considered by a Special Committee and to insert a new Chapter on this subject in the Draft Charter. It has been unanimously agreed that the development of economic resources in all parts of the world will improve opportunitions for employment, enhance the productivity of labour, increase the demand for goods and services, contribute to economic stability, expand international trade, and raise the levels of real income, thus strongthening the ties of international understanding and accord". It has been unanimoussly agreed that this general economic development should be achieved, not only through individual action on the each state, but through the collaboration of all states. Far from opposing the alvancemcntof countries whose resources are still in an carly stage of development, as might suggest a short-term policy, the more advanced states should not prevent them from acquiring capital, raw materials, plant, mddern technical means, specialised personnel and competent technicians. For their part those states should not take any measure projudicial to the interests of the states assisting them. Collaboration of the same order is necessary to facilitate the recovery of countries whose economics have seriously suffered from the war. Apart from this general assistance, special protective measures, which may not conform to certain obligations of the Charter will doubtless have to be contemplated to facilitate, in agreement with the ITO, the establishment or recovery of certain industries. The Committee decided to continue consideration of this important problem with the assistance and in conformity with opinions of the Economic and Social Council. Committee II which dea;t with Commercial and Customs policy was certainly faced with the most difficult task, by reason of the varicty, number and 9. E/PC/T/PV/5 complexity of the problems laid before it. It was a question of laying down for, all points ordinarily appearing in trade agreements or which are essential for the exchange of goods abody of equitable rules which would become law in these matters. The text of the draft provided a very useful basis for discussion in this connection. The drafting was revised at numerous points. In many cases the proposed modifications are of a technical nature and do not alter the spirit of the Charter. Certain other modifications are of wider import. I have especially in mind the new draft proposed for quantitative restrictions which authorises a wider use of these practices, especially if it a question of correcting a disequilibrium in the balance of payments, the modification made to take account of the recommendations of the Joint Committee on Industrial Development. I also draw attention to the great importance of Article 18 by which governments agree to open negotiations so as to succed, by mutual concessions in reducing customs tariffs and in suppressing discriminatory treatment. Should any state not abide by this agreement it might be deprived of the benefit of mutual concessions among other states. According to the new wording of this Article, the consolidation of customs tariffs effected by nations whose tariff is low will/considered as equal to the reduction of a high customs tariff or to the climination of a preference. In this connection, the Committee has studied a momorandum outlining the plan of these future negotiations and the procedure to be followed in this report. In this wide sphere, agreement was reached on the must important points . Discussionof others must be continued. Committee III dealt with Restridrive Trade Practices. By this term is meant, generally speaking, the operation of individual enterprises or groups of enter- prises acting jointly, which by fixing prices, limiting the volume of production and distributing commodities, curb competition, restrict access to markets or promote controls of a monopolistic nature. There were differences of opinion with respect to the manner in which these practices were to be judged and the moment from which they might be considered injurious to trade, but the delegations unanimously agreed that insofar as the practices were contrary to the general purposes of the Charter they should be avoided. Since it is impossible to determine precisoly and in advance which 10. E/PC/T/PV/5 practices are responsible, the committee decided that the ITO should be empwered to hear complaints and to initiate inquirics. Should it appear, following an inquiry, that the complaint is justified, the ITO will submit its findings to all the member states asking them to take action so as to prevent the continu action or the recurrence of indictable rectices, and should it doom it advisable it will recommend appropriate measures. Each member state, obviously, will act in accordance with its own legislation and procedure. The ITO on the other hand will pursue consideration of this matter and, should the need arise, it will call inter-governmental Conferences to deal with it. 11. C & D E/PC/T/PV/5. Committee IV was instructed to consider and define a general policy relating t primary commodities in connection with the purposes of the ITO. This work was carried out mainly with the co-operation of the Food and Agriculture Organisation. It was unanimously admitted that greater stability of the price of raw materials and of the real lncome would greatly help to maintain a satisfactory level of international trade and employment, Hence the Committee recommends the establishment of Study Groups wherever difficulties might arise or might threaten with respect to the marketing of a primary commodity. Should normal means not right the situation, inter-governmental agreements governing exports, airports, production or prices, based on the findings of a Conference which would have considered every aspect of the problem, might be reached under the auspices of the: ITO. The rules to be fellowed are set out at length in the Report of the Committee and in the attached documents. The Committee has reached full agreement on most of these points, A certain number of them were subject to reservations, and consideration of these matters will be carried on at a later date. Committee V was entrusted with the complex task of determin- ing the status of the new ITO, of defining its competence and powers and of outlining the scope of its future activities. The results achieved, though incomplete, are notewerthy, since an agreement on principle dealing with a draft charter of the Organisation was reached. Various matters however still remain pending; they include the exact tabulation of the purposes of the ITO, the number and determination of the special duties of various Committees and the serious problem of voting within the Executive Committee and the Conference. With reference to this lest question., the finding of an agreement formula capable of reconciling the principle of the equality of all nations with the necessity of ensuring the effective and fruitful activity of the ITO will devolve on the representatives of the countries, at their Second Meeting. 11.a C & D E/PC/T/PV/5. Finally, the various principles of the Charter will have to be harmonized particularly with a view to defining the internal power of decisien of the ITO in disputes, and in the settlement of differences between countries with reference to external solutions, such as arbitrage and appeal to the International Court of Justice. It is obviously difficult at the present time to submit a final report on our werk since, as I have said, it is not yet completed. To be sure in order to reach agreement, the basic text has had to be rendered more supple and the regulations less rigid, particularly in matters concerning trade policy proper. Does this imply recession? I do not think so. The rules of trade policy must not be regarded as an end in themselves but as a means to achieve a higher aim, which is the development of world economic prosperity. Now it is certain that great progress has been made along these lines by concrete proposIs concerning employment, the development of new countries, assistance to be rendered countries affected by the war. In general, the scope of economic collabora- tion is extended by the re-adjustments proposed by the Committee and this cannot but assist in the attainment of the aims pursued by us all. Our work, as it stands, will be reconsidered in the course of a second meeting which will take place in Geneva on the 8th April, 1947. In the interval, questions left in abeyance and those on which agreement has not been reached, will have time to mature. The governments will then be able to discuss them anew, and in the light of further consideration, propose new soulutions. Furthemore, the work of the second meeting will be greatly facilitated by that of a Drafting Committee which will meet on the 2Oth January and will draw up draft texts for cluuses where agree- ment has been reached and prepare. alternative texts for all the others. Mereover, it is hoped that during this Second Meeting, the member states of the Interim Committee, in accordance with the proposal of the United States Government which was approved by the Committee, will open negotiations. to reduce tariff barriers and 12. C & D. E/PC/T/PV/8. suppress discrimination. This will be the most important attempt over made in this field and, if successful, it will bring about stabilisaticn of the tariff status relating to trade dealings among tho principal economic powers of the world. Such a move would supplement the Charter, rendering it practical and giving full scope to its powers. After the Second Meeting, the Committee will have cleared the way for the International Conference on Trade and Employment which will give its work a definitive form. Many events will take place between now and then and some of our plans will doubtless undergo change . Already, however, we have achieved this result; the important economic powers of the world, convinced that sterile struggle is useless, have determined to co-operate in creating a prosperous and happy world. With these optimistic and confident words, I should like to end my statement. (Applause). Gentlemen, various delegations have asked for the floor, in order to give us their opinions and impressions of the results of our work. I shall call upon the various delegates following alphabetical order. I shall begin with Mr Coombs, the head of the Australian Delegation. 13. E/PC/T/PV/6 MR. COOMBS (Australia) Mr. Chairman, Members of the Committee may recall that in the opening statement which I made to this Committee on behalf of the Australian delegation I outlined five basic principles which it seemed to us should be embodied in the work of this Conforence. They may recall also that the statement of those five principles followed a statement by the leader of the United States delegation of also five principles which his delegation believed fundamental. They were different, at least in emphasis, and to a considerable degree in content. I am very happy to say that the Australian delegation feels that the fiive principles upon which our approach to this question was based are in fact embodied in the work of the Conrference, and I am also pleased to say that I believe it has been possible to achieve that result without impairing to any significant extent the five principles stated by the United States delegation, and that/I believe may well be the experience of other delegations. It is, I consider, an achievement of considerable importance. Out of this Conference has come a set of Reports in which the area of agreement is so largo as to be dull enough to delight Mr. Wilcox's hart. I would like to say, however, that dull as the result may be in its absence of dissension, the process of arriving at it has to me and to my delegation been one of the most exciting experiences we have had. Twice in our generation the world has been plunged into catastrophe, once in the depression and once in the war, by forces which to ordinary people appeared as irrational and as unpredictablc and beyond- human control as the catastrophies of nature. These two major catastrophies are not unrelated. There is no doubt in our minds that the seeds of the war were sown in the depression, and that the future peace of the world depends upon our capacity to build world which is economically sane and which is progressing steadily towards better standards of life and greater justice. Since those catastrophies I believe real progress has been 14. E/PC/T/Pv/ 5 madc, to a greater oxtont than ever before, particularly .ithin the field of individual economics The economic setting in which men and women must live their lives is becoming a matter within human control. To me this Conforence is important because it continues that process and it continues it in a field where most progress is necessary in the international field. I believe we have participated hero in one of the many battles in the longe struggele of human knowledge and human co-operation against .ignorance, prejudice and fatalism. We have contributed, l fool to the development Of a world in which the lives and happiness of ordinary people .will no longer be at the morcy of blind economic forces, but be will be such that the conditions of life -ill be within the capacity of man to determine, subject only to the limits sot by the resources of nature and the capacity of human knowledge and labour. The task of achieving this will not be casy. Our ignorance is very great and the problem complex. There is no doubt that we shall make mistakes, possibly tragic ones, but our feet are on the road and there is hope ahead. For me and for my delegation I would say that it has been a privilege to be associated in taking these first stops. Thank you, Mr. Chairman. (Applausc). -THE CHARIMAN: I thank Mr. Coombs for his statement. I call upon the hcad of the Belgium-Luxembourg delegation. MR. KERCHOVE (Belgium-Luxeimbourg) (Translation) : Mr. Chairman, the Belgo-Luxembourg Delegation notes with satisfaction that its desire to offer constructive co-operation in the work of the Proparatory Committee of the Conference on Trade and Employment has been most sympathetically received by the other delegations. we may well hope that there will result from our work an instrument of multilateral contract, all-embracing and effective, worthy of ultimate acceptance by all nations. The Belgo-Lixombourg 15. E/PC/ T/ PV/6 Economic Union long ago demonstrated its faith in plurilateral trade agreements, by the part it played before the war in the agreements negotiated at Osloand Ouchy. That agreement of a group of economic powers, inspired by an equal determination to forego policies of economic self-sufficiency and to promote mutual trade, formed, as is well known, the first experiement in the sort of agreement that has occupied us for the last six weeks. I should like to indicate, in the form of a short analysis of the work of the five Committees, the extent and the significance of the adherence of Belgo-Luxombourg Delegation to the agreed texts. Committee on Employment: Before the war the various employment policies were mainly social in character and operated within the national framework. I am not engaging in criticism or controversy when I state that the attempts at a solution, and the remedies propoced and applied, were incapable of curing the ill; today, within the Proparatory Commission, a wider, more just and more objective view prevails. The achievement of full employment .ls E.1 The achievement of full employment appears no longer as the result of economic prosperity, but above all as one of its actermining factors, an thus demands from those in authority in every country the broadest and most intelligent consideration. The Conference has aimed further; it wishes to transpose the question on to the only plamon which a solution is possible, the only plane where a solution can be found consonant with the prosperity of individual countries as well as with that of the whole international economic community. Indeed, whether it be a question of young countries or of countries already industrially developed, it is now clear that full employment can only be realised if the effective world demand increases steadily, and if the various long or short term economic policies are co-ordinated in a practical manner. The Belgo-Luxembourg Economic Union is fully aware that approval of the aims of the Committee on Employment must not and cannot be limited to an agreement with the draft proposed, but must include the determination to co-operate continually in the undertaking. However, the Economic Union has made a point of warning the Committee against the dangers that would arise from too precise undertakings that could not be fulfilled However much we may co-ordinate our efforts, it is imrobable that we shall be able to suppress entirely the alternation of periods of prosperity and wellbeing with periods of depression or smaller effective demand, and the committee has acted wisely in recommending the governments concerned to provide for these cycles by reserving, for times of crisis, a seriou of measures designed to minimuze the effects of a depression and to limit its duration. With regard to the Joint Committee on Industrial Development, the Belgian Delegation welcomes the introduction into the Charter of a new chapter dealing with economic development. The nations today engaged in a praiseworthy effort to Civersify their economic equipment, to provide their population with modern machinery or to rebuild an economy devastated by the war, will be sensible of the breadth of vision of therpeoples s propared to help them by facilitatin- the lone term accomplishment of that task within the framework of the Charter. we are convinced that the young countries will make reasonable use of the 17 system of privilopes and exceptions, which enablers them to limit the effect of international competition on their economics. In ouyr vies, no country should make use fo such a weepen to try to evade the olligations which result from world economic soliderity. We firuly believe, ont eh contrary, that they will devote themselves, under the wise guidance of the ITO, to ensure by this means, a harmonious expansion of world trade, by assigning to each country its share in the chain of responsibilities, spread out ever a period of time, for develop- ment and utilisation of the resources of the world. May the young countries profit by the experience of countris like our own, which have been able to achieve a high degree of industrialisation without closing their doors to the trade of other nations. After two hundred years of industrialisation we are qualified to state today that the industrial development of a nation is as compatible with freedom of exchange as it is with the acceptance of heavy responsibilites in the sphere of international trade. Committee II. The new draft text proposed for Chapter IV deals with general commercial policy, particularly these Articles relating to most- 'favoured-nation treatment, tariff reductions, the climinaiton of preferences and quantitative restrictions, and the provisions relating to urgent and unfore- seen cases. This delegation is of the opinion that the amendments made in the new text relative to these questions will meet the many objections raised in the course of discussion. This delegation is convinced that these alterations are of a kind to strengthen mutual confidence between members as well as to create confidence in the future International Organisation . It believes then. now to give the Charter full paly in ensureing the exeansion of world trade. This delegation expresses the hope that the nogotiatioons arranged for the spring will lead to the full realisation of this objective, thanks to sub- stantial reductions in high tariff rates. Generally speaking, the provislome of the Charter relating to customs. and allied questions, as they were interpreted or amended by the Committee, do not run counter to essential Belgian principles, nor to the guiding principles of the future Netherlands-Belgium-Luxembourg Customs Union. However, although agreement has been reached in many cases, on other points, as was to be expected, it has not been attained. As the Articles appear at present, they are evidently inspired by a desire to move towards freer conditions of trade. The Belgian Delegation is pleased that in several cases it has been able to secure improvements allowing the national system of control wider scope than under the scheme oriinally envisaged. When need arose we did not hesitate to make express reservations, but we are happy to say that on all main points we have been able to agree At this point I should draw attention to the proposal, made on the initiative of the French Delegation, that the ITO should take over the international organisation for customs tariffs at present working in Belgium, and give it a wider field of action, so that there would be a permanent office in Brussels responsible for the collection, analysis and publication of the rules and regulations governing international trade, and for providing corpartive rulings on given points. Committee III has shown a spirit of great understainding in its work, coupled with a unanimous desire to work out a construtive draft. This draft is intended to prevent the efforts made by the various states to achieve the aims of the Organisation being jeopardized by the machinations of commercial enterprises which would take advantage of the preponderant influence they might have gained over international commerce, either individually or as a result of some agreement. The agreement given unreservedly by the Belgian-Luxembourg Delegation to this principle also applies to the procedure laid down which, while giving an important rule to the International Oraganisation, at the same time ontrusts the state concerned with the largest share in control measures, investigations, decisions and repressive measures, and is designed to avoid all conflict with any national legislation. - The work of Committee IV has resulted in an almost entirely new draft of Chapter IV of the Charter. The present text which, with slight reserva- tions, has received the almost unanimous approval of the delegations present, meets the main requirements of the Belgian Delegation which is respoinsible on the one hand for upholding the interests of the home country, mainly a con- sumer of primary commodities, and on the other hand, the interests of the colonies, mainly producers of raw materials. A satisfactory balance has been achieved between provisions intended to protect the consumer and those aiming at safeguarding the interests of the producers. Committee V. Considerable results have been achieved by the Committee for Organisation. They have, in fact, drawn up a draft constitution for the now Organisation. Several questions, however, have been left in abeyance. I shall 15. merely mention the question of the voting procedura in thc Executivc Board and in the Conference, in view of the particular importace of this matter and the impossibility of reconciling the opposing opinions. The Belgian and Netherlands Delegations have suggested as a compromise that the principle of equal votes be adopted within the various committees of the ITO and that permanent seats on the Executive Committee be allotted to the economic powers that play a leading part in international trade. Furthermore, the Netherlands, French and Belgian-Duxembourg Delegations have submitted to the Secretariat of this Committee a proposal to amend Article 76 in such a manner as to widden the scope of the provisions relating to powers of arbitration and to the competence of the International Court of Justice, in the interpretation and the settlement of any disputes that might arise. The Belgian Delegation hopes that these proposals will receive careful consideration from the Drafting Committee that will review our work. In conclusion, it will be seen that, subject to some reservations on certain particular points, the Belgian-Luxembourg Delegation heartily concurs with the texts which are to lu submitted to the Plenary Committee. Nevertheless, it should. not be inferred from this general agreement to the suggested Charter, as it will be drawn up in New York, that we consider we are nearing the and of our task or are within sight of our goal. It is obvious that much ground has still to be covered before the hopes arising from the admirable lead given by the government of the United States and the resolution of the Economic and Social Council can approach realisation. This realisation does nt depend, even in the main, on the Charter itself, its provisions, its text or its spirit. It must arise out of world public opinion and the growing convictionof the duty, which has devolved on our generation , to see that the principles of solidarity shall prevail over agoism both int he social field and in the economic field proper. with this and in view, it is important that propaganda, both alert and skilful, shall arouse interest in our work among the economic circles in all countries, whether represented at this Conference or not, so that, when the Charter finally comes into force, its provisions may be known and their inter- connections fully realsed. It must be truly considered, as the words of the Charter so happily expres it, as a code of progress, as an "ensemble" of solomn undertakings implying an i9rrevocable decision to abandon the errors of thbe past, as the will to cut short the miseries of the present, the resolve to create, in the light of this double experiment, a new framework worthy of that future which we all ardently hope for and desire. 20 1 E/PC/T/PV/5 THE CHAIRMAN (interpretation): I think the delegation of Belgium-Luxembourg for his statement. Now I call upon Mr da silva, the Head of the Brasilian Delegation. MR DA SILVA (Brazil) (interpretation): Mr Chairman, the Brazilian Delegation came here in a spirit of hope and enthusians for the taks awaiting us, the task, namely, of helping, in collaboration with the other countries invited by the Economic and Social Council of the United Nations, to lay the economic foundations of a lasting peace. beginning had already been made by the conclusion of monetary, financial and other agreemnts, in the course of the war. The most important question still outstanding is no doubt the regulation of internaional trade, that is to say, the elaboration of an international statutory settlement for the governance of the world's trade after the war. Our main task in this connection must be the study of the means of freeing commerce form the trammels created either by Governments or by private monopolies> But the expansion of international trade is not in itself an end, but a means to the true ends, namely, the improtenment, equalization and stabilization of the standard of livining of the world's populations. For the practical attainments of these ends it was necessary that we should not confine ourselves to world trade problems in the stricter sense of the expression. We were led accordingly to consider in addition the problem of unemployment , the problem of the stabilization of raw :material markets, and, above al, the problem of the industrialisation of less highly developed countries and of countries whose development has been arrested or set back as a consequence of the war. We are -ratified to note that the countries here assenbled have all, without exception, recognized the interdependence of these problems, and the consequences resulting from the existence of profound differences in the economic structure of the different countries. It is only right, I think, to emphasize the importance of that consideration. It means that, on the one hand, there has been a more realis-is- tic conception of international trapre -oblemwhile , , on the other hand, a number pof racticale stps havee ben discussed with a wvie giving to effect to that conception. Te eeehasebecnreadiness to ao accept, as being in thinterestssts of all, a policy general al economic collaboration of -angible and continuous ous nature, over and aeovheelh action eakcn undexisting en ccmnonic agreements weenroc nations. The final result of our labours will accordlngLe bc an intational n.L statutory settlement, whiwill il not be concerned solewy vith tworld's &' draLe, bwt WilI 21. F2 E/PC/T/PV/5 regulate international economic collaboration in many important fields. It was not possible, nor was it necessary, to arrive at definitive forms. Six weeks are a very short time for the solution of the important a problems and the Economic and Social Council very properly decided, in accordance with the suggestions of the United States, to distribute the work ever two sessions of the preparatory Committee , and one Session of a Drafting Committee, before summering the Plenaryn International Conference. Apart from thye drafting of the statutory settlement, there is another task awaiting us at our second satheirng namely, tariff engotiations. That is a practical step, which should inausurate the new international economic policy, even before the adoption of its fundemental statutory settlement. We trust that these neptiations will yield positive results without excessive delay, in spite of the novelty and the difficulties of the proposed procedure. They will do so, if in the course of the negotiations the fundmental principles of the our future statutory settlement are borne in mind, principles of fairness and of justice, and recognition of the varying requirements of the different countries. In taking leave of our colleagues of the other delegation,s we desire to thank then for the spirit of comprehension displayed, which has facilitated the work of us all; and we express a wish that we may be able at cur future meetings to continue this collaboration, which has had so satisfactory a beginning, in the interests of our countries and of humanity. THE CHAIRMAN (interpretation): I thank Mr da Silva. I now call upon Mr Robertson, of the Canadian Delegation.. MR ROBERTSON (Canada): Mr Chairman, in the absence of Mr Hector McKinnon and his :colicagues who have borne the heat and burden of the day, it is my privilege to say a few words on behalf of the Canadian Delegation. Now that the Conference is coming to an end, I think it is possible for the real workers to look back over the work of the past six weeks with considerable satisfaction.- When the Conference, opened, many felt that if it succeeded only in conducting a preliminary reconnoitre of the steps which would have to be taken before an International Trade Organization could be set up, it would not have been a failure. The problems to be solved were sp complex, and the economies of the various countries represented weere so diverse, that is scomed unreasonable to expect much greater progress then that. In the upshot, the main problems have 22. E/PC/T/PV/5 been explored, and a wide area of preliminary agreement has been reached between delegations. Our Governments will new have before them agreed drafts of many articles of a trade charter, and we turn over to the Interim Drafting Committee a wealth of concrete proposals. Differences, of ourse, remain. But after the through discussions which have taken palce here, it should be much easire to compose them when the Committee meets at Geneva. This wide measure of agreement on the official level appears all the more gratifying when account is taken of the varying economic situations in which the countries represented here find themselves. Some of them have been devastated by the war; others have escaped unravaged. Some of them are rnature industrial economics, anxious to find ex- panded markets for their manufactures; others are under-developed industrially, and wish to diversify and increase their industrial production. Some of then beliieve in wide schemes of government ownership of industry; others put more reliance on the initiative of private enterprise. Out of this diversity might well have come merely confusion of tongues and confusion of counsels. That instead there has emerged such wide preliminary agreemnt is a tribute to the good will and hard work of the delegates. Even more, it is a confirmation of the fundamental attachment of the Governments represented hrer to the purposes for which this Conference was called. Differences rain over emphasis nad methods; but all are agreed that governments must take concerted action to free the channels of trade and to maintain a high and stable level of employment. If we can create an institutional structure to outlaw those practices which: have had such a harmful effect on world trade in the past, and to settle recurring commercial difficulties, we will have done much to rid the peoples of the world of the fear of insecurity, want and unomployment. All countries are affected by changes in the volume and pattern of world trade my own country not least of all. We must see to it that such trade is expanded as much as possible. If goods can be made to pass freely and in god volume through the arteries of international trade, this lively current will ultimately have a tonic offect on the fortunes and wellbeing of individuals all over the world. For the success which has been achieved already, Mr Chairman, the Canadian Delegation feel that you have been in no small measure responsible. Your long experience and unfailing courtesy have been constantly 23. P3 F4. at the service of the Conference, and have helped it over many difficulties. we are also indebted to the hospitelity of the United Kingdom Government, which has done so much for the comfort and convenience of the delegates. We would like to pay a special tribute to the initiative of the United States Delegation in presenting to the Conference sucha carefully prepared draft chjarter for its consideration. The Canadion Delegation also wisees to associate itslef with the appreciation already voiced of the services rendered by the International Secretariat. We have made a good start. But much still remains to be accomplished, and I am sure that there is no one here who is in danger of falling into complacency. The Canadian Delegation take the preliminary agreement which has been reached here as a good auzury for final success when we cotinue oru work next year. the chariman (interpretation): I thank MR Robertson for his speech. I now call upon Mr Bianchi, the ambassador of Chile. MR BLANCHI (Chile): Mr. Chairman, the Chilean Delegation has followed with agreat satisfaction the deliberations of this preparatory Conference of Trade and Employ- ment, during which the representatives of seventeen countries have, with efficiency and entire frankness, exchanged poins of view on the many economic problems, the importance of which no one will deny. In accordance with the statement I made in one of the first Plenary Sessions of this Conference, the Chilcan Delegation has endeavoured to cooperate in every possible way in teh discussions which have taken plac,e trying to make clear the situation of countries which, like our own, are in the initial stages of economic development and which, for this reason, have not yet been completely and efficiently absorbed into international trade. In general, our Delegation has been -preoccpied with ensuring that the Conference should give adequate consideration to the main object of the future World Con- .crence as set out by the Economic and Social Council of the United Nations in its Reselution of the l8th February last, namely, the increase of production and the exchange and consumption of goods, and not merely limit itself to the study of how to climinate present hindrances to world trade. We have made clear that the climination of any qualitative or quantitative hindrances ts international trado Must be allied wiith questions of productive capacity and balance of payments. 24. EP/C/T/PV/5 as those obstacles, at least in Chile, arise out of necessity and only when such necessity is removed will it be possible to climinate the ob- stacles resulting therefrom. . It îs for this reason that the Chiloan Delegation proposed tocarnestly the inclusion in the Charter of a. Chapter on Industrialization. The Chapter finally approved, while it does not entirely satisfy us, is a great step forward, although we should have preferred it to be more cocise and were, in fact, prepared to formulate even more concrete proposals than those originally put forward. We fully appreciate the immense difficulties in the way of reconciling the many diverse points of ivew on this matter and arriving at an agreement sufficiently elastic to include them all, and at the same time concise enought to make the agreement something more than a mere declaration of opinion. We hoep that work will continue along these lines, and that shortly the function of the different organisations of economic cooperation created by the United Nations will be brought into harmonly, onabling them to carry out their tasks in an efficient and well coordinated manner. In this way, the causes which have obliged many countries to adopt restrictive measures which hinder the free expansion of international trade end the velfare of peoples, would be removed, 25. F5 With the object of ensuring frank and ample Consideration of all problems with which this Conference must deal, the Chilean Deleaction has also endeavoured to see that other questions which might perhaps be considered in greater detail or more competently at otehr Conference shold not be forgotten, since they are also closely interwoven with the main matters dealt with by the present Conference, for example, the problem of services. IN the opinion of this Delegation, the general and comprehensive terms embodied in certain Chapters of the American Charter seen more appropriate than the new proposals put forward by other Delegations. Another guiding prlnciple of the Chilean Delegation has been that the problems confronnting the small nations as well as the great should be considered ona footing of absolute equality. The Delegation is gratified to note that among the exceptions to the most-favoured-nation clause, the exceptïons in force between neighbouring countries are recognised as being included. As a result, chile will be able to negotiate the elimination of this exception from her agreements, as father countries. will do with similar exceptions. Inspired by the same principle, our Deleation has not accepted new proposals tending to alter the equality of voting within the International Organisation while may come innto being form these delib- erations. With regard to Stae trading - a matter of some importance today, when a large number of enterprises are, to a greater or lesser degree, of that type - the Chilean Delagation has clearly set out its view that such enterprises should enjoy the same liberties and advan- tagas as those of a private character, In so far as commercial consid- crations are concerned, In view of the economic structure of our country and the nature of our foreign trade, similar, moreever, to that of many other South American countries - based on the export of two or three primary products - the Chilean Delegation has requested that consideration should be given to the provision of a safeguard with respect to the grave problem of the cost of raw materials. With regard to the question of full employment", our Delegation. wishes to record ts satisfaction that the principle of raising the 26. -2 E/PC/T/PV/5 standard of living of the working-classes has been considered, a point to which I had pleasure in referring at one of the inaufural meetings of this Conference. I remember that some days ago I agreed to speak for a few minutes only, .and so I will conclude by saying that i wish the interin drafting committee every success in the task entrusted to it, which will complete the work begun in London - work in which the spirit of collaboration animating all delegations and the most adporable sense of justice andn the dynamic personality of the President, Monsieur Max Suetens, have played the most imporant part. (Applause.) THE CHAIRMAN (interpretation): I wish to thank M. Blanchi for his speech, and I row call upon Mr, wunsz King, Ambassador of China. WUNSZ KING (China).. Mr Chairma, the conclusion of our labours at this stage marks a milestone on our long journey of the preparation of a draft instrument for the future International Conference on Trade and Employment, Nobody would expect that we, of the seventeen, diff- erant economies, world have no difficulty whatsoever in finding a common and complex system of highway code applicable to different ways of traffic and that we would reach our destination by one hop. Differences of opinion, differences of emphasis, differences of approach, there were bound to be. In spite of all these however, a large measure of agreement has been reached on a number of important issues We have realised that to expand international tracde positive measures are as Important as, if not more important than, the negative ones, We are all agree" that to maintain an all-round effetive demand for goods and services, industrial development, particularly in the less developed countries, will be as important a contribution as the premotion of full and productive employment policy ad the elimination of trade barriers. In giving effect to these, principles not only do we owe to our own people a great responsibility for material. advancement, but we owe to each other a mutual responsibility for promoting the general well-being of the peoples of the world. 27. E/PC/T/PV/5 I am happy to say that in our deliberations we have placed equal cmphasis on individual measures, as well as on offective international action for the premetion of an expading world aconomy. We have also recognised the imperative need for nathig this code of interational commercial rekatuibs adaotable not only to the existig economic structure, out also to the future trends of economic development. If we are of one mind as to the principles which we would like to see applied for shert-term as well as long-term problems, I venture to hope that the success of the proposed International Trade Organisa- tion in the future is assured I need not remind the Conference that we are oly called upon to do the preparatory work which is of a technical nature, and I think is right to assume that what we have discussed will have to be reviewed by our respective governments. When we re-assemble next Spring, inspired by the spirit which has been manifested in this meetig and guided by the considered opinions of our goverments ad the public, we may be ready to find a common basis on certain questions on which we have not been able to reach agreemet, or which we have had no time to discuss here i detail. What is more, we shall then be able; I hape to attempt a new inter- national experiment in tariff negotiations which will certainly prove to be a complicated task. We of the Chinese delegation beliveve that in trade matters as in many other related matters, the success of bilateral or multilateral discussion or negotiatios relating thereto can be made possible only if an attempt is made to regulate these matters on the principle of reciprocity and in a spirit of mutual helpfulness. My remarks, however, will be incomplete if I do not record our sincere appreciation of the tact, sagacity and other outstanding qualities with which our Chairma has guided us through the fruitful discussions of a very complicated problem. We are equally grateful to all the delegates who have shown great understanding of each others' problems. We are proud to have a highly able and competent Secre- tariat, under the guidace of the Executive Secretary, who have 28. E/PC/T/PV/5 contributted in no small measure to the resulted we have obtained. I think all my colleagues will agree with me if I say how much we owe to the host government for their kind hospitality. Last, but not least. I would add a word of a appreciation for the services rendered by the Interpreters. (Applause.) THE CHAIRMAN (Interpretation): I would like to thank the Ambassador Mr Wunsz King for his speech, and I now call upon Mr. de Blanck, Minister of Cuba. Mr. G. de BLANCK (Cuba): Mr Chairman, the Cuban DeIegation wishes to express publicly its recognition of the competence and discretion with which the Chairman of the Preparatory Committee and the Chairman of the various Committees and Subcommittees which have carried out the work of this Conference have discharged their respective tasks. Cuba also desires to record equally its appreciation of the cordial conduct and collaboration with our Delegation on the part of each and every one of the Delegates and Advisers of the seventeen nations here represented. And we do not wish to miss this opportunity of publicly expressing our gratitude to the authorities of the United Kingdom, to the officials in London of the United Nations and to other persons and organisations for the kindness and officiency with which they have contributed to making the time spent by our Delegation in this city an enjoyable occasion. It can be said that the work which has been done here has been carried on in an indisputable atmosphere of comprehension of the problems pecullar to each country, and of collaboration towards the pertinent solution of those problems, within the framework of the fundamental objective which has brought us here together, of drafting the constitution of an international organisation, which being above but not ignoring the economic peculiarities of each country, will establish adequate regulations for an extensive commercial intercourse between the nations of the world. The Cuban Delegation appreciates with satisfaction the fruits of our labour and views with optimism the final objectives which we all pursue, In the course of our deliberations the solution of many problems of fundamental importance for our country have been 29. E/PC/T/PV/5 left pending, but in the final documents which have been elaborated, the solutions of many oother problems of importance for Cuba's economy have been embodied. It has been a satisfaction to my country to see that emphasis has been given in the Charter to the problems of enployment. International trade is not an and in itself, but one of the means of showing, through an expansion in its volume, the increase of production and of the opportunities of employment in each country. 30. E/PC/T/PV/5 We have noted that what is important, in order that the economy of each country and the sum total of world economy may reflect the true welfare of nations, is that the benefits of production and of wealth shall be shared to their maximum extent by these who work to secure them. Cuba has seen with satisfaction that her carnest desire to establish the general principle of raising the standards of living of the labouring classes and of climinat- ing the sub-standard conditions of labour have been incorpornted in the Chapter on Employment in the International Trade Charter. It could not have been otherwise, for how could the democratic nations/here represented be opposed to considering as an obligation for the world what already constitute an obligation for their own peoples? We have appreciated the capital importance, as a part of the regulation of international trade, that commodities be offered in the world markets free from the unfair competition of having been produced by the exploitation of human labour. The small number of reservations which a for delegations have made on this point have been due to doubted in regard to the jurisdiction of the I.T.O. in this aspect, and not to opposition to the general principle, which, to the satisfaction of our progressive sentiments, has been unanimously accepted at this Conference. The establishment of the I.T.O. could not imply the freezing of the present: economic position of the various countries of the world. Some nations have fully attained their maturity in economic matters, but many others are, however, in the carly stages of their development. The regulatory principles of the I.T.O. could not be inflexibly the same for countries at different economic levels. Our purpose could not be to stop the diversification of production in the world, but, on the contrary, to increase it to i ts maximum in every corner of the globe. For this reason, we can point to the Chapter in the 31. E/PC/T/PV/5 Charter dealing with Economic Development as the most important fruit of our work. It is an initial attempt, from the internation- alpoint of view, to grapple with the specific problems of countries in the carly stages of economic development, and, consequently, could not be wholly successful. Much remains to be done in this matter, but it is only just to recognize that the Preparatory Committee has taken the first steps towards the solution of this problem. Nations which have attained full development can face the international economy of free competition which we are trying to organize in conditions of maturity such that, if we do not guarantee to those nations which have not yet attaincd this condition of full maturity the use of the same means employed by the former in the course of their economic history, the economy of the latter would be placed under a permanent handicap. The intensification and diversification of their industries and agriculture is the only means which they possess of solving the problems of employment and of increasing the purchasing power of their peoples. Such means do not hinder, but, on the contrary, increase the possibiliities of international trade. Nations which have reached economic maturity should consider the advisability of granting the countries which are in the carly stages of economic development a froc hand to achieve this object. The Cuban Delegation is pleased at the realistic and practical criteria which the Preparatory Committee have applied to the problems emanating from the existence of special commercial relations between various countries. Cuba reiterates her confidence in the final success of our labours, and with special interest wishes to record, in conclusion, its recognition of the prompt and co-operative attitude of the Delegation of the United States of America in endeavouring to reach solutions of harmony, for on its shoulders have rested the greatest tasks of the Conference, since it was the Government of the United States who submitted for our 32. E/PC/T/PV/5 consideration the basic document for the work of this Conference. (Applause). THE CHAIRMAN (Interpretation) : I would like to thank the Cuban Ambassador for his speech, and I now call upon Mr. Kunosi, of the Czechoslovak Delegation. MR. KUNOSI (Czechoslovakia): Mr. Chairman, in the name of the Czechoslovak Delegation I would like above all to say how much we have appreciated the way in which the British Government has greeted us, and how much London, once again, .has proved to be an exceptionally suitable place for difficult and important inter- national negotiations, where its atmosphere of balanced compromise is so indispensable. After some weeks of hard and serious work, it seems to me that a possible basis of international agreement is emerging and we may hope that after our proposed second session in Geneva we shall be able to present the Conference of all the United Nations with the draft of an acceptable and workable instrument. I think it emerged quite clearly in our discussions that it is not possible, and that in any case it is too carly to be dogmatic about principles and/methods which are likely to prove the most fruitful in achieving that measure of economic collaboration which we all need and desire in order to increase the volume of world trade. Here I think it is worth mentioning that the United States Delegation, after putting forward definite proposals, approached our problems with a none the less open mind and in a spirit of conciliation concerning the problems which interest us. Czechoslovakia is the only State from central and castorn Europe taking part in these discussions and in a way its needs and legitimate ambitions are typical of, even though not identical with thse of the countries in that region of the world. Mr. Chairman, we shall leave this Conference with the feeling 33. H4 E/PC/T/PV/5 that if international trade/policies in the world have to be reduced to a code of law which is to be enforced by sanctions, then full account must be taken of the actual situation and problems of the nations which were not represented. We see all the difficulties of this task, especially in a period where we all have to experiment with our own domestic economic problems, but I should like here to emphasize that we have started in the right spirit, and shall - provided we continue in a sympathetic and realistic fashion to try to dispose of the problems - in due course be able to evoIve a truly democratic and effective set of rules which will be in the interest of all the democratic nations and of world peace. We in Czechoslovakina have not practised in the past, nor do we intend to practise in the future, economic nationalism or protectionist policy, therefore my Government is willing to contribute to the reduction and gradual elimination of an number of trade barriers, but we emphasize, nevertheless, and will go on doing so, that the ways and means by which this end should be internationally achieved, should be chosen with due regard to the policy of safeguarding full employment, raising the standard of living of the different nations, annd espocially bearing, in mind the burning problems of economic reconstruction in the countries exploited for long years by Nazi Germany. we should not therefore forget, in the name of any theory, that our main object is to increase the volume of international trade in the interest of raising the standard of living of the large masses of working people everywhere we should not conscquently exclude methods which are appropriate to serve this and so far as they are fair and not in contradiction to our moral standards in the international field. So far as Czechoslovakia is concerned, we feel that we have made our contribution in this session and we shall continue this co-operation, assuming 34. E/PC/T/PV/5 that due regar is paid to our problems of economic recovery. Mr. Chairman, we are grteful to have found, on the part of all the Delegations present here, a great measure of understand- ing for our thesis that it is a first duty to ourselves and to the international community to direct all our efforts in this post-war period to overcoming the handicaps created by the wap and Nazi exploitation. we have asked for, and to a great extent have been accorded, a transitional period for the convalesocnce of our economy and now, inn this public sussion, I should like to repeat that this transitional period will be shorter or longer according to the degree of understanding and amount of help we shall receive from those States which have not been occupied by the enemy. Mr. Chairman and colleagues, I feel that I cannot end without commenting on one point o which we have been most insistent all through the session, and o which it has been found that it is advisable to postpone a decision. This is the point of relationship between the members of the organization and the countries outside it. We believe/that this is one of the most important problems, and on the right solution of it depends to a very great extent the success of/our whole undertaking. I believe there is no doubt that on the largest participation of the members of the united Nations in the International Trade Organization, depends the measure of success of our negotiations here and in Goneva as well as that of the future International Trade Organiza- tion. In proparing the Charter, we should never lose sight of this point. We submint/that if, in preparing the Charter, due regard is paid to the different economic structures as well as to the different degrees of economic development of the various countries, it is this which will, in our opinion, most effectively 35. E/PC/T/PV/5 facilitate participation in the Trade Organization by the largest number of countries. We have found in this session that we have a common and in view; to raise the standard of living of the working people everywhere through increased and mutually avantageous exchange of goods, and to consolidate the peace through economic collaboration. But to achieve it we must all be prepared to modify our policies and practices in the interest of expanding world trade in which we would all participate. (Applause). 36. I1 E/PC/T/PV/5 THE CHAIRMAN (Interpretation): I would like to thank Mr Kunosi for his speech. I now call upon Mr Nathan, head of the French delegation. MR NATHAN (France) (Interpretation): Mr Chairman and gentlemen, it is no doubt natural for one who has taken part in the work of a Committee to be tempted to pass a favourable judgment thereon. However, I think no one will contradict me when I say that all of us have worked very hard. Indeed, we should have been working too hard if, after so much work, we had not worked to good effect. It behoves us, therefore, at the end of this session, to ascertain whether we have made effective progress in the task with which we were contrusted. The answer to that question will enable us to measure the ground we have already covered, and try to measure how much remains. In my view, it is is impossible not to draw heartening impression from the work of the Sub-Committees. I would even say it is all the more heartening since the Sub-Committees had to deal with specific and well defined subjects. I do not want to review in detail the work that led to satisactory results. As an illustration, I shall merely point but how remarkable it is that we should be in a position to submit to our Governments a text on steps to be taken to prevent restrictive business practices, and that this text should have been unanimously approved when, at the outset of our discussions, the various countries seemed to be separated by fundamental differences of opinion. Once more, I do not want to dwell on particular points, for I am convinced that the Charter which we have to set up represents a whole, the different parts of which are interdopendent, and therefore we have to cndeavour to prepare a balance sheet of our discussions, considered as a whole. It. is thanks to the initiative of the Unitcd States that we are gathered here. The intention of the American Government was not only that the intrinsic unity of the economic world be affirmed but also that the means be defined whereby this unity, which in theory no one can deny, might be established on a practical basis. They meant thereby to have it agreed that goods of a like nature, wherever they might be produced, are in principle equivalent, and that no distinction should be made between them except on grounds of price and quality. In other words, they wanted, on the one hand, to be excluded considerations which might be attached to goods on account of their place of origin, considerations which 37 I2 E/PC/T/PV/5 might not always be of a specifically economic nature and, on the othor hand, to set in motion a machinery whose working should be impeded as littile as possible by problems not solely derived from production and consumption. M. Alphand, in a speech which he made at the opening of our discussions, showed that proposals such as those could not but meet, on fundamentaIs, with the warm support of France. I feel convinced that, in making these proposals, the American Government was rightly conscious of the fact that the world was awaiting them. May I just be allowed to add that the world has been awaiting them for a long tine and that their introduction into the realm of practical policy would probably have been casier had it been made twenty-five years ago. Since then, financial insecurity, the lowering of those traditions on which the activity of the main markets was built, and the war, with its train of physical and moral suffering, have led to the development of factors which represent so many obstacles in the creation of that unity of which the world feels both the need and the reality; a reality, however, which seems to slip from one's grasp, and a need which can only be satisfied at the expense of exigencies which seem to arise almost daily. The work that has to be done in order to achieve the objective which we have all set for ourselves will be long, and the road we shall have to follow to roach our goal is fraught with difficulties born of the many diffcrent ills front which the world has had to suffer since the and of the 1914-1918 war. Be that as it may, it seems to me that the discussions which have been going on for the last month show that it is very difficult and probably impossible to assume that the Charter which we have to draw up might fail to take into account the very important differences arising from the positions of the various member states of the United Nations. Every classification does no doubt involve a certain arbitrariness and must essentially be revised at not too distant intervals. It appears to me, however, that, from the point of view that we have in this connection, it might be said that there are at least three categories of states. First there are those who have reached an advanced stage of economic maturity and which at the same time enjoy a balance of payments showing a surplus or an equilibrium one might describe as organic. Secondly there are those states whose economic development has not, for varying reasons, reached the same degree of 38 I3 E/PC/T/Pv/5 advancement and perfection, and whose balance of payments is stabilised, if more or less regularly, yet on a level which cannot ic donsidered satisfactory. Lastly, there are those countries whose economic development could not, in the still recent past, be deemed to be satisfactory, but who have to take up anew a task which for varying reasons has been interrupted, those same reasons having, to a greater or lesser extent, affected their balance of payments, which is thus, for the tire being, out of equilibrium. On the first category there is nothing to be said. We agree with very many other nations in thinking that nothing is more important for the development of international exchange than the efforts which might lead to the full and effective use of the resources in manpower and raw material of those countries whose economic life has fallen behind that of other states, which, until now, were in a better position to take advantage of their natural resources and human ingenuity. It was an effort of this kind that, in the 19th century, led to the improve- ment of the standards of living. The desire for full employment urges us to improve on this effort of the nineteenth century, renewing it by recourse to other methods. That, however, is. a very long and exacting task which will necessitate the co-operation of all concerned, and above all of countries of the third category as well as those of the first. I may be allowed to observe that, for those states who have by a very great effort to make urp for a limited delay in their economic development, this work will have the effect of restoring their balance of payments. They ask for nothing better than to revert as quickly as possible to a livelihood to be ensured by the product of the sale of goods of interest to the remainder of the world and by their ability to produce capital. The fact that they have at their disposal an industrial, agricultural and economic background of long tradition, technicians immediately available for the work that they are called upon to do, and highly skilled labour, should rapidly enable them to bring active assistance to the collective effort. I do not think there is reason to believe that we are renouncing universal principles because at the same time we recognise the existence of particular situations, each giving rise to duties as well as to privileges, none of which are exactly alike. Concern for the universal principles should lead us to judge objectively these particular situations and to determine, as it were from an impersonal standpoint, what precisoly are the privileges and duties these 39 14 E/PC/T/PV/5 situations involve. There car be no doubt that the effect of our discussions has been to amend in this sense the text prepared before we met. Does the new text take sufficiently into account the diversity of these situations? Does it already posscss sufficient clasticity to allow autonomous economic developments within the common structure? Only after careful examinz- tion can we make such a statement. I believe I may say that thanks to the breadth of vision of those high authorities who were responsible for the drafting of the original text, a great step forward has been made. It would perhaps be well if the diversity of these situations were more explicitly recognised, and if it were stated at the same time, without the shadow of a doubt, that our objective is a common one, and though each country may only be able to move towards it at its own pace, at least the direction should be the same for all. I myself believe that although it is indeed important, as I have just explained, that individual situations be taken into account, there can be no lasting improvement unless those benefiting under justified exceptional treatment are propared to accept the automatic control exercised by foreign competition in their home markets. I am convinced that there is no country that has not more to gain than to lose by taking an increased part in international trade. On the other hand, it is certainly of the utmost importance that stops. should be taken to prevent customs frontiers becoming crystallised in their present shape. The onlarging of customs territories must lead to acceleration and multiplication of trade relations. If we are to promote this, we must authorise the intermediate measures which will facilitate it. I am happy to see that provisions inspired by these requiraments have been introduced into the Draft Charter, even though only rather timidly. There is another point to which I would now like to draw your attention. If it is to be, recognised that, especially at the time of the entry into force of the Organisation, clasticity shduld be the rule, and the greatest possible account should be taken of individual circumstances, it is essential that the Organisation itself should be in a position to institute such inquiries as would enable it to asscss the somewhat irrcducible essence of those circumstances. This is what makes the question of the statutes of the Organisation a matter of particular importance. In this regard I belive that valuable experiance has already been gained through our present discussions. It is absolutely indispensable that the 40 I5 E/PC/T/PV/5 measures to which we shall have recourse receive the complete adherence of the public opinion of all the member states. To this end, it is essential that the reasons loading to the adoption of these methods, and those which may result in the recognition of certain exceptions, should be the subject of the most public discussion. I think you will agree with me when I say that we do not know one another well enough. A great English political writer stated in a famous book that no parliamentary government was possible in a country where in every county it was said of the next, "I don't know anything about it, except that that is where the beggars come from." This idea, although profound, is absolutely true. I believe it would be as truc if the sentence were changed to run as follows, " I don't kow anything about the next county, except that that is where the police come from." It is therefore necessary, if the International Trade Organisation is to yield all the results we have the right to expect from it, that each member country should. know that no other member country is playing the part either of the beggar or of the policeman. Only public discussion can produce this result. I believe also that we must add the notion of perfect equality between member states, which is saying, in effect, that, subject to reconsideration, it seems to me desirable in the present stage of our discussions to assume that in the I.T.O. Conference each state will dispose of a single vote. But as soon as it is a question of setting in motion economic machinery, nothing is more important than to ensure continuity of policy and to give the states which play the predominant part in world trade a true sense of their responsibilities. For this reason, it seems to me that provision should be trade for permanent seats on the Executive Board of the Organisation. There is no doubt that under any regime - and this applies both to national and to international life - trade is directly affected by politics. This influence is brought to bear in a thousand ways, some brutal, some subtle to the point of being almost imperceptible. 41 J1 E/PC/T/PV/5 It is to be wondered whether it would be advisable to go on increasing this influence. In any case, we believe that in determining the relationship between the I.T.O. and the wider and loss specialized councils, the fact should be borne in mind that this influence will always make itself folt, whatever steps are taken. In the initia^ stage, however, what will be the duties of the Organisation? It will see to it that each Member State is provided with indispensable information regarding the position and needs of all other Member States. This information and the conclusions drawn from it will be the subject of discussion. That is the very basis of a sort of parlid mentary system, of a parliament whose duties will consist in making recommen- dations rather than in cnacting laws. Does that mean that the I. T. O. must be given no authority? I do not think so. If its authority, however, is to appear justified and based on reality, decisions which might entail sanctions against or condemnation of one or several Member States should, in a sphere where laws can only be enacted gradually and probably very slowly, express the opinion of a body set up in such a way as to climinate the possibility of anyone thinking that the grounds of such pronouncements conceal certain interests, whether these be of national concern to certain Member States, or result fror more or less stabla combinations having achieved a majority. It is, therefore, in my opinion, essential to crown the structure with a Supreme Court, which, taking into account the intentions upon which the I.T.O. is based, would render de facto rather than de jure decisions. Drawin inspiration from a recent speech of Her Majesty the Queen of England, I shall say that if the supremacy of the law is to be recognized, then the law must be the servant and not the tyrant of society. It would seem that it is due to a combination of the influence of tradition and of the recognition of the fact that adaptations are necessary, that, what is known as Common Law in Great Britain, owes its cfficacy and authority. That is one of the examples which it would be well to ponde. I do not propose, of course, to give here an outline of what the I.T.O. should be. I only wish to draw attention to the complexity which will be required in this Organ- ization. Most of the processes of economic life used to consist of a more or less unconscious groping towards a state of balance, never clearly 42. E/PC/T/PV/5 defined. Now these adjustments which come about gradually, and which were justified or invalidated, but always coorrected in the course of time, are to be replaced by institutions cmpowered to apply those methods which we are attempting to make clear. The passage from reflexto voluntary action offers grave risks, and always calls for greet precautions. For my part, I think that the reflex actions which have taken place in the last twenty-five years, that is to say, born of poverty and uncertainty, should at least be corrected, and that this cannot be done unless they are submitted to the light of conscience. That is why I consider the lead given by the United States so opportune. I do not wish to conclude without reiterating my faith in world unity and in the possibility of a wide measure of international agreement and cooperation. Often, in reading the Draft Charter, or in listening to our American colleagues, I have found myself thinking they were inspired by a concern for logic which is more usually considered as French; and I have felt that the appelals to empericism made by my colleagues of the French Dele- gatian and myself, and the idea which we have upheld, that account must be taken of all situations, as well those which have been lost for the moment, as those which have been gained, could quite well be inspired by that prudence which is generally ascribed to the Anglo-Saxons. This shows clearly that we are on common ground which in my opinion our discussions have largely contributed to define, and therefore we are now far better equipped to start building than we were a menth ago. The building of the Tower of Babel no longer seems an over-ambitious project. THE CHAIRMAN: (interpretation): I should like to thank Mr Nathan for his speech. Gentlemen, if you agree, I propose now to adjourn and to resume at preciscly three o'clock. Ten speakers have spoken this morning. Ten more speakers have to speak this afternoon. With some luck and good will we can hope to end by this evening. Therefore, Gentlemen, the meeting is adjourned, and we will resume at precisely three o'clock. (The Meeting rose at 12.50) (For Verbatim Report of Afternoon Session, sec E/PC/T/PV/6) 43.